China to investigate infant formula makers for possible price-fixing

China’s top economic planning agency said yesterday that it would investigate some of the world’s biggest infant formula makers for possible anti-trust violations.

The companies, which include Nestle, Danone, Mead Johnson Nutrition and Abbott Laboratories, were co-operating with China's National Development and Reform Commission (NDRC) in its investigation into possible price-fixing and anti-competitive practices.

"The companies are believed to have a monopoly and pursue anti-competitive practices in the market," the People's Daily, which is the official newspaper of the Communist Party, reported.

The paper quoted the NDRC’s price monitoring and anti-monopoly unit, saying it had “evidence that these companies charged higher prices in the Chinese market, with price increases of about 30 per cent since 2008”.

More than 70 per cent of Chinese mothers rely on baby formula rather than breast milk to feed their babies, as they believe they do not provide enough milk.

Formula scandal
However, the reputation of domestic infant formula was shattered by an infant formula scandal in September 2008, when six children died and a further 294,000 became ill from drinking domestically produced infant milk formula contaminated with the chemical melamine.

Nearly 52,000 more were hospitalised.

Foreign brands now account for about half of total sales, and Irish companies are active in the infant formula market in China.

Dairygold is the leading supplier to the Chinese market of demineralised whey, a key ingredient of infant formula.

In October last year, Kerry signed a partnership deal with China’s leading domestic baby formula brand, Beingmate, to supply dairy ingredients for the infant nutrition sector.

Since 2008 Glanbia has had a premix manufacturing facility in Suzhou where it manufactures a range of vitamins, minerals and other nutraceuticals for infant formula.

The Beijing Times, which first reported the investigation, said the investigations came to light after a Hong Kong-listed infant nutrition manufacturer, Biostime International Holdings, said its Guangzhou unit was under investigation by the NDRC for an alleged violation of China's anti-monopoly law.