The Food Safety Authority has launched an investigation into the sale of horse meat for human consumption but only processed to pet food standards.
The meat has been on sale at the Mangere and Otahuhu markets in Auckland.
The authority will investigate whether the meat, processed to lower pet food standards at an abattoir, is knowingly being sold as fit for people to eat.
Compliance and investigation director Geoff Allen says a stall was investigated only about two months ago but no law breaches were found at the time.
He says evidence now indicates that people producing the meat are giving verbal reassurances, possibly false and misleading, about the quality of the product.
Mr Allen says pet food is made to different standards and while humans may be able to eat it, there is a greater risk of food poisoning, because levels of parasites and bacteria are likely to be higher.
He says there have been no notifications of anyone falling ill after eating the meat.
An Auckland pet food manufacturer on Tuesday vehemently denied suggestions its product has knowingly been sold for human consumption.
The owner of Gillard Meat Processors south of Auckland, which also runs the stalls, says there has never been an illusion that the meat is meant for humans.
Eddie Clark says the company does not promote horse meat as good eating meat and it is clearly labelled as pet food only. However, he says the company cannot control what happens to its meat after it has been sold.
The Petfood Manufacturers Association is concerned the industry's reputation could be tarnished and will help the authority with its investigation.
Association secretary Richard Brake says the sector is tightly regulated and there are clear rules that products slaughtered and manufactured to a different standard to meat intended for human consumption must be clearly labelled.