China fines baby formula firms for price-fixing

August 7, 2013 7:42 am
A woman checks the price of Dumex baby milk formula at a store in Yichang, China, August 5, 2013/AFP
A woman checks the price of Dumex baby milk formula at a store in Yichang, China, August 5, 2013/AFP

, BEIJING August 7-  China said Wednesday it has fined six mostly foreign baby formula producers including New Zealand’s scandal hit Fonterra a total of $108 million for price fixing, as it seeks to cool public anger over the sector.

The penalties also levied against firms from the US, France, the Netherlands, and one Chinese company came after a five month inquiry by the National Development and Reform Commission (NDRC), China’s top economic planner.

They were a “record high” in Chinese anti-monopoly rulings, the official Xinhua news agency said.

They also come in the middle of the latest safety scare over formula, in which Fonterra has had to recall in several countries products tainted with a bacteria that can cause botulism, a potentially fatal disease.

It said Wednesday that all the affected items had been removed from retailers’ shelves.

China is the world’s biggest market for formula and foreign branded products are in high demand after repeated safety scandals involving domestic products including one in 2008 when six children died and 300,000 were sickened.

Prices are high as a result, leading to frustrations among consumers.

The NDRC said it a statement it fined Mead Johnson and Abbott from the US; Dumex, a subsidiary of France’s Danone; a China arm of Royal FrieslandCampina of the Netherlands; Fonterra and China’s Biostime.

The firms set minimum prices with distributors and punished dealers who did not comply, the NDRC said, and their actions reduced competition and “unjustifiably maintained high milk powder prices”.

“They undermined the fair market competition order and harmed consumers’ interests,” it added.

Mead Johnson said it had been fined 204 million yuan ($33 million), adding it remains committed to the country that is “one of the company’s most important markets”.

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