New Zealand business needs to know whether Agriculture Minister Jim Sutton will lean on the Commerce Commission to get more competition law favours. Fonterra may need Government help for yet another exemption from normal competition law against monopolies, says ACT Commerce spokesman Stephen Franks.

"Section 26 of the Commerce Act gives the Government power to lean on the Commerce Commission.

"Australian company National Foods Limited has applied to the Commerce Commission for consent to acquire Fonterra subsidiary New Zealand Dairy Foods. Fonterra has disclosed a shareholding of 18.2% in the Australian company.

"Approving National Foods would be letting Fonterra sell to itself. It would be a mockery of last year's requirement that Fonterra divest itself of New Zealand Dairy Foods to ensure genuine competition for NZ consumers. Through the Australian associate, Fonterra could exert substantial influence on its only major retail `independent' competitor in New Zealand.

"Cosy Board connections would feed down the chain, even if theoretical voting power says the company would not be `controlled' by Fonterra.

"The Consumers Institute, farmers who might have hoped to see genuine competition through supplying New Zealand Dairy Foods, and anyone interested in the integrity of our competition law should be demanding clarification from the Minister of the Government's attitude to this application by the Australian Fonterra.

"Politicians around the world get drawn into crony deals for powerful businesses like Fonterra. The Government last year exempted Fonterra from normal competition law so it could become a near monopoly in New Zealand.

"What Mr Sutton actually thought of Fonterra's prospects slipped out several weeks ago with his comment on its governance imbroglio, when he said: `New Zealand is very bad at big companies. It's hard to think of a big New Zealand company in which they are satisfied with management. Mostly they stuff up'.

"If he thinks that is Fonterra's natural fat, he may want to prop them up by allowing them continued monopoly pricing power over New Zealand consumers. Letting the Australian associate acquire New Zealand Dairy Foods could secure that for Fonterra," Mr Franks said.

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