Infant formula

Executive Summary

Mead Johnson and American Home Products propose to pay $39 mil. and $8 mil., respectively, to settle a federal suit filed two years ago by 21 wholesalers and retailers accusing the companies of conspiring to fix prices on infant formula to wholesalers, the two companies announce July 2. The two firms do not admit guilt but say they chose to settle to avoid costly litigation. The proposal must still be approved by the wholesaler group. The suit also names Abbott, the U.S.'s largest infant formula maker, but a settlement has not yet been negotiated. Mead Johnson and AHP on June 11 reached an infant formula settlement agreement with the Federal Trade Commission ("The Pink Sheet" June 15, T&G-11). Mead Johnson will take a pre-tax charge of $46 mil. to cover the settlements.