The New Zealand government has requested a probe into competition in the country's dairy market.
The investigation, to be undertaken by the Commerce Commission, is required under the Dairy Industry Restructuring Act, which allowed the merger of New Zealand's largest dairy co-operatives to form Fonterra. The DIRA contained provisions to safeguard farmgate milk prices. These provisions are intended to expire when there is workable competition in the domestic dairy market, the authorities said.
"The dairy industry is a major part of our economy, and we’ve seen significant growth in recent years," said Minister for Primary Industries Nathan Guy. "This report into the state of competition is key to assessing whether the Act is effectively promoting efficient operation of dairy markets in New Zealand."
The Commerce Commission will start work on the report next month and the process is expected to take nine months.