New Zealand: Building supply merchants are reluctant to stock products of Winstone Wallboards' rivals and are squeezing alternative goods, claimed the chief of a competing business who supplied documents to New Zealand's Commerce Commission (CC).
Kevin van Hest, managing director of Elephant Plasterboard, which has only 3% of the market share in New Zealand, said that suppliers were shy about stocking or selling alternatives to Winstone's Gib because they had strong financial reasons not to. Van Hest claimed that the reasons include personal rewards like invitations to sporting and other events, overseas trips and financial payments.
The Commission announced in September 2013 that it was looking into the allegation, which remains to be concluded. Rick Osborne of Winestone Wallboard's parent company Fletcher Building said at the time that his business was advised that the CC intended to inquire into its wallboard supply arrangements with building supplies merchants. "The company will fully cooperate with the Commerce Commission and is confident that its supply arrangements comply with the Commerce Act," Osborne said.
A spokesman for Fletcher Building said that the system in operation actively rewards those building supply merchants who sold Winstone board, but there was nothing wrong with the deal. "Rebate structures are prevalent in most industries and in reality amount to price competition, with supply terms being based on volume and the duration of contractual relationships," he said. "Fletcher Building is confident that its arrangements are not anti-competitive and do not breach the Commerce Act. In that regard we aim to prevent any potential anti-competitive conduct through our internal compliance programmes," said Fletcher Building's spokesman.
David Thomas, Winstone's general manager, said that the business has a 94% market share because it manufactured and delivered the best product to customers. "People do have other options and they have for the last 20 years,'' Thomas said, citing Elephant wallboard and other products including Chinese board. But van Hest said that a combination of incentives and commercial pressure on merchants meant he couldn't get any more than 3% of the wallboard market, despite being in business since the 1980s.
Lack of competition and arrangements with merchants was one of the big factors forcing New Zealanders to pay 70% more for wallboard than Australians, which increases house-building costs by 40% compared to Australia. Big chains will sell Elephant wallboard, but not necessarily from their shop floors, van Hest said. Instead, if they sold it at all, they took a builder's order and arranged delivery from van Hest's Glendene warehouse to the construction site. Very few big chains would stock Elephant board. "Stores are reluctant to trade too much in Elephant wallboard because of the financial and other incentives," said van Hest.
