Danone may take legal action over baby formula recall, says Fonterra

Mon Dec 2, 2013 6:09am EST
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By Naomi Tajitsu

WELLINGTON/PARIS (Reuters) - New Zealand dairy exporter Fonterra (FSF.NZ: Quote) may face legal action from France's Danone (DANO.PA: Quote) over the recall of infant formula containing a potentially contaminated Fonterra ingredient, the company said on Monday.

In August Fonterra said it had found a potentially fatal ingredient contained in a range of products sold by a number of multinational companies.

After recalls were issued across nine countries including China and Malaysia, the food safety scare turned out to be a false alarm because the ingredient was found to contain a less harmful bacteria.

Danone is seeking full compensation for what it says were 350 million euros ($476 million) in lost sales following the recall of its infant formula products in Asia and New Zealand.

The two sides started negotiations in October to try to resolve the dispute.

"We're still in talks (with Danone)," Fonterra CEO Theo Spierings told Reuters in a telephone interview. "I put a commercial proposition on the table at the end of October and I haven't heard back on that proposition.

"If their counterproposal is commercial, I would of course entertain a commercial discussion. If their reply is legal, then we would have a different discussion."

A Danone spokeswoman told Reuters on Monday the group was "still in talks" with Fonterra and would make no further comment.   Continued...

The Fonterra Te Rapa plant is seen behind a sign board for cyclists near Hamilton, August 6, 2013. REUTERS/Nigel Marple