The Commerce Commission says seismic mesh made by Steel & Tube has failed strength tests.
The watchdog confirmed this tonight, after an ongoing inquiry triggered by an RNZ News investigation.
The commission got results back this week showing a Steel & Tube mesh sample did not meet the standard.
Those tests alone do not prove the mesh is non-compliant with the Building Code.
The commission now wants more information from the company to back the claim it's made for weeks that its mesh complies.
Steel & Tube has put a hold on selling any more of the mesh, and has told building stores to quarantine it until further tests are done, including external tests.
The welded steel is meant to be able to stretch by at least 10 percent to give slab floors and walls in homes and multi-storey buildings resilience to withstand quakes.
Lack of such stretchability, or ductility, was a reason the CTV Building collapsed in the Christchurch 2011 quake, killing 115 people.
A memo to a major building chain obtained by RNZ News earlier today had said Steel & Tube was putting a hold on supplying its four main types of the seismic mesh, including what was used in houses.
This means two of the country's four largest makers of mesh are now not supplying the seismic mesh, disrupting the building market.
Another distributor, Euro Corp, was stopped from selling its own mesh earlier this month when it also failed Commerce Commission strength tests.
Steel & Tube also said earlier today it was going to have all its mesh tested by an external laboratory, and not just in-house, to remove any doubt that it complied.
The listed building products firm said in an announcement this afternoon to the NZX that the mesh test results it had seen, including from the commission, were surprisingly variable, and it might be time for the government and the industry to review mesh standards.