Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

Date set for Fonterra's bid to suspend lawsuit

Danone put the cost of Fonterra's recall at 350 million when it revealed its third-quarter results last year. Photo / Christine Cornege
Danone put the cost of Fonterra's recall at 350 million when it revealed its third-quarter results last year. Photo / Christine Cornege

Dairy giant Fonterra's attempt to suspend the legal action it is facing from French food company Danone over last year's botulism scare is due to be heard in the High Court in June.

Danone, the parent company of infant formula maker Nutricia, said in January it was launching High Court proceedings in New Zealand 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 when it revealed its third-quarter results last year.

Danone wants compensation from Fonterra for losses from the botulism scare and the harm it says was 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 it would "vigorously defend any proceedings".

Fonterra has since applied to suspend the action it is facing in New Zealand pending the determination of international arbitration proceedings which began in Singapore this year and involve companies in the Fonterra group and Danone.

The dairy co-operative's application to stay the New Zealand proceedings against it is due to be heard on June 23 in the High Court at Auckland. Danone has pleaded four "causes of action" in its statement of claim against Fonterra.

Two of these are for breaches of the Fair Trading Act and the other two for alleged "tortious conduct", the judge said.

The most common tort claim is for alleged negligence.

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 reached an agreement with all of them except Danone.

- NZ Herald

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