Privy Council finds for Carter Holt

By PAM GRAHAM

The Privy Council in Britain has vindicated Carter Holt Harvey with a decision that overturns a $525,000 fine for anti-competitive behaviour imposed by the High Court.

The commission won an action against the country's second-largest listed company in the New Zealand High Court in 2001, but the Privy Council yesterday found that there had been no breach of New Zealand competition law.

The case goes back to 1992 when Nelson company New Wool Products developed "Woolbloc" batts to compete with Pink Batts marketed by Carter Holt's Insulation New Zealand Company (INZCO).

The Pink Batts had 75 per cent to 85 per cent of the market but by 1994 the wool-based product marketed as environmentally friendly had 30 per cent to 40 per cent of the Nelson market and was making inroads elsewhere.

INZCO came out with a "me too" product, Wool Line, made from 60 per cent polyester and 40 per cent wool.

The High Court found that a Carter Holt "buy one get one free" promotion was 30 per cent below cost and breached the Commerce Act.

Throughout the litigation, Carter Holt maintained that the two-for-one offer was a normal competitive response.

"The offer was good for Nelson consumers who welcomed, and reaped the benefit, of these lower prices," said Carter Holt Harvey general counsel Nicholas Short.

He said the case was significant for the wider business community, given the common practice of companies selling below cost for valid competitive reasons.

"Mistakenly describing competitive behaviour like INZCO's as predatory can impede the very conduct that the competition laws are designed to protect."

The Commerce Commission said last night that it was reading the judgment before commenting.

The judgment comes as New Zealand abandons recourse to Britain for final appeals in favour of a local Supreme Court.

Carter Holt has since sold INZCO.