Turners & Growers sues Zespri

Wednesday 22nd July 2009

Turners & Growers, the fruit marketer and distributor that called for deregulation of the kiwifruit industry last month, has sued Zespri in the High Court in Auckland, accusing the monopoly exporter of abusing its market position.

The disgruntled company has accused Zespri of unlawfully discriminating among suppliers by paying more to growers who are prepared to sign exclusivity agreements. It claims Zespri has “carried on businesses and activities prohibited by the Kiwifruit Export Regulations 1999 without obtaining the approval of shareholders and suppliers.”

T&G claims the Kiwifruit Export Regulations giving Zespri a monopoly over the fruit’s export breach both the Commerce Act and Bill of Rights, and accused the kiwifruit exporter of “preserving its monopoly” by tying growers, suppliers and harvest operators into exclusive contracts, attempting to control the supply of kiwifruit exports to Australia and attempting to control new varieties of the fruit.

The company “is taking this action to protect the rights of the kiwifruit growers and post harvest operators in New Zealand which do not support Zespri and whose interests are harmed by Zespri’s monopoly power,” it said in a statement.

Zespri has written the proceedings off as a “publicity stunt as part of the T&G/GPG campaign to destabilise the kiwifruit industry.”

“An initial analysis suggested it was entirely without merit, containing willfully false allegations about the company, its growers, the industry and the regulations under which they operate,” said Carol Ward, Zespri’s director of corporate and grower services in a statement.

Last month, T&G issued a 39 page report attacking Zespri’s 10-year-old monopoly and claiming deregulation had been the ultimate aim when the Kiwifruit Marketing Board was disbanded in 1999.

The report accused Zespri of disadvantaging local growers by selling kiwifruit grown all around the world under the Zespri brand while ordering the destruction of the New Zealand crop.

Last season, Zespri declined a bid from T&G for a joint marketing effort involving around 300,000 trays of local fruit, forcing Turners to fill market orders from Chile, while Zespri had New Zealand growers destroy 2.5 million trays of domestic production to boost international market prices.

T&G chairman Tony Gibbs told his shareholders at the annual meeting offshore buyers “are crying out for alternatives” and Turners has received interest from potential customers outside of Zespri.

Shares in Turners & Growers were unchanged at $1.70 in trading yesterday, and have surged some 17% in the past three months.

Businesswire.co.nz

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