Aug 6 Mead Johnson Nutrition Co said on
Tuesday it would pay a penalty of about $33 million related to a
probe by China into possible price fixing and anti-competitive
practices by foreign baby formula makers.
The maker of Enfamil formula said that as a result of its
antitrust review, China's National Development and Reform
Commission (NDRC) had assessed administrative penalties against
Mead Johnson and a number of other milk formula companies doing
business in China.
Foreign infant formula is highly coveted in China, where
public trust was damaged by a 2008 scandal in which six infants
died and thousands of others were sickened after drinking milk
tainted with the toxic industrial compound melamine. Foreign
brands now account for about half of total sales.
Mead Johnson said the payment, which resolves the NDRC
review, would reduce its full-year earnings by about 12 cents
per share, but it reiterated its 2013 earnings forecast for
profit, excluding one-time items, of $3.22 to $3.30 per share.
The company said in recent weeks that it was being
investigated, along with Danone, Nestle,
Abbott Laboratories and Hong Kong-listed Biostime
International Holdings, by China's National
Development and Reform Commission, an economic planning agency,
for possible antitrust violations including price-fixing.
As a result, Mead Johnson and others cut prices on their
Representatives from Danone, Nestle and Abbott Laboratories
were not immediately available for comment.
Infant milk producer Biostime International Holdings Ltd,
which imports most of its products, said on Tuesday its shares
had been suspended pending an announcement related to an
investigation by Beijing's top economic planning agency.
The company had said previously that a unit based in China's
southern city of Guangzhou was being investigated by the NDRC
over suspected price-fixing.
In a statement to the Hong Kong stock exchange in late July,
Biostime said it planned to lower prices of infant formula
products by 5 percent to 10 percent and that the investigation
into its unit was ongoing.