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Commission concludes plasterboard investigation

22 December 2014

The Commerce Commission has completed its investigation into allegations that Winstone Wallboards Limited (a subsidiary of Fletcher Building) acted anti-competitively to maintain its market position in the manufacture and supply of plasterboard.

Based on the evidence gathered during the investigation the Commission does not believe Winstone has breached the Commerce Act 1986 and it will not be taking any further action.

The Commission’s investigation was centred on three areas – Winstone’s alleged exclusive agreements with merchants, the rebates Winstone pays to merchants, and Winstone’s alleged practice of undercutting other plasterboard suppliers on jobs.

Commission Chairman, Dr Mark Berry, said "We have completed a thorough investigation and there is no evidence to suggest that Winstone has breached the Commerce Act in any of these areas."

"Winstone’s supply contracts with merchants (excluding Placemakers which is also a subsidiary of Fletcher Building) do not contain contractual provisions that require the merchants to purchase all their plasterboard from Winstone. Nor do we believe that the rebates Winstone pays to merchants result in merchants purchasing nearly all of their plasterboard from Winstone."

"The evidence suggests the loyalty shown to Winstone and its large market share is likely a result of a number of other factors – its level of service (in particular, technical product information and delivery support), the quality of GIB products, comparative prices, regulatory barriers to entry to the market, and until recently import duties on plasterboard."

"If Winstone were to stop using rebates tomorrow, we would not expect to see any greater competitiveness of the market."

"This investigation was complex and as a result lengthy. An initial investigation was completed in April this year. However, additional information was provided by complainants which led us to undertake an additional round of interviews and further investigation."

"While plasterboard only accounts for between 1% and 3% of the cost of building a new home in New Zealand (excluding land), the construction industry is a very important part of the New Zealand economy. As such, we needed to ensure we took the time to complete a very thorough investigation," said Dr Berry.

A copy of the investigation report can be found on the investigation reports page.

Background

New Zealand had long-standing anti-dumping duties on imported plasterboard until they were removed in June 2014.