The Commerce Commission says the Fonterra dairy co-operative is obliged to supply milk to two cheese companies, under regulations on raw milk .
The commission has been investigating the dispute between Fonterra, the Grate Kiwi Cheese Company and the Kaimai Cheese Company, over milk supply terms for the current season.
The dispute relates to the interpretation of raw milk regulations that require Fonterra to supply milk to independent dairy processors.
The cheese companies had complained to the commission that Fonterra had refused to supply them on grounds that they were not independent processors of raw milk, and were not taking delivery of the milk at their own factories.
But the commission says its preliminary view is that under the regulations Kaimai and Grate Kiwi Cheese are 'independent processors', and Fonterra must supply the companies with the milk to their nominated delivery points.
Fonterra says it has not yet been given the reasons for the Commerce Commission's view, and once that happens it expects to make submissions on it.