Nestle cuts China infant formula prices amid probe
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Nestle cuts China infant formula prices amid probe

BEIJING (AP) — Nestle SA says it will cut infant formula prices in China by an average of 11 percent starting Monday in response to a probe into alleged price-fixing by several foreign companies.

The price cuts by the company’s Wyeth Nutrition unit will be maintained through 2014, and the prices of some products will be cut by up to 20 percent, Nestle spokesman Jonathan Dong said in an email Thursday.

China’s National Development and Reform Commission is investigating five foreign companies and one Chinese company for allegedly violating market competition laws by manipulating retailers to sell infant formula at inflated prices.

China has not alleged collusion among the companies in setting prices, known as horizontal price-fixing. However, regulators in many countries often focus more on prices set for retailers, known as vertical price-fixing, because collusion allegations can be difficult to prove.

The other foreign companies — Danone Dumex, Abbott Laboratories, Mead Johnson Nutrition Co. and FrieslandCampina — did not immediately respond to questions about whether they also were lowering their prices or merely said they were cooperating with the inquiry and it would be inappropriate to comment further.

The Chinese company, Guangzhou-based Biostime International Holdings Ltd, said it was awaiting the result of the investigation and had no current plans to lower its prices.

Chinese demand for foreign milk formula has risen in the wake of scandals that have left many parents wary about domestically produced infant formula. In 2004, fake Chinese milk powder caused malnutrition deaths in at least a dozen babies. That was followed by a melamine-tainted milk scandal in 2008 that killed at least six babies and sickened nearly 300,000 others.