Fonterra chairman John Wilson says he cannot go into details about dispute resolution talks with French dairy giant Danone over the botulism contamination scare, but promises a frank discussion about the issues when his board's investigation is complete.
Wilson said the resolution process with Paris-based Danone was confidential, but Fonterra denied any legal liability in relation to the recall that Danone baby-formula subsidiary Nutricia made when Fonterra sounded the botulism alarm, which later testing proved to be false.
"The reality is I can't say anything more. The reality is we need to continue discussions."
Wilson refused to say if Danone had started legal action against Fonterra, or if the talks were a bid to ward off legal action.
"We have a very long relationship with Danone. It is a key customer. There's nothing else to add."
The discussions aimed to reach a mutually acceptable commercial outcome.
Wilson said once a Fonterra board-ordered independent investigation of the contamination event was finished late this month or early in November, he could talk about issues around the scare, including the recalls.
Fonterra, New Zealand's biggest company and the world's leading dairy exporter, confirmed yesterday it was in talks with Danone, which said last month it was "reviewing its recourse and compensation options" over the Fonterra scare, later found to be a relatively benign bacteria that does not cause botulism.
Danone said product recalls impacted significantly on its baby-nutrition sales in Asia.
"The group has also incurred non-current costs to cover recall procedures and efforts to boost sales," it said.
In August, Danone subsidiary Nutricia Australia and New Zealand recalled products from eight markets after the news that whey protein concentrate supplied by the New Zealand dairy giant may have been contaminated.
Danone's chief financial officer, Pierre-Andre Terisse, said last month that the division's third-quarter sales would be down because of the scare and related recalls.
Danone told DairyReporter.com that it was studying the steps that led to the situation that had an impact on Danone's brands and subsidiaries, and it was reviewing its recourse and compensation options. The recalls involved 67,000 units in New Zealand.
Fonterra, in its financial statements for the 2013 year, said provision had been made in contingent liabilities for $14.1 million in connection with the false botulism alarm.
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