The Commerce Commission has begun the consultation process for its review of the state of competition in the New Zealand dairy industry.
It has released a consultation paper outlining its proposed approach and scope of the review.
The Government requested the paper as a requirement under the Dairy Industry Restructuring Act (DIRA) which paved the way for the creation of the giant Fonterra co-operative in 2001.
This Act was designed to ensure competition in the New Zealand milk market, to counter Fonterra's size and dominance.
It requires Fonterra to supply some of the milk it collects to other dairy processors at a formulated price.
The Commerce Commission's review will assess the level of competition in the dairy industry and whether the current market share thresholds need to be adjusted, or whether there is now sufficient competition to open the way for deregulation.
Fonterra's share of the milk supply has fallen from 96 percent when it was formed to about 87 percent today as a growing number of competing dairy companies emerge.
The Commission will receive submissions over the next month and complete its report by March next year.
