Infant formula firms fined

Three foreign suppliers of infant formula said today that China has fined them in a price-fixing investigation.

Infant formula firms fined

Three foreign suppliers of infant formula said today that China has fined them in a price-fixing investigation.

The investigation shook China’s fast-growing dairy industry, which also is reeling from a separate recall due to possible contamination of supplies.

It reflects intensifying government scrutiny of business practices under China’s five-year-old anti-monopoly law. Most targets so far have been foreign-owned.

Mead Johnson Nutrition, based in Glenview, Illinois, said its China unit was fined 203.8m yuan (€24.6m). Hong Kong-based Biostime International Holdings said its local arm was fined 162.9 million yuan (€19.5m). New Zealand’s Fonterra Co-operative Group said it was fined 4.47 million yuan (€541.8m).

A Chinese dairy, Beingmate Group, said it was spared a fine but ordered to stop activity that violated the anti-monopoly law.

The Communist Party newspaper People’s Daily said Wyeth Nutrition, a unit of Nestle, and Japan’s Meiji Dairies, were also spared fines. It said total fines imposed were 668.7 million yuan (€80m).

Milk is an especially sensitive issue in China after six babies died and thousands were made ill in 2008 due to formula tainted with the chemical melamine. That prompted many parents to switch to buying more expensive imported milk.

Authorities said earlier they were investigating possible vertical price-fixing, or the setting of minimum retail prices by milk suppliers for distributors.

That is a common practice in some markets but lawyers say Chinese regulators appear to see it as illegal under the anti-monopoly law.

Regulators did not allege direct collusion by the companies, or horizontal price-fixing, which can be difficult to prove.

Suppliers including Nestle and Dutch-based FrieslandCampina announced price cuts after the investigation was launched.

In a separate case, a Shanghai court last week ordered US-based health care giant Johnson & Johnson to pay damages to a distributor in a lawsuit filed under the anti-monopoly law.

The court said J&J improperly set minimum prices, depriving the local distributor of possible sales.

Meanwhile, China has ordered a recall of Fonterra infant formula after the dairy announced on Saturday that hundreds of tons of infant formula, sports drinks and other products might be tainted with bacteria that could cause botulism.

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