MOF may set ceiling to control formula prices

MOF may set ceiling to control formula prices

The Ministry of Finance (MOF), while affirming that it would use its power to prevent the formula price escalation, has stated that it may set the ceiling prices for the products.

Nguyen Anh Tuan, Head of the MOF’s Price Control Agency has said so on Tai Chinh, the ministry’s official newspaper.

The domestic formula market is now witnessing another price increase wave. Mead Johnson Nutrition Vietnam kicked off the new wave by raising the selling prices of 16/28 products by 5-7 percent, reasoning the increases in the input prices.

At the cabinet meeting on February 28, the Prime Minister Nguyen Tan Dung in person requested relevant ministries and branches to inspect four big dairy producers Vinamilk, Mead Johnson Vietnam, Nestle Vietnam, Friesland Campina Vietnam which have raised the selling prices of their formula products designed for children aged less than six.

Nguyen Thien Nhan, Chair of the Vietnam Central Fatherland Front, noted that the four dairy producers raised the formula prices at the same time, the behavior which could be an infringement of the Competition Law.

MOF released a document requesting the dairy producers to explain their move, but they still raised the prices at the same time.

“We recommend that the Ministry of Industry and Trade, the Competition Administration Department and relevant branches clarify the problem to find out if this is a signal of an unhealthy competition,” Nhan said.

Prior to that, on February 24, MOF sent a dispatch to Nestle, the distributor of Nan brand products, requesting to explain why it raised the selling prices.

The reasons cited by Nestle, including the inflation rate, the higher labor cost and cost price, according to MOF, are unconvincing. The ministry has requested Nestle to check the input costs to keep the prices stable, or submit additional documents to prove its arguments.

The dairy producers have been requested to sell products at the unchanged prices while waiting for MOF to clarify the issue.

However, in fact, Nestle began selling the products at the new price levels since January 31, 2014 already, even though MOF has not made the final decision.

Tuan from MOF told VietNamNet that the dairy producers’ behavior of raising the selling price while the explanation process has not yet finished could be seen as a violation of the price management laws.

“The dairy producers’ attitude showed that they set MOF in defiance,” Tuan said. “We will not forgive this.”

Consumers hope that MOF would punish the dairy producers as it promised. However, analysts have every reason to keep doubtful about this.

In fact, MOF and relevant ministries many times inspected dairy producers in the past and many times vowed to take drastic measures to control the price increase. But they have failed to do this so far.

Some months ago, the three big mobile network operators were suspected of colluding with each other to raise the 3G service fee, a violation of the competition law. However, the Competition Administration Department has concluded that they were innocent.

vietnamnet