Reports: Nestle, Danone To Cut Infant Milk Prices In China Amid Probe

(RTTNews) - Swiss food and nutrition products giant Nestle S.A. (NSRGY.PK, NSRGF.PK) and French dairy giant Danone (DANOY.PK) will reportedly cut prices of infant formula milk in China after the country started a probe into possible price-fixing and violation of anti-monopoly laws by foreign companies in the sector.

According to media reports on Wednesday, Wyeth Nutrition, which was acquired by Nestle in 2012, will cut prices of certain infant-formula products by up to 20 percent and will not raise prices for a year. Danone's Dumex unit is said to be preparing a price cut whose details would be disclosed later.

The two companies, along with Mead Johnson Nutrition Co. (MJN) and Abbott Laboratories (ABT), are being investigated by China's National Development and Reform Commission or NDRC. The companies reportedly said they are co-operating with the probe.

Mead Johnson said Tuesday that it is committed to providing high-quality and safe products at a good value for consumers in China and throughout the world. The company added that is fully cooperating with the Chinese government's antitrust review of resale prices in the infant formula market and will provide information in response to inquiries received from government officials.

The NDRC is said to have evidence that these companies sold their products in China at high prices, with their prices rising about 30 percent since 2008. Chinese consumers turned away from local products in 2008 when infant formula tainted with melamine killed at least six infants and made thousands sick. Foreign brands now account for more than 50 percent of total sales in China.

According to Xinhua, the Chinese government has since issued a series of policies, including technology restructuring and the establishment of a quality guarantee system, to improve the quality of domestic infant formula products.