China issues record fines to formula firms

BEIJING -- China has issued record fines of 670 million yuan ($108 million) to six baby formula companies on the mainland following an anti-trust probe, the country's top economic planner announced Wednesday.

The six companies are Biostime, Mead Johnson, Dumex, Abbott, Friesland and Fonterra, said the National Development and Reform Commission (NDRC).

Biostime was fined 163 million yuan, or 6 percent of its sales revenue in 2012, as it "seriously violated the anti-monopoly law and failed to actively take corrective action," said Xu Kunlin, chief of the Price Department of the NDRC.

Mead Johnson was fined 204 million yuan, or 4 percent of its revenue last year, because it "did not actively cooperate with the investigation but did take active self-rectification measures," said Xu.

Dumex, Abbott, Friesland and Fonterra each received a fine equal to 3 percent of their 2012 revenue. They were fined 172 million yuan, 77 million yuan, 48 million yuan and 4 million yuan, respectively.

Xu said these four companies cooperated in the probe and actively moved to correct their improper practices.

Three other companies, including Wyeth, Beingmate and Meiji, were exempt from punishment, because they cooperated with the government investigation, provided important evidence and actively took self-rectification measures, said Xu.

Xu said that in the probe into these nine companies initiated in March, the NDRC found the involved formula producers set minimum resale prices for distributors. The distributors who sold their products at a price lower than the fixed minimum price were punished.

Xu said the practice maintained milk powder prices at a high level, restricted competition in the market and harmed the interests of consumers.