Turners & Growers Case Against Zespri To Begin in High Court

News Release

2 May 2011

TURNERS & GROWERS CASE AGAINST ZESPRI BEGINS IN HIGH COURT THIS WEEK

Turners & Growers substantive case against privately owned monopoly kiwifruit exporter, Zespri begins in the High Court in Auckland this week.

The trial, which gets underway on Tuesday (3 May), is to hear Turners & Growers claims that Zespri is breaching the Commerce Act. In particular the case will look at Turners & Growers complaints about three aspects of Zespri’s behaviour:

1. Zespri’s three-year rolling exclusivity contracts with growers and the exclusivity arrangements with suppliers, which Turners & Growers says have the purpose, and will have the effect of, restricting competition by Turners & Growers and other exporters for growers’ fruit post-deregulation;

2. Zespri’s service level agreements with suppliers for Australia in 2009, which Turners & Growers says were intended to prevent suppliers selling class 2 fruit to Turners & Growers and other exporters to Australia in that season; and

3. Zespri’s policy not to agree to the export of fruit from third party cultivars unless the fruit has been through Zespri’s testing process, which Turners & Growers says has the effect of giving Zespri control of cultivars as well as control of exports.

The trial is set down for five weeks.

In July 2009, Turners & Growers Limited and its wholly owned subsidiaries, Turners and Growers Horticulture Limited and ENZA Limited filed proceedings in the Auckland High Court against Zespri Group Limited and its subsidiary Zespri International Limited.

An initial four-day hearing was held in the High Court last July to determine the issues of:

(a) Whether the Kiwifruit Export regulations purportedly giving Zespri a monopoly are unlawful; and (b) whether the High Court has jurisdiction to determine whether Zespri has been acting in breach of regulations 9 (non-discrimination) and 11 (non-diversification) of the Kiwifruit Export Regulations 1999.

Turners & Growers appeal on those matters will be heard in the Court of Appeal on 16-17 November.

ENDS

Background on Zespri’s Monopoly:

Zespri has monopoly powers conferred upon it by Government, but is a private company, not a cooperative. Shareholding is not linked to production, so many ordinary growers are shut out because they cannot buy shares in Zespri.

In 2009 the Government’s own 2025 Taskforce stated that Zespri’s monopoly power should be revoked.

New Zealand kiwifruit growers are forced to sell through Zespri, and owners of nonZespri kiwifruit varieties are banned from selling their fruit anywhere but Australia and New Zealand.

Turners & Growers is working to achieve free and unrestricted trade access for all New Zealand grown kiwifruit to world markets, including: ENZA’s own exclusive ENZAGold™, ENZARed™ and Summerkiwi™ varieties.

About Turners & Growers:

Sells approximately of $1 billion of fresh produce globally each year

45 companies worldwide in the Turners & Growers Group including ENZA

New Zealand’s leading distributor, marketer and exporter of premium fresh produce

The largest corporate horticulture investor in New Zealand

The largest grower of new apple varieties and hothouse tomatoes

Own the largest network of fresh produce markets in New Zealand facilitating more than 200 million kilograms of fresh fruit and vegetables every day

One of the largest operators of fruit cool stores and pack houses throughout New Zealand

Operates a specialized fresh produce transport fleet in New Zealand that travels more than 4 million kilometers every year

Coined the name ‘Kiwifruit’ in 1959 as it established exports of NZ-grown ‘Chinese Gooseberries’

Remains at the forefront of the kiwifruit industry with several new varieties it has developed and tested for production and export from New Zealand including ENZAGold™, ENZARed™ and Summerkiwi™.

Estimates its new kiwifruit varieties could earn NZ up to half a billion dollars per year in export earnings.

Wants the right to be able to export, without restriction, its own kiwifruit varieties internationally.

About ENZA:

New Zealand’s largest apple exporter

Sells fruit in more than 60 countries

Grows apples in 12 countries

One of the world’s best-known produce brands

Key supplier of fresh produce to 22 of the world’s top 25 retailers

Owns the rights to new global varieties including JAZZ™ and ENVY™ apples and ENZARed Kiwifruit.

Merged with Turners & Growers in 2003 to create global growing and distribution network.

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