China's National Development and Reform Commission (NDRC) has fined six companies, including Mead Johnson Nutrition Co., Danone and Fonterra, a total of US$110 million (S$139.6 million) following an investigation into price fixing and anti-competitive practices by foreign baby formula makers. This followed recent announcement by the NDRC that it had launched a major anti-trust investigation of major foreign infant formula brands selling in China. According to earlier official reports by the China's People Daily, Mead Johnson Nutrition Co., Abbott and Nestlé were amongst those that had allegedly entered into the collusive arrangements which were the subject of the investigations. Unlike Mead Johnson Nutrition Co. and Abbott, Nestlé was not punished by the NDRC as it was quoted by the Xinhua News Agency to have "cooperated with investigations and provided important evidence and had carried out active self-rectification".
It is understood that the NDRC's probe on "possible price fixing" were driven by allegations that the foreign infant formula brands in China engaged in potentially abusive behaviour which resulted in highly inflated prices of their products. Driven by recent milk safety scandals, Chinese consumers have switched to foreign infant formula brands as the confidence in the local brands plummeted; this increased the 2012 market share of the foreign brands to 52.1 percent of the market from a mere 30 percent in 2008. Prices of infant formula brands however, rose by more than 30 percent since 2008. Within days of the investigations taking place, announcements on price reductions were made and foreign infant formula brands began slashing the prices their products by as much as 20 percent. It is likely that other competition regulators globally will be looking at the behaviour of the infant formula brands in their jurisdictions as well.
While circumstances in Singapore will not be identical to China, it is interesting to note that there has also been dissatisfaction voiced by Singapore consumers. One unofficial complaint letter published in the forum of the Today Paper dated 13th July 2013 noted that infant formula prices in Singapore had risen by over 50 percent in the past six to seven years. It would be safe to assume that the Competition Commission of Singapore will be following this investigation in China since it is usual practice for it to keep itself abreast of the global competition scene including investigations conducted by its counterparts overseas.