China fined six companies, including Mead Johnson Nutrition Co., Danone and New Zealand dairy giant Fonterra, a total of $110 million following an investigation into price fixing and anti-competitive practices by foreign baby formula makers.
The other three penalised were Abbott Laboratories, Dutch dairy cooperative FrieslandCampina and Hong Kong-listed Biostime International Holdings, the National Development and Reform Commission (NDRC) said yesterday.
The fines, which follow a four-month antitrust probe by the NDRC, coincide with separate pricing investigations into 60 foreign and local pharmaceutical firms as well as companies involved in gold trading. Those probes have yet to conclude.
The official Xinhua news agency said the fines were a record for China, although it did not elaborate.
“These are really significant fines for China, which has typically not issued large fines for antitrust violations,” said Peter Wang, an antitrust expert and Shanghai-based partner for law firm Jones Day.
Foreign infant formula is coveted in the world’s second biggest economy, where public trust was damaged by a 2008 scandal in which six infants died and thousands became ill after drinking milk tainted with the toxicindustrial 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 China is set to grow to $25 billion by 2017 from $12.4 billion in 2012, according to data from Euromonitor.
The NDRC said in a statement the fines were for restricting competition, setting curbs on minimum prices for distributors and for using a variety of methods to disrupt market order.
These are really significant fines for China
It fined US-based Mead Johnson 203.8 million yuan ($33.29 million); French food group Danone 172 million yuan; Biostime 162.9 million yuan; Abbott 77 million yuan; FrieslandCampina 48 million yuan and Fonterra four million yuan.
All of the companies said they would not contest the penalties.
Swiss giant Nestlé, Japan’s Meiji Holdings and Zhejiang Beingmate Scientific Technology Industry and Trade Co. Ltd were not punished because “they cooperated with the investigation, provided important evidence and carried out active self-rectification”, Xinhua quoted Xu Kunlin, the head of the NDRC’s price department, as saying.