The company said it will be applying to the High Court for permission to appeal a decision against it in the Court of Appeal, issued at the end of December.
"This is a case of EU rules being exploited to allow the biggest player in this market to get bigger, at the expense of the consumer," stated Carol Williams, company secretary for Northern Foods. "We think it's anti-competitive, and it's a sad day for common sense."
The court case pits Northern Foods against the Department for Environment Food and Rural Affairs (Defra), and by extension local producers belonging to the Melton Mowbray Pie Association.
The court battle has evolved as a ground breaking case over the EU's geographical indications (GI) system and the problems it can pose for manufacturers.
The case is a result of an application by Defra to the European Commission on behalf of local producers in the area of Melton Mowbray for their pies to be protected under the GI system. Defra, as part of a government policy to promote local foods, is applying under the GI system for protected geographical indication (PGI) status for the area.
If granted, it would be the first recipe-based product to receive such status in theUK.
The EU's rules require that GI approved areas stick to the specifications outlined in their applications, including the product's recipe, and keeping production and sourcing within a defined geographical area. For PGI products, the geographical link must occur in at least one of the stages of production, processing or preparation a food.
Once approved other producers outside the protected area may not use the name. A successful application would prevent other companies, including Northern Foods, from making the pies outside of the area specified in the application.
Pie makers in the Melton Mowbray area want to protect their recipe and create an exclusive 1,800 square-mile zone in which the pork pie can be made.
Facing a situation in which it would lose a growing multi-million euro market for its Melton Mowbray pies, Northern Foods decided to take the case to court in an effort to bloc the application. The case was heard by the Court of Appeal in early December and a decision was issued just before Christmas.
Northern Foods wants to continue manufacturing its Melton Mowbray pies at factories in Shropshire and Wiltshire. If Melton Mowbray gains protected status, it would become an offence to sell a Melton Mowbray pork pie not made to the recipe and manufactured outside the defined zone.
On 21 December Justice Crane turned down Northern Foods' bid, allowing the application to the Commission to proceed. Northern Foods immediately issued a statement saying it would appeal the decision.
"We have fought this challenge all the way on some very clear principles and we will have no compunction about doing the same again," Williams stated.
Northern Foods has argued that the protected status would create what it calls an "artificial zone" for the manufacture of the pies. The application also specifies that genuine Melton Mowbray pork pies must be grey in colour and made from uncured pork. The Melton Mowbray Pie Association's dominant member and leading commercial manufacturer, Samworth Brothers, produces both cured and uncured pies under the name.
Melton Mowbray Pork Pies are made by both large scale food manufacturers and small artisan producers up and down the country. The market is worth an estimated £51.7m per year and is the fastest growing section of the pork pie market.
Samworth Brothers has a 62 per cent market share, followed by Northern Foods with a 24 per cent market share. Samworth Brothers manufactures over 99 per cent of the pies produced by Association members. The Melton Mowbray Pork Pie Association lodged an application with Defra in 1999.
The area extends beyond the borough of Melton to encompass the cities of Leicester, Nottingham and Northampton, thus including Samworth Brothers' factory in Leicester.
The application was forwarded by Defra to the European Commission for consideration, but the application was suspended earlier this year while Northern Foods sought a judicial review in the High Court.
The application will now continue its path to the European Commission.
Northern Foods stated it is in discussions with Defra about the length of any transition period. The company hopes it will gain a five grace period, in line with other recent EU cases on GI status.
In 1993 EU legislation came into force which provides for a system for the protection of food names on a geographical or traditional recipe basis. The system is similar to the familiar "appellation controllée" system used for wine.
The scheme highlights regional and traditional foods whose authenticity and origin can be guaranteed. Under this system a named food or drink registered at a European level will be given legal protection against imitation throughout the EU.
Defra said the decision on Melton Mowbray pies justified the department's decision to champion the cause.
"The government's policy is to encourage more UK producers to take advantage of the EU protected food name scheme," stated Lord Bach, the UK's minister for food and farming. "Protection provides a means for producers to add value and to meet consumers' growing demand for food with a clear regional provenance."
To date, 36 UK products have been registered with the EU including Stilton Cheese, Cornish Clotted Cream and West Country Farmhouse Cheddar. A further 18 applications are being considered.
The EU wants international recognition for the GI system and has applied to World Trade Organisation to get it ratified. That application is being contested by the US, which claims the system is nothing but another form of trade protection.