Danone has been awarded a $163.5 million payout from Fonterra to cover the damages caused by the whey protein recall four years ago in an international arbitration.
Danone was among the companies affected by the precautionary recall of Fonterra's WPC80 whey protein concentrate in August 2013.
Fonterra at the time gave precautionary recall advice to some customers, including Danone, that had been supplied with Fonteraa's WPC80 ingredient or products that contained it. It was later confirmed that there had been no food safety risk to the public.
Danone alleged at the time that Fonterra breached the Fair Trading Act and sought compensation, although Fonterra said it believed its liability was limited to $30 million.
“We are disappointed that the arbitration tribunal did not fully recognise the terms of our supply agreement with Danone, including the agreed limitations of liability, which was the basis on which we had agreed to do business,” Fonterra chief executive Theo Spierings said. “Fonterra is in a strong financial position and is able to meet the recall costs.”
Fonterra said although it was reviewing the tribunal’s findings closely, there were limited options for challenging the decision of an international arbitration.
Danone said the arbitration “underscores the merit of its legal actions against Fonterra, including to champion the highest standards of food safety across the industry”.
“Danone believes that food companies and their suppliers can only work together through a solid relationship based on trust, transparency and accountability. Danone will continue to build that relationship with its suppliers across the world.”
