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China Targets Foreign Baby Formula Brands in Anti-Trust Probe

07-02 14:00 Caijing
The six baby formula makers violated China’s anti-monopoly law by manipulating wholesale and retail prices, which thwarted competition, said the anti-trust bureau.

China has launched an anti-trust investigation on some foreign baby formula makers, in its latest efforts to shore up troubled home baby formula industry, the National Business Daily reported.

Among the targets of the investigations are international brands including Mead Johnson, Wyeth, Dumex, Abbott Labs, Frisco as well as home brand Biostime, which allegedly sell baby formulas at higher prices in China. 

Those companies have lifted their prices by 30% since 2008, the anti-trust bureau of the National Development and Reform Commission (NDRC), China’s top planner, told the paper.

The six baby formula makers violated China’s anti-monopoly law by manipulating wholesale and retail prices, which thwarted competition, said the anti-trust bureau.

Prices of imported baby formula soared over 60% over the last years amid dwindling confidence in home brands following the food scandal in 2008 which left six babies killed.

Statistics showed market share for foreign brands has jumped to over 60% from around 30% back in 2008 and once hiked a 90% high in 2009.

Biostime shares plunged as much as 7.55% Monday after the HK-traded company informed investors of the NDRC investigation last week.

Mead Johnson, Wyeth, Dumex and Frisco have all confirmed the investigation.

The Chinese government has stepped up its monitoring of imported baby formula while raising the safety standards of domestic dairy products to hold up its scandal-tainted dairy industry this year.

China’s cabinet plans to standardise the breeding of dairy cattle and increase the scale of industry players by restructuring dairy corporations. It will also speed up the introduction of a regulatory system for online sales. 

Baby formula will be managed as strictly as medicine, with an identification, authentication and tracking system so products can be traced back to their sources, according to a State Council conference chaired by the Chinese Premier on May 31st.

The country is also closing doors on new players into the market to ensure better monitoring of production, Wang Liming, minister of Industry and Information Technology (MITT) said at a conference which gathered 127 dairy producers.

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