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Sri Lanka court ends ban on sale of Fonterra products

By Shihar Aneez

GAMPAHA, Sri Lanka (Reuters) - A Sri Lankan court ended a ban on the sale, distribution and advertising of all Fonterra milk products, lawyers said, soon after the company suspended operations in Sri Lanka on Friday.

The New Zealand dairy giant said earlier it had temporarily suspended work at the Sri Lanka unit, citing precautionary measures to ensure the safety of its 755 employees after it faced product bans, court cases and angry demonstrators.

The district court of Gampaha last week banned Fonterra from selling or advertising its products after food safety authorities said they found the toxic agricultural chemical dicyandiamide (DCD) in two batches of milk powder. Fonterra vigorously disputes the finding.

After a nearly three-hour court session, Sudath Perera, a lawyer representing Fonterra, said, "The enjoining order was dissolved on suppression and misrepresentation of the facts submitted to the courts."

Upul Jayasuriya, who represented a health sector trade union that filed the case, said the judge had said consumers could make a decision on whether or not to use Fonterra milk powder.

"They (defendents) made submissions, but the judge did not refer to any suppression and misrepresentation. The judge said that there is no independent report to say that there is DCD," Jayasuriya said.

The court also has summoned top officials at the Fonterra subsidiary on contempt of court charges for not adhering to the earlier ban.

Perera said the contempt of court case has been fixed on September 25.

Sri Lanka's state-run Industrial Technology Institute (ITI) found the DCD in a batch Anchor full-cream milk power and another of the Anchor 1+ brand for young children, which were manufactured between October and December 2012.

Fonterra has disputed the accuracy of the ITI testing, but the local company Fonterra Brands Lanka last week told Reuters it had recalled two batches of Anchor-branded products in accordance with the health ministry directive.

Sri Lankan opposition follows a global food scare after Fonterra said earlier this month that some of its products could contain a bacteria that can cause botulism. Its products have been removed from shelves from China to Saudi Arabia, while other countries have restricted imports.

(editing by Jane Baird)

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