China fines companies for baby formula price fixing
A Chinese state agency has fined six baby formula companies $110 million for alleged price fixing. The companies include US-based Mead Johnson, French-based Danone and New Zealand’s Fonterra. According to authorities, the companies violated the law by setting a minimum price for formula, raising the cost for consumers. Regulators say there was no direct collusion between the companies.
“This concept of setting minimum prices is common practice in many markets. Companies do this because they want to maintain an image as a premium brand,” says the BBC’s Martin Patience from Beijing. “But here in China, it appears that the regulators see this as illegal, and that’s why these companies have been fined.”
The baby formula industry is worth nearly $12 billion in China, and foreign brands account for about two thirds of the market. After six babies died from contaminated formula that was manufactured domestically in 2008, Chinese parents have shown a willingness to pay a premium for foreign brands.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
