Dairy exporter Fonterra may face legal action by Danone

It seems that legal actions against the New Zealand dairy exporter Fonterra may be taken by Danone SA, which is one of the largest France-based food companies and primarily produces fresh milk products, biscuits, cereal products, medical nutrition products and baby foods. The litigation is over an infant formula, which is considered to contain a potentially contaminated Fonterra ingredient. The problem occurred in August 2013 when Fonterra announced that the company had found a potentially dangerous ingredient in some products provided by several large multinational companies. Fonterra is known as one of the most famous global companies, based in New Zealand, which operate in the dairy products business.

Luckily for both dairy products providers and customers all over the world, the havoc created by the company was proved to be a false alarm, because it turned out that less harmful bacteria was contained in the ingredient in question. This was the reason for the anger of Danone, which now intends to seek a full compensation for its lost sales in Asia and New Zealand due to Fonterras recall, although the two parts negotiated in October in order to smooth their strained relations. The company claims its losses amount to 350 million Euros, which is about 476 million dollars.

Here is what the CEO of Fonterra – Theo Spierings – said in a telephone interview for Reuters: “Were still in talks with Danone. I put a commercial proposition on the table at the end of October and I havent heard back on that proposition. If their counter-proposal is commercial, I would of course entertain a commercial discussion. If their reply is legal, then we would have a different discussion.”

Fonterra Shareholders Fund, which is a unit trust, had its annual meeting on Monday. Then Theo Spierings said that the company had not managed to reach an agreement with Danone in September, when both companies had some negotiations. Fonterras CEO also said that the finds, which the company has earmarked have yet to be tapped. The sum amounts to 14 million New Zealand dollars, which is about 11.40 million U.S. dollars.

On the other hand, Fonterra managed to reach an agreement with other six of the eight companies, which were affected by its recall. Spierings also made it clear that Fonterra is also about to reach a commercial agreement with the nutritional company, which was affected.

According to Bloomberg, the current share price of Danone is up 0.13%, and the one-year return rate is up 13.15%. The days range is expected to be between 53.4300 and 53.9200.