French dairy giant Danone SA said yesterday it would sue New Zealand farming cooperative Fonterra for compensation over a botulism scare last year that forced global recalls of baby formula.
Danone said the scare in August last year, which turned out to be a false alarm, had harmed the company and it was launching legal action seeking redress in the New Zealand High Court.
“This affair illustrates serious failings on Fonterra’s part in applying the quality standards required in the food industry,” Danone said in a statement issued by its Paris head office.
Danone did not reveal how much compensation it wanted, saying the figure was a matter for the courts to determine. However, the company estimated late last year that the crisis had cost it 300 million euros (US$407 million).
The company also said it had canceled its supply contract with Fonterra, a grouping of about 13,000 New Zealand farmers that accounts for about a third of the world’s dairy exports.
It did not say how much the supply contract was worth.
Fonterra said it would “vigorously defend” the legal action and was disappointed Danone had abandoned commercial discussions in favor of going to the courts.
“Fonterra stands by its track record of having world-class food safety and quality standards, quality systems and robust testing regimes across all its manufacturing facilities,” it said in a statement.
Fonterra has denied any legal liability for Danone’s losses and said in its accounts last year released in September that it had set aside just NZ$14 million (US$11.6 million) to cover any claims arising from the crisis.
The scare erupted in August last year when Fonterra announced a whey protein used in baby formula and some other products had tested positive for a bacterium linked to botulism, which can cause paralysis or death.
The scare led to infant formula being pulled off shelves from China to Saudi Arabia, before subsequent tests determined the bug was actually another, non-toxic, bacteria strain. Most of the recalled formula tins were Danone brands.