China fines six baby formula suppliers $108 million

The Chinese government Wednesday issued what it said were record-high fines totaling $108 million in connection with the scandal-ridden baby formula industry.

The government fined five foreign companies — Mead Johnson Nutrition Co. and Abbott Laboratories, both in Illinois; the Dumex unit of France's Groupe Danone; Royal FrieslandCampina in the Netherlands; and Fonterra Co-operative Group in New Zealand — as well as Biostime International Holdings in Guangzhou, China.

The government accused the manufacturers of artificially inflating the price of formula, taking advantage of the panic among Chinese parents over tainted milk products.

The milk powder industry in China has lurched from scandal to scandal. Most recently, the world's largest dairy exporter, Fonterra, disclosed Saturday that it had found traces of the bacteria causing botulism in some of its product.

China is one of the world's largest markets for baby formula.

Since 2008, when six babies died because of the illegal addition of melamine to milk powder, parents have turned to imported brands, often stocking up on supplies during trips abroad. Hong Kong last year had to impose restrictions on formula sales because so many mainland Chinese were stripping the products from store shelves.

In a statement Wednesday, an official of the National Development and Reform Commission, China's top economic agency, said formula producers set minimum resale prices and punished distributors who sold at lower prices.

"These practices caused milk powder prices to remain at a high level, restricted competition in the market and harmed the interests of consumers," Xu Kunlin was quoted as saying by the New China News Agency.

Chinese state media reported that prices for imported baby formula had risen 30% since the 2008 melamine scandal.

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