Fonterra 'vindicated' over wholesale milk prices

Fonterra has emerged the victor in the ongoing spat with Waikato's Open Country Cheese over the costs the co-operative charges rival dairy companies for milk.

The Commerce Commission ruled yesterday that Fonterra did not breach dairy industry regulations by including retained profits from the sales of shares in Wrightson and National Foods in calculating the wholesale milk price it charged independent processors last season.

The commission said retained profits from these sales were able to be included in a formula which set the price.

The ruling was welcomed by Fonterra, which said the ruling vindicated its approach to calculating wholesale prices.

However, Open Country chief executive Alan Walters said his company had to pay $700,000 more to Fonterra last season than if the share sales were not taken into account.

He said the share sales were only relevant in price setting in the season they occurred.

The $700,000 was "not that much in the scheme of things" but Open Country had applied to the commission on principle to challenge having the retained profits in the calculation.

"I'd rather have that [the $700,000] than Fonterra have it."

The setback for Open Country comes after it won a determination from the commission in December over the way Fonterra charged for milk transport.

The determination found Fonterra's transport charge was not reasonable and ordered Fonterra to pay $211,426 in compensation to Open Country.