Fonterra to fight botulism scare court action by Danone

WELLINGTON - New Zealand dairy giant Fonterra said Thursday it will vigorously defend legal action by French food firm Danone, which is claiming compensation for last year's false botulism scare.

A woman uses her mobile phone in front of an advertisement for Fonterra in Jinan, East Chinas Shandong province, August 12, 2013. [Photo/icpress.cn]

Earlier Thursday Danone announced it was canceling its supply contract with Fonterra and starting court proceedings in the New Zealand High Court, as well as arbitration proceedings in Singapore "to bring all facts to light and to obtain compensation for the harm it has suffered" from the month-long scare.

Fonterra launched a global recall in August after batches of whey protein concentrate were wrongly found to be contaminated with a botulism causing bacterium, forcing Danone's Australasian subsidiary, Nutricia, to recall batches of its own Karicare infant formula.

The recall reportedly cost Danone 350 million euros ($475.16 million).

"This affair illustrates serious failings on Fonterra's part in applying the quality standards required in the food industry," said a statement from Danone.

"Danone is terminating its existing supply contract with Fonterra and making any further collaboration contingent on a commitment by its supplier to full transparency and compliance with the cutting-edge food safety procedures applied to all products supplied to Danone."

Fonterra issued a statement saying it had been in ongoing commercial discussions with Danone and was "disappointed that they have resulted in legal action."

"Fonterra will now work through the detail of Danone's claims. It continues to be confident in its position and will vigorously defend any proceedings," said the statement.

"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."

The botulism scare prompted the New Zealand government to launch an official inquiry into the incident and food safety standards.

Last month, ministers pledged to tighten the food safety regime despite the inquiry issuing a report last month finding no failures in the regulatory system.

However, critics claim that government cost-cutting was partly responsible for the scare.