Commerce Commission v Carter Holt Harvey Ltd - [2014] NZHC 531

ORDER THAT ANY SEARCH OF THE COURT FILE IS TO BE LIMITED TO THE FORMAL PLEADINGS. THE SUMMARY OF FACTS IS TO BE SEALED AND IS NOT TO BE SEARCHED.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
COMMERCIAL LIST

CIV-2014-404-000006 [2014] NZHC 531

UNDER Sections 27, 30 and 80 of the Commerce
Act 1986

BETWEEN COMMERCE COMMISSION Plaintiff

ANDCARTER HOLT HARVEY LTD First Defendant

DEAN DODDS Second Defendant

Hearing: 19 March 2014

Appearances: J C L Dixon and V A Howell for Plaintiff
S J P Ladd and L M L Bird for First Defendant
A E Ferguson and K J Webster for Second Defendant

Judgment: 26 March 2014

JUDGMENT OF VENNING J (REDACTED COPY FOR PUBLICATION)

This judgment was delivered by me on 26 March 2014 at 11.30 am, pursuant to Rule 11.5 of the High
Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Meredith Connell, Auckland
Bell Gully, Auckland
Wilson Harle, Auckland

COMMERCE COMMISSION v CARTER HOLT HARVEY LTD [2014] NZHC 531 [20 March 2014]

Introduction

[1] Following an investigation the Commerce Commission (the Commission) commenced proceedings against Carter Holt Harvey Ltd (Carter Holt) and Dean Dodds for breaches of the Commerce Act 1986 (the Act). The Commission alleged Carter Holt had breached ss 27(1) and 27(2) of the Act via s 30 and that Mr Dodds had breached s 80(1)(c) by being a party to the entry of an understanding and also by being a party to giving effect to the understanding in breach of s 27(2) via ss 30 and
80(1)(c) of the Act.

[2] The Commission commenced proceedings in this Court on 20 December

2013. On the same date Carter Holt filed a notice of admission of the first and third causes of action against it and Mr Dodds filed a notice of admission of the second and fourth causes of action against him. The admissions were on the basis of an agreed statement of facts.

[3] The Commission, Carter Holt and Mr Dodds have reached agreement on the quantum of penalty that they consider appropriate. It is now for the Court to fix the quantum of that penalty.1

Background

Parties and market

[4] Carter Holt is a New Zealand registered company having its registered office in Auckland. It is comprised of two divisions: “pulp, paper and packaging” and “building supplies”. The “building supplies” division is made up of three business units, two of which are relevant for present purposes – Carter Holt Harvey Wood Products New Zealand (Wood Products) and Carters. As its name suggests, Wood Products manufactures and distributes a range of wood products, including MSG8 which is timber used for commercial construction.

[5] Wood Products is the largest supplier of structural timber in New Zealand. It supplies product to a number of building supply merchants, including Carters,

1 Commerce Act 1986, s 80(1).

Fletcher Distribution Ltd (Placemakers), Bunnings, ITM and Mitre 10. Nationally Wood Products major MSG8 structural timber customers are Placemakers and Carters. In Auckland Wood Products’ major customers are…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NZHC 531
Decision Date: 26 March 2014

CaseChat Overview and Summary

The High Court of New Zealand dealt with proceedings brought by the Commerce Commission against Carter Holt Harvey Ltd (Carter Holt) and Dean Dodds, alleging breaches of the Commerce Act 1986. Carter Holt and Dodds admitted to the allegations, leading the court to determine the appropriate penalties. The Commission, Carter Holt, and Dodds had reached an agreement on the penalty amounts, which the court was to confirm. The court assessed the maximum potential penalties based on the seriousness of the breaches and the relevant turnover figures, but acknowledged that the actual penalties would be significantly lower. The court considered various factors in setting the penalties, including the nature of the market, the seriousness of the conduct, the role of the defendants, and the commercial gain achieved. For Carter Holt, the court favoured a starting point of $2.8 to $3.2 million, applying a discount due to mitigating factors such as the absence of previous contraventions and cooperation with the investigation, resulting in a penalty of $1.85 million. For Dodds, given his lower level of culpability and cooperation, the court set a starting point of $10,000 to $15,000 and applied a discount based on his personal circumstances, resulting in a penalty of $5,000. Both parties were to bear their own costs.

Orders