China fines six foreign infant milk suppliers $108 mn for price-fixing

China has fined six overseas infant milk suppliers a total of $108 million for price-fixing and anti-competitive behaviour, as Chinese regulators continue to scrutinise the business practices of foreign companies operating in the country.

The National Development and Reform Commission (NDRC) imposed a total fine of 668.7 million yuan on Illinois-based Mead Johnson Nutrition Co and Abbott Laboratories, France's Danone SA, Hong Kong-based Biostime International Holdings Ltd, New Zealand's Fonterra Co-operative Group and the Netherlands-based FrieslandCampina NV.

Mead Johnson was fined $33 million, Biostime $26.3 million, Dumex $27.7 million, FrieslandCampina $7.8 million, Abbott $12.5 million and Fonterra $720,000.

Last month, the NDRC, the country's top economic planning agency, launched an investigation into six overseas infant milk producers, over possible price-fixing and anti-competitive behaviour.

A day after the investigation was made public, Switzerland's Nestle-owned Wyeth Nutrition, FrieslandCampina and Danone reduced prices on nutrition milk powder by an average of 11 per cent, with the biggest single price reduction on certain baby-formula products by 20 per cent.

NDRC said that these companies admitted to violating anti-monopoly law by setting minimum resale prices for distributors. The NDRC also said that its investigation found that distributors were punished if they sold their products at a lower price than that fixed by the company.

According to the NRDC, by keeping milk powder prices at a high level, the companies restricted competition and undermined the interests of consumers.

The NDRC said that China's Beingmate Group, Wyeth Nutrition and Japan's Meiji Dairies Corp had also violated the law but were spared fines since they cooperated with the investigation, provided important evidence and rectified their mistakes.

The fine comes amid probes underway on overseas pharmaceutical companies, including GSK, Merck, Baxter Healthcare and Sandoz, over price fixing of drugs and bribing doctors, hospitals and others.

Chinese regulators have also widened their probe to Switzerland-based food processing and packaging company Tetra Pak Group over alleged abuse of market dominance and stopped import of all milk powder from New Zealand over fears of botulism after its main exporter Fonterra discovered a strain of bacteria in some of its products that can cause the disease. (See: China bans New Zealand milk powder on fears of botulism contamination)