Nestlé escapes fine in baby formula probe

A Beijing mother feeds her baby at a shopping mall Keystone

China has fined six baby formula producers following an investigation into price fixing and anti-competitive practices. Swiss food giant Nestlé was not punished because it cooperated with the Chinese authorities.

The Chinese National Development and Reform Commission (NDRC) announced that it was charging the companies a total of $110 million (CHF102 million) following a four-month antitrust probe. The penalised firms are Mead Johnson Nutrition, Danone, Fonterra, Abbott Laboratories, FrieslandCampina and Biostime International Holdings.

In a statement, published on Wednesday, the NDRC said that the fines were for restricting competition, setting curbs on minimum prices for distributors and disrupting market order.

Along with two other companies, Nestlé was not punished because it “cooperated with the investigation, provided important evidence and carried out self-rectification” said the head of the NDRC’s price department.

In July, when the probe was made public, Nestlé said that it would slash its baby milk formula prices by up to 20 per cent in China.

The punished firms now have to pay fines worth three to six per cent of their 2012 sales.

Analysts have said that the probe may have been part of a Chinese plan to promote the consumption of local baby formula.

In 2008, melamine-tainted Chinese formula killed six infants and sickened thousands of others – increasing the demand for foreign milk products.