NZ's Fonterra to fight Sri Lankan dairy injunction

WELLINGTON Sun Aug 18, 2013 8:04pm EDT

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WELLINGTON Aug 19 (Reuters) - New Zealand's Fonterra, the world's top dairy exporter, said on Monday an injunction banning the sale of its products in Sri Lanka because of alleged contamination was incorrect and unjustified as it sought to control a growing customer backlash.

On Friday, A Sri Lankan court banned the sale and advertising of all Fonterra Co-operative Group Ltd milk products for two weeks. A trade union had sought the court ban because Fonterra products suspected of being contaminated with the agricultural chemical dicyandiamide (DCD) were still on the market.

Fonterra said last week it had withdrawn two batches of milk powder allegedly containing DCD under orders from Sri Lankan authorities, although it has disputed the accuracy of the testing.

"We strongly refute the allegations on which this injunction has been made," Johan Priem, Fonterra's managing director Asia Pacific, Middle East and Africa, said in a statement issued to the New Zealand stock exchange.

"Our independent testing has found no traces of DCD in any Fonterra branded products in Sri Lanka and no affected whey protein concentrate or products containing it have been sent to the country," Priem said.

Fonterra has said it would fight the official Sri Lankan ban, and is looking at legal options regarding Friday's injunction.

The Sri Lankan ban comes as Fonterra looks to recover from the global food scare caused by the finding of a bacteria that can cause botulism in whey protein concentrate, which is used in infant formula and other products.

That contamination scare sparked product recalls and bans on some Fonterra products in countries including China, Russia and Vietnam. (Reporting by Gyles Beckford; Editing by Lincoln Feast and Gyles Beckford)

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