Nestle, Danone to cut Chinese infant milk prices amid probe

Swiss food company Nestle and French rival Danone are cutting the price of infant formula milk in China after Beijing launched an investigation into possible price-fixing and anti-competitive behaviour in the sector.

Wyeth Nutrition, which Nestle bought last year, said on Wednesday it had been co-operating with a probe by China’s National Development and Reform Commission (NDRC) and was responding by cutting prices and improving sales and marketing practices.

Danone said in an e-mail that its Dumex business had also been co-operating with the NDRC and was preparing a price-cut proposal whose details would be disclosed later.

Both companies, along with Mead Johnson Nutrition and Abbott Laboratories, said on Tuesday they were being investigated by the NDRC.

Analysts see the probe as possibly part of a broader Chinese plan to boost consumption of local infant milk products. Mothers turned away from Chinese milk powder in 2008 when infant formula tainted with the industrial compound melamine killed at least six babies and made thousands sick with kidney stones.

China has since made efforts to crack down on persistent food safety problems that have included chemical-laced pork and infant milk contaminated with cancer-causing agents.