7 Aug 2013

China fines milk powder firms

8:55 pm on 7 August 2013

China has imposed fines totalling $US109 million on six international milk powder companies accused of price-fixing.

Officials say the firms used a variety of methods to restrict competition. They are: Mead Johnson, Biostime, Dumex, Abbot, Friesland and Fonterra. The move follows an antitrust and anti-competition probe by authorities.

Consumers in China are willing to pay more for foreign brands after six children died from drinking tainted milk produced locally in 2008 and 300,000 were made ill.

The BBC reports the fines are not connected with the melamine milk scandal, which involved 22 Chinese companies including one part-owned by Fonterra.

The fines, announced by China's top economic planner, the National Development and Reform Commission, coincide with a separate pricing investigation into the pharmaceutical industry.

Five of the companies named in the probe are foreign while Biostime is listed in Hong Kong.

New Zealand dairy giant Fonterra said on Wednesday its fine of $NZ900,000 was in the lower range and has nothing to do with the current controversy over contaminated whey products.

The company said it co-operated fully with the inquiry and accepts the findings. It said the decision clarifies pricing policies for the future and it would be improving training for its sales teams.