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China imposes record fines on dairy firms for high-pricing
August 7, 2013, 5:20 am

[Xinhua Images]

China’s Food and Drug administration is looking into a proposal to tighten licensing of milk powder production [Xinhua Images]

China has issued record fines of 670 million yuan ($108 million) for six dairy companies on charges of price-fixing on Wednesday.

The six dairy companies are Biostime, Mead Johnson, Dumex, Abbott, Friesland and Fonterra.

Fonterra is embroiled in a separate milk powder contamination scare that has led to product recalls in China, Hong Kong and elsewhere in Asia.

Some foreign brands have increased their prices by up to 30 per cent since 2008, with some prices reaching nearly twice as much as domestic brands, shows data from China’s top economic planner, the National Development and Reform Commission.

The six foreign firms have been found guilty after an official probe into charges of violating China’s anti-monopoly laws through high pricing and limited market competition, said the NDRC.

US-based market research firm AC Nielsen says four foreign brands, including Mead Johnson and Wyeth, accounted for about half of the total sales of baby formula in the Chinese market in 2012.

The China Food and Drug Administration, said in a statement on Tuesday that it is seeking public opinion on a proposal to “tighten conditions for the granting of licenses for milk powder production”.

Chinese consumer confidence in domestic baby formula sank in 2008, when melamine-tainted milk killed six infants and made 300,000 sick.

The NDRC has undertaken an anti-trust review by investigating high pricing in gold trading and pharmaceuticals, apart from milk powder production.

China’s state council said in July that it would reform drug pricing and procurement mechanisms, guarantee drug quality and “fairly reduce drug costs…and resolutely investigate illicit kickback behaviour”.

Source: Agencies

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