Biostime gives discount amid possible price-fixing

Updated: 2013-07-10 15:15

By Liu Xiaozhuo (

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Chinese infant formula provider Biostime International Holdings Ltd on Tuesday acknowledged that it may have violated antitrust law and announced price cuts disguised as a sales promotion.

The announcement came 12 days after the Hong Kong listed company said its subsidiary company Biostime Inc. Guangzhou was under anti-trust probe by the National Development and Reform Commission (NDRC).

Biostime Inc. Guangzhou, in order to control the price structure of its products, sets the bottom price for distributors in their sales agreements, which is a violation of antitrust law, according to a report in Southern Daily.

Several foreign and domestic milk powder producers, including Wyeth Nutrition, Danone's Dumex, Abbott Laboratories, Nestle SA, Beingmate Group Co Ltd, Royal FrieslandCampina NV, had already announced their own price reductions.

So far, only Mead Johnson Nutrition Co, which is also under investigation, has not announced price cuts.

Biostime's sales promotion covers all of its infant formula products. Customers will be given 50 percent more in purchase credits. Ten points are worth 1 yuan toward the purchase of Biostime products. The promotion is actually a price cut of 11%.

If Biostime and other dairy providers under investigation are found guilty, they will be fined 1%-10% of their annual sales, according to an unnamed lawyer.

Biostime is still being investigated by NDRC. In coordination with NDRC, Biostime began signing new agreements with product dealers, its statement said.

Biostime saw its net profits increase 40 percent year-on-year in 2012. Its operating revenue is 3.4 billion yuan in 2012. Sales of infant formula account for 80.3 percent of its total income, according to its official website.

That means Biostime may face a fine ranging from 20 million to 200 million yuan if its milk powder business is found to have broken antimonopoly laws.

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