Fonterra ordered to pay Danone $125m over baby formula scare

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December 1, 2017 1:56 AM

New Zealand dairy giant Fonterra was ordered to pay French rival Danone NZ$183 million ($125 million) in damages Friday over a baby formula botulism scare.

The huge payout came after Danone sued over the 2013 issue, when fears about contamination in Fonterra-supplied ingredients forced global formula recalls, including Danone brands.

"We can confirm that this is the amount of the damages. We are currently considering the full financial implications of the award for Fonterra," the New Zealand cooperative said in a statement.

The suspect ingredient eventually turned out to be a non-toxic bacteria, rather than the potentially fatal botulism.

The French company estimated in 2014 that the episode cost it 300 million euros ($360 million) in operating profit and 370 million euros in sales.

Danone made claims at tribunals in New Zealand and Singapore, but it was not immediately clear which one made Friday's decision.

Danone said Friday it was important Fonterra be held to account for the food safety failures that led to the scare.

"Danone welcomes this arbitration decision as a guarantee that the lessons from the crisis will not be forgotten," it said in a statement.

"Danone considers that this arbitration underscores the merit of its legal actions against Fonterra, including to champion the highest standards of food safety across the industry."

Formula supplies across the world, particularly to the lucrative Chinese market, were affected as cans were yanked from shelves as a precaution.

Fonterra shares were placed in a trading halt before the payout was announced, with chief executive Theo Spierings assuring the market it would not have a long-term impact.

"Fonterra remains in a strong financial position and any damages award will not affect our ability to operate," he said.

Fonterra in September announced an annual net profit of NZ$745 million ($509 million), down 11 percent on the previous year.

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