Free Subscription

  • Access daily briefings and unlimited news articles

Premium

Only $39.95 per year
  • Quarterly magazine and digital
  • Indepth executive interviews
  • Unlimited news and insights
  • Expert opinion and analysis

Regulator begins dairy industry review

milkThe Commerce Commission is inquiring into whether Fonterra’s 87 per cent share of New Zealand’s milk pool gives it too much market dominance.

The review is required under the Dairy Industry Restructuring Act 2001, when Fonterra was established, which sets rules for supply to other milk companies and anticipates those DIRA provisions be phased out once certain market share thresholds have been met.

“Our review will look at whether the regulations are helping or hindering the efficient operation of the New Zealand dairy industry. To do this we intend to examine how competition has developed since Fonterra was established and what it might look like in the future,” commissioner Stephen Gale said in a statement.

The commission is calling for submissions on its discussion document by July 10 and market participants will get another chance for feedback when the regulator releases its draft report in November.

Fonterra CEO, Theo Spierings, this week vowed not to let the co-operative’s share of milk fall further, despite increased competition for supply.

Under the terms of the review, the regulator must report to the Minister for Primary Industries on the state of competition in the dairy industry “and, if the state of competition is insufficient, advise the minister as to whether the market share thresholds should be reset and provide options for a pathway to deregulation (if any).”

Key tests are contestability in the market for farmers’ milk and access by independent processors to raw milk and other dairy goods and services needed to compete in dairy markets.

BusinessDesk

You have 3 free articles.