Commission looks into Fonterra milk dispute

An investigation is under way in the dispute between Fonterra and independent dairy company Open Country Cheese, the Commerce Commission has confirmed .
Open Country - founded by former National MP Wyatt Creech - made a complaint last September relating to the price Fonterra charges to deliver milk.

At the time, the commission could not confirm whether an investigation would take place.

After submissions from both parties, it is understood the commission plans to release a draft determination by the end of the month.

Open Country is the first new local competitor Fonterra has faced since it was formed in 2001.

Because of its dominant industry position, Fonterra is required by law to sell milk to competitors at a default price that can be contested through the commission.

Open Country's application said the two parties had been unable to agree on the value of the transport component of the default milk price for raw milk. Open Country's factory began production last October. It plans to make and export up to 20,000 tonnes of cheese a year.

Two other legal disputes between the commission and Fonterra over interpretation of the Dairy Restructuring Act are ongoing.