Fonterra has indicated China is investigating more dairy products than simply infant formula after a week when it emerged companies including Nestle and Danone are being probed over alleged price fixing on baby milk.
The New Zealand dairy giant yesterday (4 July) confirmed it had been contacted by China’s National Development and Reform Commission on “a current broad-ranging investigation of consumer dairy products”.
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The admission followed news the NDRC is looking into allegations of anti-competitive practices in the setting of prices of infant formula. Nestle, Danone, Mead Johnson and Abbott Laboratories are among companies being investigated. The probe has prompted Nestle and Danone to announce plans to cut prices on infant formula.
Fonterra said: “Fonterra understands that the NDRC is reviewing a wide range of consumer businesses in the Chinese dairy industry as part of this work.
“Fonterra operates a small consumer business in China and has a long history of engagement with government agencies and is co-operating fully with the NDRC. Fonterra will provide further updates on any outcomes as appropriate, when the investigation is complete.”
Officials at the NDRC could not be reached for immediate comment.
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By GlobalDataThe investigation into the alleged fixing of infant formula prices was first revealed by Hong Kong-listed Biostime International Holdings, when it admitted it was under investigation. FrieslandCampina is also part of the group of companies being probed.
China is seen as an attractive market for dairy and infant formula companies. Demand for dairy products is on the rise and there has been a jump in sales foreign-made infant formula after a series of safety scares involving domestically-produced products.
The price of infant formula in China has come under the spotlight recently, with Chinese consumers shipping in products from overseas, prompting rationing in markets in Europe and in Australia.
Figures from Euromonitor claim the average unit price of infant formula in 2012 totalled US$24.60, compared to an average price of $20.40 in western Europe and $16.30 in the UK.
