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Confidential settlement ends testy milk dispute

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A long-running legal stoush between two rival milk companies over use of the term “A2 protein” and of health benefit claims about a2 Milk Company milk has come to a close, after the businesses reached a confidential settlement.

The settlement ends a testy dispute between The a2 Milk Company and Lion Dairy and Drinks, in which each company accused the other of misleading and deceptive conduct, as they battled to protect their brands and market share.

Bottles of milk from a2 and Pura, which both make A2 protein claims. Bottles of milk from a2 and Pura, which both make A2 protein claims. Photo: Steve Hynes

The a2 Milk Company had alleged that because Lion’s milk labels in question stated that they “naturally contains A2 Protein,” these Lion products were being “passed off” as “the same as, or similar to, a2 Milk”. A2 had sought damages, and wanted Lion to stop using its labels.

But Lion shot back quickly, alleging that representations made by a2 that its cows’ milk made many people feel better than they did after consuming ordinary cows’ milk were false.

Given the settlement reached by the parties is confidential, one can only speculate on how Lion will present its milk labels in future, in the aftermath of the case.

In a statement released by a2 Milk on Wednesday evening the company, which is listed on both the New Zealand and Australian stock exchanges, said the legal actions would be dropped.

“The parties have mutually agreed not to proceed with their cases against each other. The terms of the settlement are confidential.

“The parties are very satisfied with the outcome and will remain focused on building and maintaining the strength of their individual brands,” it said.

On Thursday a Lion Dairy and Drinks spokesperson released a statement containing the same three sentences.

Since its arrival on the Australian market 10 years ago, a2 Milk has gained a significant foothold in the fresh milk market. It has also become a significant player in the infant formula market.

And the company, which is of New Zealand heritage and is listed on both the New Zealand Stock Exchange and on the ASX, has become a sharemarket darling over the last year in particular.

On the last day of trading in 2016 shares in a2 closed on the Australian market at $2.04. They have more than tripled since and it now has a market capitalisation of about $5.2 billion.

But shares in a2 fell 22¢ (almost three per cent) on Thursday to close at $7.12.

Last month a2 revealed it had recorded a net profit of $NZ52.3 million ($47.4 million) for the first four months of fiscal 2018.

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