Mead Johnson Settles With China Over Price-Fixing
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Version 0 of 1. Mead Johnson Nutrition said on Tuesday it would pay about $33 million in connection with a Chinese investigation into possible price-fixing and anticompetitive practices by foreign makers of baby formula. Mead Johnson, the maker of Enfamil formula, said that as a result of its antitrust review, China’s National Development and Reform Commission 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 commission’s review, would reduce its full-year earnings by about 12 cents a share, but it reiterated its 2013 earnings forecast for profit, excluding one-time items, of $3.22 to $3.30 a share. The company said in recent weeks that it was being investigated, along with Danone, Nestlé, Abbott Laboratories and Biostime International Holdings, by the Chinese commission, an economic planning agency, for possible antitrust violations including price-fixing. As a result, Mead Johnson and others cut prices on their baby formulas. Representatives from Danone, Nestlé and Abbott Laboratories were not immediately available for comment. Biostime, which imports most of its products, said on Tuesday that its shares had been suspended pending an announcement related to an investigation by China’s top economic planning agency. The company said previously that a unit based in Guangzhou, a city in southern China, was being investigated by the commission over possible 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 to 10 percent. |