Wednesday 13 Mar 2002

If genuine competition practically disappears in New Zealand's yoghurt market the Minister Jim Sutton should be held to account, says ACT commerce spokesman, Stephen Franks.

"Fonterra could have effective control over yoghurt prices, if Fonterra's subsidiary New Zealand Dairy Foods (NZDF) is sold to Australia's National Foods Limited.

"National Foods is currently 18.2% owned by Fonterra. If the Commerce Commission allows National Foods to acquire NZDF, it would make a mockery of section 9 of last year's Dairy Restructuring Act, which requires the sale. The sole purpose of the sale is to ensure genuine competition with Fonterra in New Zealand.

"The Government should have used its statutory power to express a policy view to the Commerce Commission to make it clear that this application should not have been entertained.

"Currently, the yoghurt market is predominantly split between three major brands. NZDF's Fresh 'n' Fruity brand makes up about 60% of the yoghurt market. National Foods' Yoplait brand makes up about 20% of the yoghurt market. The remainder is made up of Mainland's Meadow Fresh brand, which is also effectively owned by Fonterra, and a few niche brands in the health yoghurt area.

"If National Foods buys NZDF, it would hold about an 80% share of the yoghurt market. Its stable mate Mainland has most of the balance, so the implications are clear.

"Such dominance would substantially lessen competition. National Foods' massive market power would be a poor outcome for consumers and undermine the integrity of our competition laws," Stephen Franks said.

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