China imposes fines on infant formula companies over price fixing

The National Development and Reform Commission (NDRC) of China has imposed a total of $109m fines on six foreign and domestic baby formula manufacturers for alleged price fixing and anti-competitive practices.

This development comes after a four-month antitrust and anti-competition investigation by the Chinese authorities.

The implicated companies include Mead Johnson, Biostime, Danone, Abbot, Friesland and Fonterra; among these only Biostime is headquartered in China.

NDRC has penalised Mead Johnson $33.29m, Biostime $26.6m, Danone $27.8m, Abott $12.4m and FrieslandCampina $7.78m, while Fonterra was fined less than $1m.

All of the companies stated that they would not contest the fines.

NDRC price department head Xu Kunlin was quoted by the Xinhua news agency as saying that Nestlé, Meiji Holdings and Zhejiang Beingmate Scientific Technology Industry and Trade have not been fined as they co-operated with the probe, provided important evidence and implemented active self-rectification.

In March, China’s top economic planner initiated an investigation into possible price fixing by foreign firms in response to high prices of infant formula products; however, the probe was publicly announced in early July.

In response, several international firms such as Danone, Mead Johnson Nutrition and Nestlé lowered the prices of their baby formula in China by up to 20%.

The demand for international baby formula brands increased significantly in China after the tainted milk controversy in 2008, in which 22 dairy companies were implicated for using the industrial chemical melamine in milk and infant formula.

The 2008 scandal led the government to set up a food safety commission which called for stringent punishments against violations of rules.