Baby formula suppliers probed by China watchdog for inflating prices

Watchdog investigates milk suppliers for breach of anti-monopoly law; prices up 30pc in 5 years

PUBLISHED : Tuesday, 02 July, 2013, 8:04pm
UPDATED : Wednesday, 03 July, 2013, 5:17am

Five foreign infant milk formula companies are under investigation by China’s top economic planning agency for possible antitrust violations, the Beijing Times reported on Tuesday quoting sources.

The article said Nestle, Abbott Laboratories, Mead Johnson Nutrition, Danone’s Dumex brand and Wyeth Nutrition are under investigation by China’s National Development and Reform Commission (NDRC) for possible price-fixing behaviour and anti-competitive practices.

A Danone spokeswoman said the world’s largest yoghurt group was “fully cooperating with authorities”.

Nestle said in an email it was cooperating with the investigation. Mead Johnson China-based spokeswoman Ronny Li said the firm had provided information to the NDRC. Wyeth Nutrition spokeswoman Winnie Wang confirmed the investigation was taking place and said the company was cooperating.

Abbott Laboratories and Dumex could not be reached for comment. Officials at the NDRC were not available to comment.

Danone shares were off 1.6 per cent in Paris while Nestle shares were down 0.3 per cent in Zurich.

Foreign infant formula is a highly coveted item in China after a 2008 tainted infant formula scandal that left at least six children dead damaged public trust. Foreign brands now account for about half of total sales.

The Beijing Times said the investigations came to light after a Hong Kong-listed infant nutrition manufacturer Biostime International Holdings said last Thursday that its Guangzhou unit was under investigation by the NDRC for an alleged violation of China anti-monopoly law.

“The main purpose of the investigation is in relation to an alleged violation of Article 14 of Anti-Monopoly Law of the People’s Republic of China by Biostime Guangzhou in managing the market sales prices at which the distributors and retail sales organisations sell our products,” the company said in a filing to the Hong Kong stock exchange.