2 Aug 2011

Milk decision welcomed by Fonterra

1:14 pm on 2 August 2011

The Commerce Commission says competition between Fonterra Brands and Goodman Fielder more than meets the requirements of the Commerce Act.

The commission says it has no valid reason to hold an inquiry into the price of milk.

Fonterra has welcomed the decision, saying it has always argued that there was no justification for an inquiry or further regulation at any level of the milk market.

Chief financial officer Jonathan Mason says Fonterra's competitors led the call for an inquiry because they want to force down the amount they pay New Zealand farmers for raw milk.

Fonterra says the way it pays farmers for their milk was endorsed in a recent review by an international specialist in competition law economics, which also found there was plenty of competition in the New Zealand dairy market.

The Fonterra Shareholders Council says the commission's decision vindicates the farmers' view, that the farm gate milk price is fair and reflects the capital and production costs incurred in the dairy industry.