8 Nov 2011

Kotahi Partnership before Commerce Commission

8:00 am on 8 November 2011

Opponents of a freight tie-up between Fonterra and Silver Fern Farms have told the Commerce Commission they fear the proposal will squeeze smaller exporters out of the market.

The commission is considering whether or not the Kotahi partnership - set up to co-ordinate domestic and international freight services and ensure better shipping schedules and bigger ships - is anti-competitive since it is initially confining its services to Fonterra and Silver Fern.

Other importers and exporters are being invited to become partners and customers in future.

The Importers' Institute is one of three parties that have lodged submissions on the proposal and its secretary Daniel Silva says the two companies are basically applying for exemption from New Zealand's competition laws.

The arrangement is also being opposed by the country's second biggest dairy processor Open Country Dairy, which says it will increase the costs of companies that don't join the partnership.

It is also sceptical the arrangement will deliver the improved port infrastructure and bigger ships it promises.

Chief executive of Canterbury-based dairy company Synlait, Dr John Penno, supports the proposal but wants the commission to impose clear rules detailing how other parties can join the partnership.

The Commerce Commission is expected to release its final decision by mid-May 2012.