Sector Snap: Infant formula makers

Media reports says China committee launching probe into foreign infant formula makers

Associated Press

NEW YORK (AP) -- China is launching an investigation into alleged price fixing by some foreign makers of infant formula, according to state media reports.

The reports said that the National Development and Reform Commission is investigating Biostime International Holdings Ltd., Mead Johnson Nutrition Co. and Nestle SA for allegedly violating anti-monopoly laws by charging high prices and limiting competition. Other companies being investigated include Abbott Laboratories and Danone SA.

Nestle spokeswoman Melanie Kohli said that the company's Wyeth Nutrition unit has been actively cooperating with the commission's review of the industry but said it wasn't appropriate for the company to comment on the details of the review at this stage of the process.

Mead Johnson said in a statement that it is committed to providing high-quality, safe products to its consumers, and that it is fully cooperating with the review.

Abbott spokeswoman Kelly Morrison said that the company is aware of the inquiry and is cooperating with the commission.

Other targeted companies did not immediately respond to emails seeking comment.

There is a degree of mistrust about domestically produced infant formula. In 2004, fake Chinese milk powder left at least a dozen babies dead from malnutrition. That was followed by a melamine-tainted milk scandal in 2008 that killed at least six babies and sickened nearly 300,000 others.

In May Chinese Premier Li Keqiang told a meeting of Cabinet officials that the quality of infant formula should be tested with the same standards used for medicines and that each step of the production process must be monitored.

Shares of Mead Johnson declined $4.18, or 5.3 percent, to $75.25 in Tuesday afternoon trading. Abbott's stock fell 11 cents to $34.92.

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