Danone says will cut China baby formula prices

PARIS (AFP) - French food group Danone said on Monday it would cuts its prices for baby formula in China by five to 20 per cent, after the government launched an investigation into alleged price-fixing by foreign firms.

Both Danone and Swiss food giant Nestle last week announced plans to lower prices for baby milk.

Their decisions came after China's National Development and Reform Commission, the country's top economic planner, launched a probe of high prices that it claimed resulted from a monopoly-like situation.

Danone said in a statement its subsidiary Dumex would cut the prices from Tuesday and would also "cooperate entirely" with the Chinese probe.

It announced an internal review of its procedures "to ensure they are in accordance with (Chinese) laws and regulations".

The probe comes amid huge demand for foreign baby formula products after a 2008 scandal involving tainted formula that killed six children and sickened more than 300,000.

Other foreign companies being investigated include Mead Johnson Nutrition, Abbott Laboratories and Dutch firm Royal FrieslandCampina, Chinese state media said.

Danone has made significant efforts to expand into China's growing market for dairy products. Last year Danone generated about six percent of its sales in China, or 1.3 billion euros (S$2 billion) out of a total of more than 20 billion euros.

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