Watchdog moves to prevent profiteering

PUBLISHED : Saturday, 20 September, 2008, 12:00am
UPDATED : Saturday, 20 September, 2008, 12:00am

The mainland's pricing watchdog warned yesterday that it would severely punish profiteering and price fixing of baby milk formula as parents worried about a possible price spike.

In an urgent directive, the National Development and Reform Commission ordered its branches to watch for any price fluctuations and signs of baby-formula stockpiling.

It also authorised price regulators to use arbitrary curbs in accordance with a special NDRC provision to offset a dramatic rise in formula prices.

The provision, introduced in January as the cost of consumer goods soared, stipulates that manufacturers must apply to regulators before raising prices and allows lower-level governments to set price caps for some key commodities and profit ceilings for manufacturers.

Parents are scrambling to find safe alternative milk powder, such as premium foreign brands, that have not tested positive for melamine.

Melamine-tainted baby formula has killed four infants and made 6,200 babies ill.

Ge Weihong , the mother of a four-month-old boy, said she fed him baby formula by Qingdao's Shengyuan, one of 22 dairies on the official blacklist.

Ms Ge said the formula she used was not contaminated, but she was looking at several foreign brands for a substitute.

She said she did not want to see the prices go too high, 'but at the moment I couldn't care less about the prices as long as they're safe'.

Li Shouen , mother of a two-year-old boy, said he needed two to four tins of Abbott powdered milk each month - about 180 yuan (HK$205) each. 'I'm worried about a possible price hike, but I have no choice,' said Ms Li, a university lecturer, adding that she would not switch to domestic brands even though they might be much cheaper.

Many batches of fresh milk bearing premium domestic brands have also tested positive for melamine, indicating possible industry-wide abuse of additives.

But worried parents could take some comfort from commitments by four major foreign brands, including Abbott and Mead Johnson, that they would not raise their prices in the aftermath of the scandal.

A Mead Johnson China spokeswoman declined to say how long the price freeze would last, but prices would not be raised before the end of the year.