Tetra Pak probed for abuse

China's authorities have started a probe into Swedish packaging giant Tetra Pak over possible abuse of market dominance, a move that analysts said Sunday indicates China is ramping up its scrutiny of foreign firms operating in its dairy-related markets.

Zhang Mao, head of the State Administration for Industry and Commerce (SAIC), said on Friday that the agency started the probe as it was "strengthening our efforts to curb anti­-competitive behaviors."

"We are organizing more than 20 provincial and city-level industry and commerce authorities to carry out the investigation," he said at a conference held among commerce officials in Beijing.

SAIC did not specify how Tetra Pak was accused of abusing its power. The company could not be reached by the Global Times to comment as of late Sunday, but a spokesperson told the South China Morning Post, "We are fully cooperating with the officials."

Wang Dingmian, a veteran dairy market analyst, told the Global Times on Sunday that Tetra Pak commands more than 50 percent of the room-temperature liquid milk packaging market, with the company providing packaging for 60 billion out of 110 billion units sold in China.

"Tetra Pak could have used its dominant position to fix a high price for its packaging, or driven smaller local firms out of the market," Wang speculated. "All these possibilities might have raised red flags to China's authorities."

Tetra Pak entered China in 1972 and counts the country's biggest milk and beverage companies among its clients, including Inner Mongolia Yili Industrial Co and China Mengniu Dairy Co Ltd.

Tetra Pak is known for its aseptic technology, which allows liquid milk and juice to be preserved at room temperature for up to one year without going sour. The Swedish company earned 11.16 billion euros ($14.32 billion) in sales last year.

Tetra Pak is not the only foreign company that has come under close scrutiny by Chinese authorities.

The country's top planning agency, the National Development and Reform Commission (NDRC), said Tuesday it is investigating foreign milk powder producers including France's Danone and Switzerland's Nestle for price manipulation and breaching the country's Anti-Trust Law.

Zhao Yong, a food and beverage industry analyst at Haitong Securities, told the Global Times on Sunday that the authorities have been scrutinizing foreign companies with the hope of restoring Chinese consumers' confidence in a domestic dairy industry plagued by food safety scandals.

"In terms of the Tetra Pak probe, one of SAIC's purposes is definitely protecting domestic milk packaging companies from being kicked out of the game by powerful multinational competitors," Zhao said, adding that the agency might also be planning to reduce the overall prices of milk products by forcing Tetra Pak to cut the prices of its packaging.