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Danone may take legal action over dairy recall-Fonterra CEO

Monday, 2 Dec 2013 | 12:38 AM ET

WELLINGTON, Dec 2 (Reuters) - New Zealand dairy exporter Fonterra said on Monday it may face legal action from France's Danone over the recall of infant formula containing a potentially contaminated Fonterra ingredient.

In August, Fonterra said it had found a potentially fatal ingredient contained in a range of products sold by a number of multinational companies.

After recalls were issued across nine countries including China and Malaysia, the food safety scare turned out to be a false alarm because the ingredient was found to contain a less harmful bacteria.

Danone is seeking compensation for what it says were 350 million euros ($476 million) in lost sales following the recall of its infant formula products in Asia and New Zealand. The two sides started negotiations in October to try to resolve the dispute.

"We're still in talks (with Danone)," Fonterra CEO Theo Spierings told Reuters in a telephone interview. "I put a commercial proposition on the table at the end of October and I haven't heard back on that proposition.

"If their counterproposal is commercial, I would of course entertain a commercial discussion. If their reply is legal, then we would have a different discussion."

($1 = 0.7353 euros)

($1 = 1.2308 New Zealand dollars)

(Reporting by Naomi Tajitsu; Editing by Matt Driskill)