Fonterra withheld vital information from French food manufacturer Danone in the early stages of the botulism scare, the High Court at Auckland has been told.
Fonterra is trying to put a halt to a civil case brought against it by Danone for damages and a breach of the Fair Trading Act.
A lawyer for Danone said Fonterra did not give the full picture when it revealed to Danone in April last year there might be a problem with contamination.
Fonterra had told the company there was no risk at a stage when there was still a food safety risk, the lawyer said.
As well, Fonterra had told Danone the problem batch of whey protein had been put on hold when some had, in fact, been onsold to Danone.
Earlier on Monday, Fonterra told the court Danone had no legal right to sue it in New Zealand over the incident.
Fonterra said that long before the contamination scare happened, it and Danone had agreed in their supply contract that any disputes which arose from a recall would be settled by a binding arbitration process in Singapore.
That process was taking place; there might be a role for the New Zealand courts only if there were any matters left unresolved once it had finished, Fonterra said.
But Danone said it would be denied justice if it was not allowed to sue Fonterra in the High Court over the issue.
The company has not said how much it is suing Fonterra for but has previously said it wants about $330 million in compensation.
Fonterra was forced to recall products worldwide in August 2013 after it was suspected that whey protein powder from its Hautapu plant in Waikato had become contaminated with botulism-causing bacteria.
It said it could not guarantee the safety of some of its products. However, later tests showed that Fonterra's dairy products were safe.
China is still banning imports of some bulk dairy ingredients from Fonterra as a result of the scare.