Fonterra bids to halt Danone legal action

Nutricia posted a 97 per cent drop in profit in 2013.

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 today in the High Court at Auckland.

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 is now applying 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.

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.