Sour decision for Fonterra

The Commerce Commission says Kaimai Cheese Company and the Grate Kiwi Cheese Company are legitimate "independent processors" - which means that Fonterra farmers are required to supply them with milk through their big co-operative.

The decision is a rout for Fonterra - not only does it have to deliver the milk where its smaller rivals want it, but business links between those rivals have not prevented each of them claiming up to 50 million litres a year.

The commission confirmed its preliminary views, released on September 26, with a draft determination that could open up Fonterra to calls from small food processors for their own supplies of cheap milk.