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The Dairy Industry Restructuring Act (2001) was a specific Act of Parliament introduced to allow for the formation of Fonterra.
Upon its creation, Fonterra collected approximately 96 percent of New Zealand's milk production.
Given this market position it was necessary for the government to regulate Fonterra to ensure that New Zealand dairy markets are contestable and efficient.
This led to the development of DIRA to which there are two main parts:
These "pro-competitive provisions" work in parallel with, and are supplementary to, the general competition provisions of the Commerce Act 1986.
The DIRA has market share thresholds that specify the expiry of the pro-competitive provisions. MAF consulted with the industry on the future of the pro-competitive regulatory regime, early in 2010.
The consultation document and submissions received are below.
As a result of the consultation, the Government is to reset the market share thresholds. This has the effect of extending the application of pro-competitive provisions placed on Fonterra.
Progress on the DIRA expiry thresholds is ongoing.
MAF has previously conducted review of the Regulations in 2007 and will do so again in 2011.
Following the 2007 review, the Dairy Industry Restructuring (Raw Milk) Regulations were amended to:
The Dairy Industry Restructuring Act was amended to allow, but not require, the Minister of Agriculture to use an auction system or any other method at all for determining the price and allocation of regulated raw milk.
All relating documents can be found in MAF's publications database.