Hamish Fletcher

Business reporter for the NZ Herald

Fonterra seeks suspension of French firm's court action

Nutricia had to recall 67,000 cans of Karicare baby milk brand in NZ after the botulism scare. Photo / APN
Nutricia had to recall 67,000 cans of Karicare baby milk brand in NZ after the botulism scare. Photo / APN

Dairy giant Fonterra is applying for a suspension of the court action it is facing from French food company Danone over last year's botulism scare, says a judge's minute.

Danone, the parent company of infant formula maker Nutricia, said in January it was launching proceedings in the High Court at Auckland and arbitration proceedings in Singapore "to bring all facts to light and to obtain compensation for the harm it has suffered", over a whey protein concentrate recall by New Zealand's biggest company.

The Paris-based company put the cost of Fonterra's recall at 350 million ($575.5 million) when it revealed its third-quarter results last year. Danone wants compensation from Fonterra for the losses it suffered from the botulism scare and the harm caused to its reputation.

"The total damages will be quantified at the time of the trial," a spokeswoman said when Danone announced the action this year.

Fonterra said in January that it was "disappointed" with the action and would "vigorously defend any proceedings".

Yesterday, lawyers for Danone and Fonterra appeared in the High Court before Justice Brendan Brown discussing a media application to view the court file.

The judge allowed members of the media to attend, but not report any of the arguments made on both sides.

A minute issued last month by Justice Brown recorded that Fonterra had filed an application "for stay of the proceeding" on February 20.

A stay can be a suspension of action between parties and can be either permanent or temporary.

A Queen's Counsel representing Fonterra, Alan Galbraith, said he could not comment when asked about this application.

Fonterra wrongly suspected in August last year that 38 tonnes of whey protein - used to make products including infant formula manufactured by Nutricia - had been contaminated with a botulism-causing bacterium. The whey protein was ultimately cleared but not before a recall of baby formula products amid fears that children could be harmed.

Nutricia had to recall 67,000 cans of its Karicare baby milk brand in New Zealand. Of the eight customers affected by Fonterra's recall, the company agreed to a commercial outcome with all of them except Danone.

- NZ Herald

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