Danone alleges fair trade breaches

Last updated 08:29 10/03/2014

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Media have been denied access to the details of French food company Danone's legal case against kiwi dairy giant Fonterra.

In January Danone said it was suing Fonterra over the impact on sales of the botulism contamination scare in August last year.

Justice Brendan Brown denied media applications for access to Danone's statement of claim against Fonterra until it was decided whether the New Zealand company would be successful in its bid to stop the court proceedings.

However, the judgment included information that Danone was suing Fonterra for two alleged breaches of the Fair Trading Act and two allegations of tortious conduct (breaches or wrongdoings that led to losses or harm to the company).

Justice Brown said Danone's statement of claim was a "substantial document".

On February 20, Fonterra filed an application for a stay of proceedings in an attempt to halt the court process while it went through confidential arbitration hearings in Singapore with a number of affected parties in relation to the fallout of the contamination scare.

If Fonterra was successful in its bid, the court battle with Danone would be put on hold at least until there was an outcome in the confidential arbitration hearings.

Justice Brown said the media had the freedom to seek, receive and impart information.

"However that interest cannot prevail with reference to information in dispute resolution processes when they are the subject of confidentiality arrangements in an arbitral process," he said.

Justice Brown said that when it was decided whether Fonterra was allowed to halt Danone's court proceedings, the matter of media access to Danone's statement of claim would be revisited.

Danone did not oppose the media applications for access to its argument.

However, both parties were concerned about a trial by media.

Justice Brown said the events relating to the botulism contamination scare and the fallout from that had already been the subject of "a significant amount of publicity in various news media".

While there had been publicity relating to the events that gave rise to the court proceedings, none of the documents had been read out in open court, which was where their contents usually became public, he said.

The public interest was addressed already to the extent that the fact of the event is in the public domain, he said.

In January Danone spokeswoman Eliza Newton said the company had identified an initial €300m (NZ$491.6m) in anticipated business losses for the 2013 financial year.

The losses were incurred when Danone had to recall baby-formula product in eight of its markets after Fonterra's botulism alarm in August last year.

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In January Fonterra said it would "vigorously defend" the legal proceedings brought by Danone.

The co-operative said it was "disappointed" that ongoing commercial discussions with Danone had resulted in legal action.

At the time the kiwi dairy giant said it stood by its track record of having world-class food safety and quality standards, quality systems, and robust testing regimes across all its manufacturing facilities.

During the Fonterra Shareholders' Fund annual meeting in December Fonterra chief executive Theo Spierings said that legally, Fonterra did not have any liability if the dispute went to court.

- Fairfax Media

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