5 Dec 2011

Kiwifruit growers want answers about Sth Korean fine

6:20 am on 5 December 2011

The Independent Kiwifruit Growers Association says it is seeking urgent answers from Zespri on the way it's doing business in South Korea and in some other markets.

South Korea's Fair Trade Commission has ruled that Zespri breached trade rules by arranging exclusive supply deals with supermarket chains which shut out competitors such as Chile. It has fined Zespri almost $500,000.

Zespri says if it ends up paying the fine, that would come from its corporate fund from the commission it charges on sales and not from growers.

But in a letter to Zespri's chairman, the Independent Growers Association argues it's still a cost to the growers who own the marketing company and it comes at a time when they are being bankrupted by the PSA vine disease.

Association spokesman Ted Meade says it's concerned about the long-term risk to trading relationships that could flow from the South Korean ruling.

He says growers are waiting to see whether Zespri faces a criminal prosecution and whether it will mean a reduction in kiwifruit exports to South Korea in coming years.

Zespri says it does not expect to face any prosecution in South Korea.

It has changed the business arrangement that was found to have broken the rules, but says it's still waiting for the full details of the ruling before deciding whether to appeal.

Other markets?

The Independent Growers Association is also seeking an assurance from Zespri that it hasn't undertaken similar business practices in other markets that could also trigger anti-competition laws.

Mr Meade says as well, it wants to know what's happening in a customs case in China, where an agent used by Zespri in Shanghai was arrested for alleged tariff evasion.

Zespri has confirmed that neither it nor any of its staff are implicated or under investigation in the Chinese customs case.

It says it will be responding to the independent kiwifruit growers' concerns, although it says it has already canvassed the issues with growers.