Wellington, March 17 NZPA - Fonterra says it is taking court action against a Sri Lankan newspaper to stop baseless claims being made about its products there.

"Anchor is the number one brand in Sri Lanka and we cannot stand by and allow competitors to mount smear campaigns that will deceive and alarm consumers," said communications director Graeme McMillan, of Auckland.

Fonterra has sought a billion rupee (about $NZ17 million) gagging writ against the newspaper which alleged that its milk products had been adulterated with palm oil or other vegetable oil.

Fonterra Brands Lanka (Pvt) Ltd has sought a court order to stop Heladiwa Irida Sangrahaya and its editor Dharma Sri Kariyawasam from re-publishing the claim.

It is asking for a billion rupees as damages if the claim is again published.

"Fonterra Brands Lanka has taken this court action to stop baseless claims about our products in Sri Lanka being spread by a local company with vested interests," Mr McMillan said in a statement.

"No Fonterra products in Sri Lanka contain any pork, poultry or vegetable fats," he said. "The media outlet published this false claim without making any attempt to check the facts with Fonterra".

Fonterra was providing consumers with the highest quality, nutritional dairy products, and meeting New Zealand and international regulatory standards for food safety and quality assurance.

A Colombo District Court judge, Sampath Wijeratne, is considering the Fonterra case against the newspaper owner, Sayuri Newspapers (Pvt) Ltd.

Fonterra's lawyer, Romesh de Silva, told the court the company imported and distributed milkpowder for brands including Anchor, Red Cow and Raththi, Anmum, Anlene, and Anchor Shape.

On March 15, the newspaper printed an article and editorial alleging the milk products did not contain full cream, but instead added palm oil and vegetable oil.

Fonterra complained it was a false and baseless allegation , and that the newspaper was planning to launch a poster campaign and continue to publish similar articles.

The attack followed with last week's launch of a big campaign in Sri Lanka to improve nutrition, with free Anchor milk distributed to children at school.

Over several weeks, more than half a million children are being given a 400g pack of milkpowder and nutrition information.

Local managing director Achyut Reddy said at the programme launch it was one of the most complete corporate social responsibility projects to tackle malnutrition in the country.

One third of Sri Lankan children suffer from some form of malnutrition, with 21.6 percent of pre-school children underweight and 18 percent stunted as a result of inadequate nutrition.

About 29.9 percent of preschool children suffer from anaemia and 36 percent from vitamin A deficiency that affects eyesight.

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