Fonterra to pay $183m over botulism scare

Fonterra4Fonterra has been ordered to pay 105 million euros ($183m) in damages to French food giant Danone over a botulism scare in 2013.

In a statement, Danone said it “welcomes this arbitration decision as a guarantee that the lessons from the crisis will not be forgotten”. The French company sued Fonterra, seeking damages of up to 630m euros, over a whey protein contamination in 2013.

In 2013, Fonterra quarantined several batches of whey protein concentrate amid fears it was contaminated with a potentially dangerous form of the clostridium bacteria. The whey protein was ultimately cleared as a false alarm. Fonterra cut deals with seven of the eight customers affected. Danone said the arbitration “underscores the merit of its legal actions against Fonterra” .

It launched proceedings in Singapore and a legal suit in the New Zealand High Court, estimating the cost of recalling the whey protein concentrate to be about 350m euros. At the time, Fonterra said it expected any court action would show the Kiwi firm didn’t have any liability in the contract, and it recognised a contingent liability of just $14m over the recall.

In 2014, New Zealand’s Court of Appeal upheld an earlier decision that the Singapore arbitration proceedings should be the first avenue, as provided for in the contract, but refused to permanently stay the legal suit. Danone’s New Zealand subsidiary, Danone Nutricia, ended its supply contract with Fonterra after the scare. The New Zealand dairy giant had its shareholders’ fund units and listed bonds halted from trading and has planned a media conference for 3pm in Auckland.

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