Commerce Commission to investigate dairy dispute

Commerce Commission to investigate dairy dispute

The Commerce Commission today announced it would investigate Independent Dairy Producers Limited’s (IDP) application for a determination under the Dairy Industry Restructuring Act 2001 (DIR Act) in respect of the price IDP has been required to pay the Fonterra Co-operative Group Limited (Fonterra) for raw milk.

IDP is a small, privately owned dairy company that processes and supplies the “Premium Milk” brand in the Auckland area.

IDP is in dispute with Fonterra through its wholly owned subsidiary, NZMP New Zealand Limited (NZMP), about the interpretation and application of regulation 8 of the Dairy Industry Restructuring (Raw Milk) Regulations 2001. IDP alleges that NZMP has breached regulation 8 of the Raw Milk Regulations by refusing to supply IDP with raw milk at the default milk price from November 2001 to 1 August 2002.

Under section 124 of the DIR Act, the Commission will complete the determination as soon as practicable.

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.

Section 123 of the Dairy Industry Restructuring Act 2001 states:

Commission must decide whether to make determination The Commission must, within 10 working days after the date by which new co-op may comment on the application,- (a) decide whether or not to determine the matter: (b) give written notice of its decision to the applicant and new co-op.

Section 124 of the Dairy Industry Restructuring Act 2001 states:

When determination must be completed The Commission must complete a determination as soon as practicable after it has decided to make a determination.

Section 125 of the Dairy Industry Restructuring Act 2001 states:

Requirements for determinations In deciding whether to make a determination under section 123(a) and in making a determination under section 124, the Commission must - (a) consider the purpose in section 70; and (b) consider whether the decision or determination promotes the principles specified in section 71.

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