China fines Dairy companies US$110m

China has fined several diary companies including New Zealand dairy giant Fonterra, Mead Johnson Nutrition Co and Danone and  a total of US$110m following an investigation into price fixing and anti-competitive practices by foreign baby formula makers, it has been reported this morning.

The other three penalised were Dutch dairy co-operative Friesland Campina, Abbott Laboratories and Hong Kong-listed Biostime International Holdings, China’s National Development and Reform Commission (NDRC) said in a statement this morning.

The official Xinhua news agency said the fines were a record for China, although it did not elaborate.

“In the probe into these nine companies initiated in March, the NDRC found the involved formula producers set minimum resale prices for distributors. The distributors who sold their products at a price lower than the fixed minimum price were punished. The practice maintained milk powder prices at a high level, restricted competition in the market and harmed the interests of consumers,” the state-controlled agency reported.

Foreign infant formula is coveted in China, where public trust was damaged by a 2008 scandal in which six infants died and thousands of others were sickened after drinking milk tainted with the toxic industrial compound melamine.

Foreign brands account for about half of total sales and can sell for more than double the price of local formula. The infant milk market in the world’s second biggest economy is set to grow to US$25bn by 2017.

Please be considerate of others when commenting. All comments posted are subject to our commenting policy. Comments violating this policy will be removed without notice.