Dairy Industry Restructuring Act: Commission releases draft determination on IDP dispute with Fonterra
Published30 Jan 2003
The Commerce Commission has reached a preliminary view that Fonterra Co-operative Group Limited (Fonterra) was required by the Dairy Industry Restructuring (Raw Milk) Regulations 2001 to supply Independent Dairy Producers Limited (IDP) with raw milk at the default milk price.
The Commission today published its draft determination relating to IDP's dispute with Fonterra's wholly owned subsidiary, New Zealand Milk Products (NZMP), regarding the price IDP has paid for raw milk.
Under regulation 8(2) of the Raw Milk Regulations, an independent processor like IDP, may require Fonterra to supply raw milk at the default milk price unless there is already a price agreement between the parties for the supply of that raw milk.
The Commission's preliminary view is that for the period from 14 December 2001 to 19 March 2002 inclusive, Fonterra was required by regulation 8(2) to supply raw milk to IDP at the default milk price.
The Commission's draft determination is available on www.comcom.govt.nz (select Dairy Industry Restructuring Act, Commission Decisions).
The Commission invites submissions from any parties who consider they will be affected by the determination. Submissions close on 21 February 2003. After considering the submissions, the Commission will release its final determination.
IDP is a small, privately owned dairy company that processes and supplies the "Premium Milk" brand in the Auckland area. IDP applied to the Commission for a determination under the Dairy Industry Restructuring Act 2001. This is the first application from a party in dispute with Fonterra for a dairy industry behaviour determination.
Background
Section 120 of the Dairy Industry Restructuring Act 2001 states:
Determination to resolve conflict
(1) A person may apply to the Commission for a determination if the person has a dispute with the new co-op (Fonterra) about the application of this subpart (Subpart 5) or regulations made under section 115.
(2) Despite subsection (1), the Commission may reject an application, and return it to the applicant (and do no more in relation to the application), if, in the Commission's opinion, -
(a) the dispute is not genuine or is vexatious or frivolous; or
(b) the applicant does not have a direct financial interest in the matter to which the application relates; or
(c) the applicant has not made a reasonable attempt to settle the matter with new co-op; or
(d) the Commission has made a determination, or is currently considering an application, on the same matter.
(3) The Commission may consider related applications together
(4) An application under subsection (1) must be made within 3 years after the matter giving rise to the dispute arose.
Subpart 5 of the DIR Act relates to the regulation of dairy markets and obligations of Fonterra. The purpose of Subpart 5 is to promote the efficient operation of dairy markets in New Zealand.
Media contact: Jan Compton, Manager, Market Behaviour Group
