Fonterra today (2 October) confirmed it is in a “dispute resolution process” with Danone over the botulism contamination saga at the New Zealand firm that led to the French food giant seeing products recalled.

Danone baby food on sale in China and New Zealand was pulled from shelves in August after Fonterra, a supplier of ingredients to the Dumex and Karicare brand owner, warned some of its whey protein contained an ingredient that could cause botulism.

The scare ended up being a false alarm but, as well as Fonterra suffering recalls across Asia, customers including Danone and Abbott Laboratories pulled products.

“The discussions between Fonterra and Danone had been confidential with a view to reaching a mutually acceptable commercial outcome however some aspects of these discussions have been made public this morning in the press,” Fonterra said today. “Fonterra confirms that the discussions remain ongoing but strongly denies any legal liability to Danone in relation to the recall.”

The New Zealand Herald today reported Danone had decided to invoke a dispute mechanism in its contracts with Fonterra after meeting New Zealand Prime Minister John Key last week. The newspaper reported Fonterra had refused to pay “major financial damages” over the scare.

Danone could not be reached for immediate comment.

Click here for our coverage in August of the botulism contamination saga.