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DANONE files suit against Fonterra

French dairy giant DANONE has initiated legal proceedings against Fonterra and is terminating a supply contract with the New Zealand cooperative. The suit is the result of a recall last year when some of Fonterra’s whey protein concentrate was found to be contaminated with Clostridium Botulinum. At the time is was feared it was the bacteria which causes botulism but authorities later confirmed it was not. The contamination was traced to a Fonterra plant and forced recalls in Cambodia, China, Hong Kong, Malaysia, New Zealand, Singapore, Thailand and Vietnam.

The two companies have been in discussions over reparations but were unable to reach an agreement. Fonterra has earmarked $14 million to cover costs related to the recall for the eight companies affected by it. Bloomberg says DANONE lost an estimated $407 million of cash flow from the incident.