Carter Holt Harvey axes land covenants including some set for 999 years

Timber supplier Carter Holt Harvey says it has removed its contentious land covenants, including four which locked up land for 999 years.

New documents released under the Official Information Act show the use of land covenants to lock up land and lock out competitors was widespread by retailers included in the Commerce Commission’s residential building supplies market study.

Carter Holt Harvey, which is a key player in New Zealand’s building supplies sector as both a wood products manufacturer and retailer, revealed to the Commission that it held more than 30 land covenants across the country, most of which specified that land could not be used for sawmilling or for a building supplies merchant other than Carter Holt Harvey.

The firm had covenants on land in Whangārei, Carterton, Rotorua, Whakatane, Tokoroa, Tasman and Bulls.

After it released the details of the industry’s land covenant-use, the Commission said in a follow up email that the building supplies firm had confirmed it had completed removal of the “covenants in question.”

Carter Holt Harvey has been contacted for comment.

Land covenants have been in sharp focus since the Commerce Commission released its market study into the residential building supplies sector.

The Commerce Act prohibits the use of land covenants that either had the intention, or were likely, to dampen competition.

The Commission recently released new guidance for businesses on land covenants after it found they may be limiting competition across many sectors of the New Zealand economy.

Hardwear retailer Bunnings has more than 20 land covenants including in Christchurch, multiple sites in Auckland, Hamilton, Palmerston North, Porirua and Kāpiti Coast.

In an emailed statement, Bunnings NZ country manager Melissa Haines said in line with many other retailers, Bunnings had "a small number of encumbrances in place across select sites in New Zealand which related to the land immediately surrounding stores".

“The encumbrances can help to protect the value of our investment in securing these sites and establishing the location as a destination for our customers. This could include preventing our signage from being obscured by new buildings, and encouraging a mix of adjoining businesses which compliment our offer.”

She said Bunnings was supportive of the Commission’s focus on covenants and welcomed any changes that helped to prevent anti-competitive behaviour.

Bunnings has had its struggles to open stores in New Zealand.

In Queenstown it had a long-running battle to open a store which included taking on old-school Otago retailer, H&J Smith.

The company says Bunnings reviews covenants it has in place as a matter of course, with a view to remove any that are no longer relevant or necessary.

After the Commission warned it would be looking closely at covenants it took action, alleging a firm linked to Mitre10 Mega in Tauranga had placed a covenant on land in the city to prevent a Bunnings being built.

Those charges were laid in December.

The Official Information Act release shows Mitre10, too, has tens of land covenants, or encumbrances, in place.

It had locked up land in Henderson, west Auckland, Papamoa, Silverdale, Warkworth and Pukekohe.

Listed building giant Fletcher Building’s retail arm Placemakers said it had only three active encumbrances, with one of those set to expire in “early 2023”.

Restrictive covenants have also been found to be problematic in the grocery sector. Grocery co-operative Foodstuffs was the first to move to get rid of its land covenants after they were highlighted as an issue in that market study.

It first announced it had removed 78 of 135 land covenants it held in June 2022.

In a March update, the co-operative said it had identified 55 restrictive covenants for removal and had removed 38 of them, and said "it's our priority to identify and remove any remaining restrictive covenants".