CHINA: Danone prepares infant formula price cut
Danone said a detailed price reduce proposal will be disclosed later
Danone has followed rival Nestle in confirming it will cut the price of infant formula milk in China as authorities carry out an investigation into alleged illegal pricing practices by foreign companies.
A spokesperson for Danone told just-food today (4 July) its Dumex infant formula unit has been "actively co-operating" with China's National Development and Reform Commission on the investigation and is "preparing a price reduce proposal". The move, Danone said, will allow it to provide consumers with "high-quality products with a good price". A detailed proposal will be disclosed later, the spokesperson said.
Nestle confirmed yesterday that its Wyeth Nutrition arm will cut prices from 8 July "through 2014" on "key products". On average, prices will fall by 11%; Nestle said the largest cut will be of 20%.
The investigation was first revealed by Hong Kong-listed Biostime International Holdings, when it admitted it was under investigation.
"The main purpose of the investigation is in relation to an alleged violation of Article 14 of Anti-Monopoly Law of the People's Republic of China by Biostime Guangzhou in managing the market sales prices at which the distributors and retail sales organisations sell our products," Biostime said last week.
Article 14 of China's anti-monopoly regulations prohibits agreements among business operators and their trading parties relating to "fixing the price of commodities for resale to a third party"; "restricting the minimum price of commodities for resale to a third party"; or "other monopoly agreements" as determined by the Anti-monopoly Authority.
In a statement issued yesterday, Mead Johnson, which manufacturers the Enfamil brand, said it was "fully cooperating with the recently reported Chinese government antitrust review of resale prices in the infant formula market".
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