Fonterra fined $900k for China price fixing

Chinese consumers are highly sensitive to any news of adulterants in dairy products. Photo / AP

Fonterra said it had been fined $900,000 following the conclusion of a review by Chinese authorities into the pricing of dairy products in the people's republic.

The review was undertaken by China's National Development and Reform Commission (NDRC).

Fonterra said it had operated "fully and openly" with the NDRC throughout the process.

"We accept the NDRC's findings and we believe the investigation leaves us with a much clearer understanding of expectations around implementing pricing policies which is useful as we progress our future business plans,'' Kelvin Wickham, president of Fonterra Greater China and India, said.

"We understand that a number of companies in the dairy industry were fined, with Fonterra's fine being in the lowest range," Wickham said in a statement.

He said Fonterra would provide additional training to its sales teams and would review distributor contracts to ensure clarity around how pricing policies were implemented through the distribution chain.

Last month, Fonterra announced a 9 per cent price cut in its Anmum maternal health products sold in China just as the NDRC's investigation into the pricing got under way.

The co-operative said then that the price cut was to better meet consumer needs in light of recent industry-wide price revisions. The price cut was effective from August 1.

Fonterra confirmed then that it had been contacted by the NDRC regarding the pricing of consumer dairy products in China. Fonterra joined Danone, Royal FrieslandCampina, Abbott Laboratories, Nestle and Mead Johnson Nutrition in cutting prices since the NDRC launched its investigation.