Fri, Dec 19, 2014 - Page 13 News List

FTC says no irregularities in milk formula prices

By Camaron Kao  /  Staff reporter

The Fair Trade Commission yesterday said that it did not find any irregularity in domestic prices of infant formula powder.

However, the commission will continue to investigate whether companies colluded to drive up prices, commission member Wu Cheng-wuh (吳成物) told reporters.

Chinese Nationalist Party (KMT) Legislator Wu Yu-jen (吳育仁) said on Monday that infant formula powder makers raised their prices every year, despite milk powder prices dropping over the past three years, and the companies enjoy high profits through oligopoly.

On Tuesday, the Consumer Protection Committee said it found infant formula powder makers Snow Brand Milk Products Co of Japan and Standard Foods Corp (佳格食品) raised their prices at the same time last month and in July last year.

However, the commission found that profits for the firms were not unreasonably high, and despite declining milk powder prices, costs for producing infant formula powder rose.

The commission said gross margins for infant formula powder makers are about 30 percent, while management and marketing costs are between 10 and 30 percent.

Import costs for infant formula powder rose to NT$341 per kilogram in the past 11 months, from NT$305 per kilogram last year and NT$294 per kilogram in 2012, Wu said.

Wu said Snow Brand increased its prices because of rising material costs, while Standard Foods raised prices due to recipe adjustments.

The two companies raised their prices after market leaders Nestle Taiwan Ltd (雀巢), Abbott Taiwan (亞培) and Mead Johnson Taiwan (美強生) raised their prices, Wu said.

Snow Brand Milk Products accounts for 11 percent of the market, while Standard Foods has a 2 percent market share, according to the commission.

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