Mead Johnson has become the last of the infant formula companies being investigated for allegedly breaking competition rules in China to pledge to cut prices.
The US company is the subject of a Chinese government probe into alleged price fixing, alongside companies including Nestle, Danone and Abbot Laboratories.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Mead Johnson said it will reduce the ex-factory price of its main products by 7% to 15% as of 16 July, and will change its current promotional, marketing and sales plans. The firm added that it was fully co-operating with an anti-trust probe by Chinese authorities.
“For the sake of the healthy development of the industry, and to reinforce the trust and support of Chinese consumers, the company will optimise its marketing and sales strategy and adjust current pricing and promotional plans,” the company said.
Nestle, Danone and Abbott, as well as two other companies that are subject to the investigation, FrieslandCampina and Biostime International Holdings have all pledged to lower prices of certain infant formula products. Cuts outlined by Nestle and Danone are of as much as 20%.
Beijing has claimed some companies at the centre of the investigation, which is also looking at the wider dairy sector, were knowingly breaking the law and had instructed staff to delete communications detailing their involvement in the alleged price fixing.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataBiostime admitted this week that its agreements with distributors in China on the price of infant formula could have broken anti-trust rules. The company said it had started to “amend relevant terms in relation to fixed prices and price floors” in the agreements to ensure the contracts complied with the law.
Beijing’s investigation comes as China’s infant formula market is booming with demand for foreign-made products driving the sector after a series of safety scares involving domestic companies. However, the Chinese government claims the price of infant formula has jumped 30% since 2008 when the melamine contamination scandal, which involved a number of domestic firms, killed six babies and sickened thousands.
The price of infant formula in China has further come under the spotlight recently after it emerged Chinese consumers, facing a jump in prices at home, were shipping in products from overseas, prompting rationing in markets in Europe and in Australia.
