CHH pays $1.5m to Christchurch rebuild in Commission settlement

Wednesday 9th November 2011

Carter Holt Harvey will make a $1.5 million payment to help rebuild Christchurch in a settlement with the Commerce Commission of the weak wood scandal.

The Commission said it has agreed a settlement with CHH which end proceedings it brought under the Fair Trading Act.

CHH will make the voluntary ex gratia payment to a project relating to the restoration and rebuilding of Christchurch following the earthquakes. It will also contribute $100,000 towards the costs an inconvenience incurred by potential claimants and $50,000 toward the Commission's costs.

The settlement gave CHH the option of either restoring or rebuilding a significant building affected by the quake, or construct a new sports-related building for public use.

The Commission alleged that the company’s Laserframe timber did not comply with the standard for MGP10 timber. Essentially the timber was not as strong as advertised.

In October 2006 CHH pleaded guilty to criminal charges brought by the Commission and was fined $900,000. The Commission filed the civil proceedings to recover the losses suffered by competitors and customers who purchased the timber.

The case pre-dates the takeover of CHH by New Zealand billionaire Graeme Hart.

CHH makes no admission that any person suffered loss or damage from the sale of Laserframe timber. The Commission said it has no reason to believe the timber poses safety concerns.

"The case was purely about people who paid too much for Laserframe timber compared with other products on the market at the time, given that some of the timber was not of the grade claimed," said the Commission's competition manager Greg Allan.

The Auckland District Court found that between July 2001 and November 2003 CHH sold timber labelled as MGP10 when it knew the timber did not consistently meet that grade.

MGP10 is a high-strength timber used for trusses and framing in homes and buildings. It was marketed by CHH as a superior and premium product.

It is estimated that around 20,000 new houses were built with Laserframe MGP10 supplied by CHH during the period.

The Commission investigated after concerns were raised by the New Zealand Timber Industry Federation. After testing the timber and finding some did not make the grade, the Commission searched the company's premises and seized documents proving CHH had known about the problem since 2001.

BusinessDesk.co.nz

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