Stampa

PRICES FOR BABY MILK


PRESS RELEASE



PRESS RELEASE

EURO 9,743,000 IN FINES
FOR MANUFACTURERS OF BABY MILK


Cartel maintains high prices,
often two or three times those found in other European countries


                               
The Italian Competition Authority, at its meeting on 12 October 2005, determined that the companies Heinz Italia S.r.l., Plada S.r.l., Nestlé Italiana S.p.A., Nutricia S.p.A., Milupa S.p.A., Humana Italia S.p.A and Milte Italia S.p.A. had set up an anti-competitive arrangement, agreeing to maintain high prices for baby milk.
That arrangement violates Article 81 of the EU Treaty and, given its seriousness and duration, has been punished with fines totalling Euro 9,743,000.
The investigation showed that, in the period 2000/2004, these companies adopted parallel behaviour in setting prices for baby milk – and specifically newborn infant formula and follow-on milk – at very high levels which are far in excess of the prices found in other European countries for equivalent or substitute products. Specifically, the price difference in pharmacies between Italy and abroad was in most cases 150% higher with instances of over 300% for newborn formula, and 100% higher with instances of over 200% for follow-on products. Furthermore, in 2004, following a request by the Minister of Health to reduce prices, the companies once again acted in concert, adopting a substantially identical approach aimed at maintaining as far as possible the pre-existing high price regime.
The collusive nature of these practices was proved by the existence of direct and indirect contacts between the companies during the whole period under consideration.
The indirect contact took place, for the period 2000/2004, when the manufacturers set recommended retail prices and advised pharmaceutical wholesalers of these; this allowed each manufacturer to give its competitors access to “sensitive” information on wholesale prices.
The direct contact took place during March and April 2004 in special meetings at the headquarters of the manufacturers’ Association, following the Health Minister’s first invitation to reduce prices.
Such contacts represent convincing evidence, when taken together with the companies’ conduct, of that element of "awareness" which lends the practices their “concerted” character.
The Authority was not convinced by the explanations, different from that of an anti-competitive arrangement, offered by the parties to justify the anomalies of pricing in the Italian market (specific nature and size of the market, particularly high promotional costs, large number of paediatricians to be kept advised) and in any case found such factors insufficient to explain the price differentials under investigation.
Finally, it should be noted that, since the procedure began on 8 July 2004, and following several interventions by the Minister, prices in the baby milk market have fallen by about 25 per cent. Along with these reductions, there has been a wider availability of information about the characteristics of the milk products, the addressing of advertising directly to end-consumers, the arrival of new lower-priced products and a greater presence of the major manufacturers’ products in the large supermarket chains.


The following table summarizes the fines by manufacturer.

Heinz Italia S.r.l.
€ 279,000
Plada S.r.l.
€ 3,022,000
Nestlé Italiana S.p.A.
€ 3,300,000
Nutricia S.p.A.
€ 629,000
Milupa S.p.A.
€ 938,000
Humana Italia S.p.A.
€ 1,377,000
Milte Italia S.p.A.
€ 198,000



N.B. Heinz and Plada belong to the American group Heinz, Nutricia and Milupa are part of the Dutch group Numico, and Humana and Milte both belong to the German group Humana.


Rome, 20 October 2005