Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
Fonterra group director governance and legal Mark Cronin says the judgment refers to complex and difficult issues about special contracts with farmers outside the co-op.
"We are now reviewing the reasoning as well as the implications of the decision," he told Dairy News.
Fonterra bought the New Zealand Dairies Ltd Studholme plant from the receivers in 2012.
It offered the former suppliers to the plant 'growth contracts' on inferior terms in order to placate its existing farmer suppliers; the former suppliers took the co-op to court.
In a written decision, Justice Matthew Muir says Fonterra's reasons for doing so stemmed from a "perceived need to assuage internal politics within its supplier base and included also an element of 'messaging' for the benefit of other farmers who might in the future be persuaded to leave Fonterra and support an independent".
Cronin says Fonterra is disappointed with the ruling.
"We're disappointed in the outcome.
"Fonterra's acquisition of the former NZDL plant benefited Fonterra and the supplying farmers who'd been left out-of-pocket by NZ Dairies Ltd, enabling significant retro-payments owed to them to be paid and ensuring ongoing milk collection.
"We'll be considering all our options, including the option of appeal."
