Fletcher Building says its subsidiary Winstone Wallboards intends to defend the proceedings. Photo: 123rf
The Commerce Commission is taking GIB board maker Winstone Wallboards to court for anti-competitive behaviour.
The competition watchdog said the Fletcher Building subsidiary's use of rebates in supply agreements with building supplies merchants between 2017 and 2022 breached the Commerce Act.
Commerce Commission chairperson John Small said the conduct was serious and harmed competition by reducing the ability of smaller suppliers or new entrants to compete.
"While the use of rebates can deliver benefits, retroactive tiered rebates can also harm competition when they are used by a supplier with substantial market power because they can reduce the ability of smaller suppliers or new entrants to compete," Small said.
"In this case, we allege Winstone used retroactive rebates to damage competition, ultimately leading to consumers paying higher prices."
The Commission revealed its intention to file legal proceedings in August.
In a statement to the share market on Friday, Fletcher Building said it would fight the legal action.
"Winstone Wallboards intends to vigorously defend the Commerce Commission's proceedings, and notes that they could take some time to resolve," it said.
When the Commission first revealed its intention to file proceedings, Fletcher Building said it disagreed with the watchdog's view.
"We disagree with the commission's conclusion, given that, during the recent building products market study, merchants told the commission that the rebate structures were not a factor that inhibited competition," Fletcher said in August.
"As we submitted during that process, these rebates are common within the building products industry and are simply one aspect of competing. The commission itself acknowledged that volume rebates were widespread," it said.
In addition, Fletcher said the commission comprehensively investigated Winstone Wallboards on the rebate topic in 2014, and concluded Winstone's market share "was driven by its attractive overall product and service offering, not the rebates, and that the evidence did not support a conclusion the rebates breached the Commerce Act".
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