Commerce Commission warns Carter Holt Harvey for failures to properly mark timber

Four years after being fined $900,000 for falsely labelling timber, Carter Holt Harvey has been warned by the Commerce Commission for failing to properly mark timber supplied to a customer.

The commission commenced an investigation into Carter Holt Harvey last year after receiving information that the company was selling timber as MSG8 grade Laserframe structural timber when it was not marked in accordance with the requirements of the NZS 3622:2004 standard or its own marketing materials. The standard requires that structural timber must be marked at 1500mm intervals with a coloured paint that signifies the grade of the timber.

The commission’s investigation identified approximately 160 sticks of timber produced at Carter Holt Harvey’s Whangarei mill between September 2008 and February 2009, and supplied to one customer, that had missing grade markings and therefore did not comply with the NZS 3622:2004 standard or Carter Holt Harvey’s own requirements.

The investigation established that the timber had been identified by Carter Holt Harvey as non-load-bearing timber, but because of problems with a machine stress grader at the mill, the timber was not properly marked as such. While staff at the mill were aware that timber was being processed with missing grade markings, and intended to process the timber as non-load-bearing timber, failures in Carter Holt Harvey’s internal systems led to the timber being packaged and sold as MSG8 cut-to-length timber.

Commerce Commission enforcement branch manager Greg Allan says that independent testing conducted by the commission determined that the timber complied with the strength and stiffness requirements of MSG8 timber when considered in conjunction with the entire population of MSG8 timber produced by Carter Holt Harvey, as required by the relevant standard. “As such, the commission’s concern relates to the missing grade markings, which meant that the timber should not have been sold as MSG8 timber as it did not comply with the standard’s marking requirements.”

Mr Allan says that this case differed from the previous case involving Carter Holt Harvey’s mislabelling of structural timber, where the company knowingly sold timber that did not meet the required grade. In this case, because the timber met the strength and stiffness requirements of the standard when assessed as part of a population of MSG8 timber, the mislabelling related to a technical matter, affected only one customer and arose out of inadequate systems in one mill.

“Our concern is that there were systemic failures within the company that gave rise to this contravention. We would have hoped, on the basis of its past contraventions of the Fair Trading Act, that Carter Holt Harvey would be extremely vigilant about ensuring it had systems in place to catch this kind of problem,” he says.

The commission has sent a warning to Carter Holt Harvey, but has stopped short of taking further enforcement action as the conduct was of a technical nature, and Carter Holt Harvey provided a satisfactory remedy to the affected customer.

Mr Allan says that this was the second Fair Trading Act action the commission had completed this year involving misleading claims about timber. In April 2010, the former managing director of a timber company that had gone into liquidation was convicted and fined for misleading timber retailers and consumers about the characteristics of timber frames and roof trusses.

“This is a timely reminder to the wider industry to ensure that any claims made about timber products or building supplies are accurate and not misleading, particularly where those claims cannot be easily verified by your average consumer.”