By PHILIPPA STEVENSON
The Commerce Commission has come out against dairy giant Fonterra in its first investigation under the dispute provisions of the legislation which set up the mega co-op.
Yesterday, in a draft determination, the commission said for three months Fonterra charged too much for raw milk it supplied to
small Independent Dairy Producers, marketers of Premium brand milk. The over-charging could total around $200,000.
A complicated formula regulates the price independent companies pay Fonterra for milk. The default price they would usually pay is the average payout to farmers plus an adjustment for what farmers receive in their Fonterra shares.
The commission said its preliminary view was that from December 14, 2001, to March 19 last year Fonterra should have charged IDP at the default price.
Instead, IDP, which was in debt to Fonterra for around $250,000, was paying a higher spot price.
When IDP sought the determination last September, company chairman Don Cowie said that almost all the milk purchased for 10 months between November 2001 and August 2002 was paid in advance by bank cheque so Fonterra did not incur any risk.
Yesterday, he said the company had only had a partial win. The commission had determined that only three months of the supply should have been at the default price.
But the around $200,000 Fonterra may have to pay IDP was significant for the small company.
Cowie said the determination had taken longer than expected but he understood that because of the potentially precedent-setting nature of the case that Fonterra had submitted a lot of legal material.
IDP's board would consider the commission's view today.
