Dairy Industry Restructuring Act: Open Country Cheese Company in dispute with Fonterra
The Commerce Commission has received an application from the Open Country Cheese Company Limited (Open Country) for a
determination under the Dairy Industry Restructuring Act 2001 (DIR Act) relating to charges for reasonable transport
costs with Fonterra Co-operative Group (Fonterra).
Open Country’s application says the two parties have been unable to agree on the value of the transport component of the
default milk price for raw milk that Open Country is to purchase from Fonterra under the Dairy Industry Restructuring
(Raw Milk) Regulations 2001.
Waharoa-based Open Country is scheduled to commence operations 1 October 2004. Its plan is to manufacture and sell
international quality cheese made from New Zealand sourced milk.
Under the DIR Act, the Commission considers applications for determinations from parties in dispute with Fonterra. The
Commission has notified Fonterra that the application has been received, and requested Fonterra to comment on the
application. Fonterra must provide those comments no later than 10 working days after receiving notification from the
Commission.
After receiving Fonterra’s comments, the Commission then decides whether or not to conduct an investigation and
determine the matter. There is no statutory time frame for completing the determination other than it must be completed
as soon as practicable.
A copy of the application is available on the Commission's website, http://www.comcom.govt.nz/dairy/decisions.cfm
Background Section 120 of the Dairy Industry Restructuring Act 2001 states: Determination to resolve conflict A person
may apply to the Commission for a determination if the person has a dispute with the new co-op (Fonterra) about the
application of this subpart (Subpart 5) or regulations made under section 115. Despite subsection (1), the Commission
may reject an application, and return it to the applicant (and do no more in relation to the application), if, in the
Commission’s opinion, - the dispute is not genuine or is vexatious or frivolous; or the applicant does not have a direct
financial interest in the matter to which the application relates; or the applicant has not made a reasonable attempt to
settle the matter with new co-op; or the Commission has made a determination, or is currently considering an
application, on the same matter. The Commission may consider related applications together. An application under
subsection (1) must be made within 3 years after the matter giving rise to the dispute arose. Subpart 5 of the DIR Act
relates to the regulation of dairy markets and obligations of Fonterra. The purpose of Subpart 5 is to promote the
efficient operation of dairy markets in New Zealand.