Multimillion-dollar fines to large corporations for cartel practices and safety concerns over imports from New Zealand are upsetting the balance of the infant milk market in China. Allegations that had prompted authorities in Beijing to open aninvestigation into price-fixing by affiliates of the market-leading foreign multinationals were confirmed.
Heavy penalties for violation of the anti-monopoly law were triggered for almost all of them, totaling more than 80 million euros ($110 mln in U.S. dollars). American Mead Johnson, Hong Kong-based Biostime, French Dumex (Danone), other U.S. company Abbott Laboratories, Dutch Friesland Campina, and New Zealand’s Fonterra will have to pay. Nestlé’s Wyeth and others controlled by Japanese and Chinese groups will not pay fines as a result of their “full cooperation” in the investigation.
According to the most recent estimates, the infant formula market in China is worth 11 billion euros. After the fines, foreign brands fear the backlash in terms of image. Even more so for Fonterra, which had to recall dozens of tons of product from the People’s Republic due to contamination by a bacterium and high nitrite content.
