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Baby milk firms to cut prices

By Wang Xinyuan Source:Global Times Published: 2013-7-4 23:48:01

A history of hikes in milk powder

Several infant milk formula companies including Danone's Dumex and Nestle's Wyeth Nutrition have promised to cut prices in response to China's anti-trust probe into price manipulation, media reports said Thursday.

"Dumex has been actively cooperating with the National Development and Reform Commission (NDRC) on the investigation and is preparing a price reduction proposal," Dumex told the Global Times in an e-mail on Thursday, saying that it will disclose a detailed price cut proposal later.

Nestle's Wyeth Nutrition admitted in a statement posted on its official website Wednesday that it had manipulated prices with its distributors and retailers.

It promised to "lower prices of its products by 11 percent on average, and as much as 20 percent for some products."

It also promised to continue offering these prices in 2014, and that it would not increase prices of newly launched infant formula products within a year of the launch.

However, its store on e-commerce website tmall.com told the Global Times Thursday that they haven't yet received any official notice of the price cut.

"It seems that the NDRC's probe into price manipulation worked in some way, which is good for consumers," Pu Xiaopeng, a dairy analyst at the Distribution Productivity Promotion Center of China Commerce, told the Global Times.

In a bid to investigate possible price manipulation in the infant formula market and restore consumers' confidence, the NDRC launched an anti-trust probe recently against some milk powder sellers including Wyeth, Dumex, Mead Johnson Nutrition, and Abbot Laboratories.

The NDRC told the Global Times Tuesday there was evidence that these companies, together with their distributors and retailers, had manipulated prices and excluded fair competition. It said its anti-trust agency would conduct an in-depth investigation to sustain fair competition and protect consumers' interests.

The prices of foreign infant milk formula products have risen by over 30 percent since 2008, prompting suspicions about price manipulation.

Voluntarily lowering prices may help reduce the fines for price manipulation, but cannot exempt companies from punishment, China National Radio reported Thursday citing Wang Xiaoye, an anti-trust advisor to the State Council who drafted China's Anti-Trust Law.

According to the law, companies that are found to have engaged in price manipulation will be subject to a fine of 1 to 10 percent of their annual sales revenue, as well as confiscation of illegal income. They are also subject to civil claims for compensation.

The NDRC initiated a similar probe against price manipulation in Feb­ruary 2013, targeting high-end liquor producers Kweichow Moutai and Wuliangye Group, which were fined a total of 449 million yuan ($73 million).

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