Independent dairy processor Open Country is objecting to Fonterra's proposal to allow its farmer shareholders to trade its shares among themselves.
It says that could be anti-competitive because it could restrict farmers from leaving the co-operative and joining another company.
Fonterra is working through the share-trading idea with its milk suppliers, who will vote on it later in the year.
It would be the final stage in the company's capital restructuring plan under which the farmers can now buy more shares than they need to match their milk supply.
The ultimate step would be allowing them to buy and sell the shares among themselves instead of having to redeem them with the company.
Open Country Dairy chairman Laurie Margrain is concerned that introducing farmer trading would inevitably reduce the share price and limit the ability of farmers to get an economic return for their shares if they wished to sell, effectively trapping them in Fonterra.
Fonterra chairman Sir Henry van der Heyden, describes the argument as nonsense, saying the principle the co-operative is using is of open exit and open entry.