CHINA: Japan's Meiji to cut price amid formula probe

By Michelle Russell | 12 July 2013

Japanese food and dairy manufacturer Meiji Holdiings, another infant formula company being investigated for allegedly breaking competition rules in China, has become the latest to pledge to cut prices.

Meiji is being investigated by the Chinese government over alleged price fixing, alongside companies including Nestle, Danone and Abbot Laboratories.

The company is to cut the prices of four key products by 3% to 7%. The price cuts will be implemented over a two-year period, a spokesperson for the firm told just-food.

Nestle, Danone and Abbott, as well as three other companies that are subject to the investigation, FrieslandCampina, Biostime International Holdings and Mead Johnson,?have all pledged to lower prices of certain infant formula products. Cuts outlined by Nestle and Danone are of as much as 20%.

Beijing has claimed some companies at the centre of the investigation, which is also looking at the wider dairy sector, were knowingly breaking the law and had instructed staff to delete communications detailing their involvement in the alleged price fixing.

Biostime admitted this week that its agreements with distributors in China on the price of infant formula could have broken anti-trust rules. The company said it had started to "amend relevant terms in relation to fixed prices and price floors" in the agreements to ensure the contracts complied with the law.

Beijing's investigation comes as China's infant formula market is booming with demand for foreign-made products driving the sector after a series of safety scares involving domestic companies. However, the Chinese government claims the price of infant formula has jumped 30% since 2008 when the melamine contamination scandal, which involved a number of domestic firms, killed six babies and sickened thousands.

The price of infant formula in China has further come under the spotlight recently after it emerged Chinese consumers, facing a jump in prices at home, were shipping in products from overseas, prompting rationing in markets in Europe and in Australia.

Source: http://www.just-food.com/news/japans-meiji-to-cut-price-amid-formula-probe_id123771.aspx?utm_source=article-feed&utm_medium=rss-feed&utm_campaign=rss-feed

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