US infant formula producer Abbott Laboratories has become the latest of the companies being investigated for allegedly breaking competition rules in China to pledge to cut prices.
Abbott is the subject of a Chinese government probe into alleged price fixing, alongside companies including Nestle, Danone and Mead Johnson.
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The company today (9 July) confirmed it would cut prices on some of its infant formula in the country by as much as 12%. The move follows similar measures by Nestle and Danone, as well as two other companies under investigation, FrieslandCampina and Hong Kong-listed Biostime International Holdings, following the launch of the investigation. Mead Johnson has yet to comment on whether it will lower prices.
Abbott said it would cut the price of Similac and Pediasure formula in China by 4-12%.
China’s infant formula sector is booming, driven by demand for foreign formula in the wake of successive safety scandals involving a number of domestic companies. However, Beijing has claimed prices have of some foreign products have jumped 30% after the 2008 melamine scandal, when formula tainted with the industrial chemical killed six babies and sickened thousands.
It has emerged the investigation into infant formula prices is part of a wide-ranging probe into China’s dairy sector, which has also taken in New Zealand dairy giant Fonterra.
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By GlobalDataBeijing has claimed some of the companies at the centre of the investigation were knowingly breaking the law and had instructed staff to delete communications detailing their involvement in the alleged price fixing.
The China State Food & Drug Administration said some of the companies under investigation are suspected of threatening retailers with penalties, including the restriction of further supply, if they did not sell the products at designated prices.
If found guilty, the companies involved could face fines ranging from 1-10% of their annual sales, the SFDA said.
Most of the companies under investigation have issued statements to say they are co-operating with the authorities.
Today, Biostime admitted its agreements with distributors in China on the price of infant formula could have broken anti-trust rules.
The investigation is ongoing. Beijing has made no indication of when it expects to publish its results.
