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May 27, 2002

NEW ZEALAND: Fonterra deal with Dairy Foods slammed as anti-competitive

New Zealand mega-dairy Fonterra has been criticised for creating an anti-competitive climate through its agreement to sell the Dairy Foods subsidiary to Graeme Hart, who acquired some 70% of Dairy Foods last month. Fonterra is believed to have promised Hart it will not set up a rival milk factory in the top half of North Island, thus giving Dairy Foods an unfair advantage. Furthermore, critics of the deal are unhappy that Hart is paying just A$1 (US$0.56) for the exclusive, free and perpetual right to use the trademarks for Anchor, Fernleaf and Chesdale products in New Zealand.

New Zealand mega-dairy Fonterra has been criticised for creating an anti-competitive climate through its agreement to sell the Dairy Foods subsidiary to Graeme Hart, who acquired some 70% of Dairy Foods last month.

Fonterra is believed to have promised Hart it will not set up a rival milk factory in the top half of North Island, thus giving Dairy Foods an unfair advantage. Furthermore, critics of the deal are unhappy that Hart is paying just A$1 (US$0.56) for the exclusive, free and perpetual right to use the trademarks for Anchor, Fernleaf and Chesdale products in New Zealand.

However, Commerce Commission director Geoff Thorn responded to the criticism, saying that Fonterra’s agreement not to supply milk north of Taupo for three years was not anti-competitive.

Hart paid A$1.7 per share, or A$119m, to acquire the half of Dairy Foods owned by Fonterra.

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