Fonterra confirms Danone has initiated legal proceedings after recall compensation talks collapse
New Zealand-based dairy giant Fonterra has confirmed that Paris-based dairy company Danone has formally initiated legal proceedings against Fonterra. The action by Danone stems from the whey protein concentrate (WPC) precautionary recall initiated by Fonterra in August 2013.
Fonterra said that it had been in ongoing commercial discussion with Danone and expressed “disappointment” that the discussions had resulted in legal action.
Fonterra said that it would now work through the detail of Danone’s claims but that it continued “to be confident in its position and will vigorously defend any proceedings”.
“Fonterra stands by its track record of having world-class food safety and quality standards, quality systems, and robust testing regimes across all its manufacturing facilities,” Fonterra said in a statement.
Danone’s claims relate to a food-safety scare, which a recent inquiry found to have been a false alarm, that led to a global recall of hundreds of thousands of cans of baby formula across Asia, principally being Danone product with the Fonterra-manufactured whey protein powder . Australian Food News reported in August 2013 that in March 2013 Fonterra believed a product tested positive for Clostridium Botulinum, a bacteria that can cause botulism, a rare but sometimes fatal paralytic illness. The food-safety scare affected three large batches of a particular type of whey protein concentrate, WPC80.
Three weeks after the possible contamination was announced, two US-based laboratories confirmed the WPC had never posed any food-safety risk. But that news came too late to prevent widespread concern among parents and caregivers, as well as significant economic harm and damage to reputations.
The impact on Danone was significant, as it relied heavily on Fonterra for the supply of baby formula in the growing and highly profitable Chinese market. Danone estimated its lost market share and sales at EUR350 million ($475.4 million).
Australian Food News reported in December 2013 that the New Zealand Government had released a report on the first stage of the Government inquiry into the Fonterra WPC incident and said the Government accepted in principle all 29 recommendations.