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Open Country Cheese Co In dispute with Fonterra

Dairy Industry Restructuring Act: Open Country Cheese Company in dispute with Fonterra

The Commerce Commission has received an application from the Open Country Cheese Company Limited (Open Country) for a determination under the Dairy Industry Restructuring Act 2001 (DIR Act) relating to charges for reasonable transport costs with Fonterra Co-operative Group (Fonterra).

Open Country’s application says the two parties have been unable to agree on the value of the transport component of the default milk price for raw milk that Open Country is to purchase from Fonterra under the Dairy Industry Restructuring (Raw Milk) Regulations 2001.

Waharoa-based Open Country is scheduled to commence operations 1 October 2004. Its plan is to manufacture and sell international quality cheese made from New Zealand sourced milk.

Under the DIR Act, the Commission considers applications for determinations from parties in dispute with Fonterra. The Commission has notified Fonterra that the application has been received, and requested Fonterra to comment on the application. Fonterra must provide those comments no later than 10 working days after receiving notification from the Commission.

After receiving Fonterra’s comments, the Commission then decides whether or not to conduct an investigation and determine the matter. There is no statutory time frame for completing the determination other than it must be completed as soon as practicable.

A copy of the application is available on the Commission's website, http://www.comcom.govt.nz/dairy/decisions.cfm

Background Section 120 of the Dairy Industry Restructuring Act 2001 states: Determination to resolve conflict A person may apply to the Commission for a determination if the person has a dispute with the new co-op (Fonterra) about the application of this subpart (Subpart 5) or regulations made under section 115. Despite subsection (1), the Commission may reject an application, and return it to the applicant (and do no more in relation to the application), if, in the Commission’s opinion, - the dispute is not genuine or is vexatious or frivolous; or the applicant does not have a direct financial interest in the matter to which the application relates; or the applicant has not made a reasonable attempt to settle the matter with new co-op; or the Commission has made a determination, or is currently considering an application, on the same matter. The Commission may consider related applications together. An application under subsection (1) must be made within 3 years after the matter giving rise to the dispute arose. Subpart 5 of the DIR Act relates to the regulation of dairy markets and obligations of Fonterra. The purpose of Subpart 5 is to promote the efficient operation of dairy markets in New Zealand.

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