A fight is brewing over the product labelling and health claims of the Australian dairy industry's most bitter rivals.

The a2 Milk Company's - which began its life here in New Zealand - claim that its product is healthier than ordinary milk are set to be tested in an open court in Australia, after the Lion Group lodged a cross-claim seeking damages for loss of sales.

Each company accuses the other of misleading and deceptive conduct in a legal battle that began when a2 sued Lion for putting a label on its Pura- and Dairy Farmers-branded milk, stating that it "naturally contains A2 protein".

The popularity of a2 milk lies in its claim that the A1 protein can cause stomach upsets and that its milk, from cows bred to exclude the A1 protein, is healthier.


a2 milk company is listed on both the New Zealand and Australian stock exchanges.

Ordinary milk contains both the A1 and A2 beta casein proteins, but Pura and Dairy Farmers brands only make this clear on the back of their bottles.

A2 alleges that it is falsely laying claim to the claimed health benefits that have seen it steal 10 per cent of the market from the big players.

In its cross-claim, Lion takes aim at the science behind a2's marketing claims, listing a range of conditions the company has claimed its product to be beneficial for, including autism, Asperger's schizophrenia, skin rashes, diabetes and heart disease.

"The medical and scientific research ... has not established that milk with no A1 beta casein affords health and/or digestive benefits," the cross-claim says.

The irony was not lost on Justice Michael Wigney who, during a directions hearing on Friday, noted that Lion's action "may be a mutually self-destructive piece of litigation in some respects".


Speaking to news.com.au outside court, a2 chief executive Peter Nathan seized on Justice Wigney's comments, which he said demonstrated the weakness of Lion's cross claim.

"Because on the one hand if they deliberately put an A2 protein label clearly on their pack, to try and demonstrate that they are an A2 milk, but on the other hand they're saying 'there's no scientific consumer benefit' - then why did they deliberately do that, knowing that there was supposedly no benefit?" Nathan challenged.

He said Lion had put A2 on its labels "to con consumers into thinking that their milk is an a2 milk, when it's clearly not".

"We still believe that the misleading and deceptive case which is the core of the case is very clear," Nathan said.

"It is very evident that their milk has not changed at all; it's still the same milk that it always has been."

By going on the offensive, Lion is covering all bases in the fight against a rival that is cutting into its revenues after cornering 10 per cent of Australia's domestic milk sales, which are dominated by Lion and Parmalat.

If the court finds that a2's health claims don't stack up, Lion's need to put the label on its products will evaporate.


Lion's cross claim refers to past claims, since removed from the a2 website, that the milk may be beneficial to children with autism and people with Asperger's or schizophrenia, along with the assertion that it may lower the risk of heart disease and diabetes.

It also references tweets by the a2 Company citing customer testimonials that claim such as: "Our Asthma has cleared up! No more puffer!" and "We've had no more ear infections or nappy rash".

Another tweet said that a2 milk "doesn't give my son blotchy skin or a rash like some other brands do. It's pure and healthy!"

A spokesman for Lion said in a statement:
"Lion believes that a2 has engaged in misleading and deceptive conduct in claiming that a2 milk has benefits which cannot be substantiated as well as that ordinary dairy milk can have adverse health consequences for consumers. Lion believes that all dairy milk is good for you.

"Lion is confident its claims and packaging are accurate and intends to vigorously defend a2's claims."

Last November, a2 settled a lawsuit with the ABC over a segment on its consumer program The Checkout, which concluded that "the jury is still out on whether a2 Milk helps digestion and there is no concrete evidence A1 has any negative effects".
The company had alleged the segment was aired in breach of the national broadcaster's code of conduct and contained inaccuracies.