FrieslandCampina has confirmed that it will follow rivals Nestle and Danone and cut the price of infant formula products sold in China.
The Dutch dairy group said that it will lower the price of its “full range” Friso infant formula products sold in China by 5% from today (8 July).
The move comes in response to an official investigation into pricing in the market, which is being conducted by China’s Price Supervision and Anti-monopoly Bureau, under the auspices of the National Development and Reform Commission.
FreislandCampina emphasised it is “fully co-operating” with the probe.
“FrieslandCampina supports the NDRC’s objective to ensure fair pricing; the company will reinforce compliance with pricing and anti-trust regulations. FrieslandCampina commits to adjusting contractual terms to explicitly emphasize adherence to China’s anti-monopoly law. FrieslandCampina will also enhance its code of conduct and provide comprehensive anti-trust training based on Chinese laws,” the company said.
The official investigation first came to light two weeks ago, when Hong Kong-listed Biostime International admitted it was under investigation in a regulatory filing.
Biostime said the “main purpose” of the investigation was “in relation to an alleged violation of Article 14 of Anti-Monopoly Law of the People’s Republic of China”. Specifically, Biostime said the authorities concerns related to the possibility firms were “managing the market sales prices at which the distributors and retail sales organisations” sell products.
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.
FrieslandCampina’s price reduction follows similar actions by rivals. Nestle confirmed that its Wyeth Nutrition arm will cut prices from today “through 2014” on “key products”. On average, prices will fall by 11%; Nestle said the largest cut will be of 20%. Meanwhile, Danone said that it is “preparing a price reduce proposal”.
Other infant formula makers under investigation include Mead Johnson and Abbott Laboratories. In a statement, Mead Johnson said that it is “fully cooperating” with the official investigation.