Six Dairy Companies Fined for Price Fixing

As New Zealand dairy company deals with the blowback from the recall of some of its milk powder that was contaminated with Clostridium botulinum, the company is now also being fined for alleged price-fixing in China. From the South China Morning Post:

The National Development and Reform Commission fined Hong Kong-listed Biostime, Mead Johnson and Abbott of the US, FrieslandCampina from the Netherlands, France’s Dumex and New Zealand’s Fonterra.

The penalties were imposed amid a drive by mainland authorities to ease consumers’ fears about the reliability and quality of domestic dairy brands.

At the same time, public confidence in foreign formula brands has plunged after several manufacturers recalled products that contained contaminated ingredients from a production line run by Fonterra. [Source]

And from Xinhua:

Xu Kunlin, chief of the commission’s pricing department, said the result of a probe initiated in March showed that the formula producers set minimum resale prices for distributors and punished distributors who sold their products at lower prices by suspending supplies or ending contracts.

“These practices caused milk powder prices to remain a high level, restricted competition in the market and harmed the interests of consumers,” Xu said.

Xu said Biostime was fined 163 million yuan, or 6 percent of its sales revenues for 2012, due to its serious violations of anti- laws and subsequent failure to correct its actions.

Mead Johnson was fined 204 million yuan, or 4 percent of its revenues last year, because it did not actively cooperate with investigators, Xu said.

Dumex, Abbott, Friesland and Fonterra each received fines equal to 3 percent of their 2012 revenues, as they cooperated in the probe and actively moved to correct their practices, Xu said. [Source]

China’s domestic and dairy product market has suffered as a result of contamination and widespread food safety issues, and foreign brands have taken the opportunity to move into China. Read more about food safety in China via CDT.