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07 August 2013

Mead Johnson settles over baby formula probe

Mead Johnson Nutrition said it will pay a penalty of about $33 million related to a probe by China into anti-competitive behaviour.

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Mead Johnson Nutrition Co on Tuesday said it will pay a penalty of about $33 million related to a probe by China into anti-competitive behaviour by baby formula makers.

The maker of Enfamil formula said the payment will 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 (±R32.20) to $3.30 (±R33.00) per share.

Mead Johnson, along with Danone, Nestle, Abbott Laboratories and Hong Kong-listed Biostime International Holdings said in recent weeks that they were being investigated 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 baby formulas.

Foreign infant formula is highly coveted in China since public trust was damaged by a 2008 tainted infant formula scandal that left at least six children dead. Foreign brands now account for about half of total sales.

 
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