Milk giant Fonterra is trying to push smaller suppliers to the sidelines, with almost exclusive supermarket shelf rights, Lewis Road Creamery says.

Fonterra is denying claims that it's attempting to gain exclusive rights to more than 95 per cent of milk fridge space in some North Island supermarkets.

The claims were made by Lewis Road co-founder Peter Cullinane.

DAVE MACKAY/FAIRFAX NZ Lewis Road says it will be pushed to the side of supermarket milk fridges dominated by Fonterra brands.

He said store owners told him that Fonterra were in talks to takeover about 97 per cent of available shelf space in Foodstuffs' North Island supermarkets.

READ MORE:

* Lewis Road vow to take on dairy giants Fonterra over 'staggeringly similar' milk marketing

* Bitterness at hit dairy Lewis Road

* Fonterra sells cream of the crop UHT milks to Chinese

Cullinane said Fonterra was reverting to "soviet era control" over the milk industry.

SUPPLIED Lewis Road founder Peter Cullinane.

"If they do proceed they're just removing competition – and probably permanently – because what do you do if you can't sell your product," he said.

The alleged arrangement would take place in New World and Pak 'n Save fridges.

Other companies, such as Lewis Road and Puhoi Valley, would be left with a slither of the fridge space, Cullinane said.

Foodstuffs, which owns the two supermarket chains, would not comment on the details of its agreement with Fonterra.

Asked if suppliers could pay for major shares of available retail space, Foodstuffs said: "In our stores customers can get a range of milk products".

"We have an agreement in place with Fonterra, as we do with other suppliers, including Lewis Road Creamery… The terms of our supplier agreements are confidential," Foodstuffs spokeswoman Antoinette Laird said.

She said deals with suppliers were competitive, to get the best prices on its supermarkets shelves.

"Our position on this is that competition is good for our customers," Laird said.

Lewis Road had been talking with Fonterra for at least the past week about the issue.

On Monday, Cullinane sent a letter to Fonterra executives saying its actions would "severely restrict, shoppers' right to choose".

"Surely anything more than four out of five bottles for Fonterra is greedy?" Cullinane wrote.

Fonterra Brands managing director Leon Clement said Fonterra, like Lewis Road, wanted "to see fair play and have plenty of choices in the milk chiller".

Fonterra and Lewis Road were in a continuing feud over Fonterra's new organic brand Kapiti milk.

When the product was launched in November, Lewis Road claimed Fonterra had copied its packaging in an attempt to confuse shoppers.

"Clearly what they want to do is sort of confuse shoppers … otherwise they'd use their light proof bottles which they made such a song and dance about," he said.

Lewis Road had consulted lawyers about Kapiti milk, Cullinane said.

Their advice had been that Fonterra was "right on the edge", he said.

At this stage, Cullinane did not think any legal action would be taken against Fonterra.