Danone Nutricia is axing its sales to China of Karicare, a baby formula brand caught up in Fonterra's 2013 botulism contamination scare.
The company - an arm of the Paris-based multinational food company Danone - said it had stopped supplying the New Zealand-made Karicare infant formula to China.
It recalled some types of infant formulas sold under the Karicare brand in 2013, after Fonterra's botulism bungle - a false alarm about deadly bacteria in its products.
Danone has since sued Fonterra for €350 million in lost sales, and the two companies have been in arbitration in Singapore since February.
Danone said it would keep selling Karicare in Australasia, but would develop its other two baby formula brands, Aptamil and Nutrilon, in the Chinese market.