Abbott Cuts China Infant Formula Prices Up to 12% Amid Probe
Abbott Laboratories (ABT) will cut prices of its main infant formula products in China by as much as 12 percent, the fourth foreign company to do so in a week after the government began a probe into possible price-fixing.
Abbott will reduce prices of products including its Similac and Pediasure-brands by 4 percent to 12 percent in China, Pamela Harrison, a spokeswoman for the company, said via phone today.
The Abbott Park, Illinois-based company joins Nestle SA (NESN), Danone and Dutch producer Royal FrieslandCampina NV in lowering prices after the National Development and Reform Commission, the country’s top economic planning agency, started a probe into their pricing of milk powder. The investigation includes Mead Johnson Nutrition Co. (MJN) and domestic firm Biostime International Holdings Ltd. (1112)
Guangzhou-based Biostime “may be allegedly” in breach of anti-monopoly laws and is offering a discount of about 11 percent on its infant formula products through reward points, starting from July 10, it said in a filing to Hong Kong’s stock exchange today. The investigation is ongoing, it said. The stock rose as much as 6.2 percent at HK$33.6 in Hong Kong trading today, paring its decline since June 27, when it said it was under investigation for price fixing, to about 30 percent.
The NDRC has proof the companies sold products at high prices in China and their pricing increased about 30 percent since 2008, the same year melamine-tainted baby formula killed six infants, the official People’s Daily has reported.
New Zealand’s Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, also said it had been contacted by NDRC, another sign of the nation increasing its scrutiny of overseas company.
Danone and Nestle are cutting prices by as much as 20 percent. Zhejiang Beingmate Technology Industry & Trade Co., the Hong Kong-listed arm of China’s second-largest baby formula company by market share, will also reduce prices by up to 20 percent to increase its competitiveness and market share. Beingmate hasn’t been named in the government probe.
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