NZ regulator clears Fletcher of anti-competitive behaviour in plasterboard market

Monday 22nd December 2014

The Commerce Commission says it found no evidence that Fletcher Building's Winstone Wallboards unit engaged in anti-competitive behaviour to protect its dominant position in the plasterboard market.

Fletcher, the biggest building products and construction company in New Zealand, dominates the plasterboard market with its GIB brand products. This year Knauf, the world’s second-largest plasterboard maker, revealed it had struggled to gain traction in the New Zealand market, saying it had taken longer than expected to get approval for its products from BRANZ and faced resistance getting its products into stores which had established relationships with Fletcher.

The commission, which began its probe last year, said it looked into three areas of activity by Winstone - alleged exclusive agreements with merchants, the rebates it pays merchants, and an alleged practice of undercutting other plasterboard suppliers on jobs.

“Winstone’s supply contracts with merchants do not contain contractual provisions that require the merchants to purchase all their plasterboard from Winstone," commission chairman Mark Berry said in a statement. "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,” Berry said.

Plasterboard amounted to 1 percent-to-3 percent of the cost of building a new home, the commission said.

A lack of competition for building materials was among reasons cited in a Productivity Commission report last year that found it costs as much as 30 percent more to build a house in New Zealand than Australia.

Shares of Fletcher last traded at $8.15 and have fallen 4.2 percent this year.

BusinessDesk.co.nz

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