Chinese regulator probes Tetra Pak over alleged abuse of market dominance

After launching investigations into infant milk and drug pricing, Chinese regulators have now widened their probe to Switzerland-based food processing and packaging company Tetra Pak Group over alleged abuse of market dominance.

The State Administration for Industry and Commerce (SAIC) has asked Tetra Pak to provide information on its business in China.

Since no specific information has been asked, industry experts speculate that the SAIC is investigating Tetra Pak since its packaging cost is part of the price of food and beverage products such as packaged milk.

Sweden and Switzerland-based Tetra Pak had entered the Chinese market in 1972 and its clients include China's biggest milk and beverage producers, including China Mengniu Dairy Co, Inner Mongolia Yili Industrial Co and Uni-president China Holdings.

The company, which had 2012 sales of €11.16 billion, has plants in Beijing, Foshan, Kunshan and Hohhot.

The move from the SAIC comes a few days after the National Development and Reform Commission (NDRC), the top economic planning agency, launched an investigation into six overseas infant milk producers, including Nestle's Wyeth, Danone, Mead Johnson Nutrition Co, Abbott Laboratories, New Zealand's Fonterra and Dutch producer Royal FrieslandCampina NV, over possible price-fixing and anti-competitive behaviour.

A day after the investigation was made public Wyeth decided to reduce prices on nutrition milk powder by an average of 11 per cent, with the biggest single price reduction on certain baby-formula products products by 20 per cent.

Wyeth also decided not to raise prices of any new products over the next year, the company said in a statement.

The Netherlands-based FrieslandCampina said it will reduce prices of its Frisco dairy products in China by 5 per cent, while Danone is also planning to cut prices and said that it will disclose details later.

Post the adulterated milk scandal in China in 2008 that took lives of 6 infants and nearly 300,000 falling ill, demand for foreign formula brands soared and infant milk producers hiked up prices.

Local infant milk producer, Biostime International Holdings, also being investigated, had raised prices by about 30 per cent since 2008, according to the NDRC.