Multinationals face increased scrutiny

As for domestic milk powder brands, the government's actions would also have a limited impact if the problems involving product quality, milk sources and trust issues were not resolved, he said.

Chinese consumers' loyalty to foreign brands is thought to be pushing up their prices over the long run.

Guo Yuanyuan, the mother of a 2-year-old, buys high-end milk powder produced by Wyeth regularly. Each can costs about 400 yuan.

"When I encounter piles of imported milk powder at the supermarket, the price is the only factor that matters to me," Guo said. "I believe the more expensive the product, the better the quality and thus the safety for children."

The government is also examining the costs and prices of international pharmaceutical companies, including GlaxoSmithKline Plc, Merck & Co, Novartis AG and Baxter International Inc, with the aim of improving the pricing system for medicines.

According to an e-mail response from MSD China, a unit of international drugmaker Merck & Co, said the NDRC announced cost and price surveys on July 2.

MSD said it is a routine cost and price data collection spanning the entire healthcare industry, including local and multinational pharmaceutical manufacturers.

The company said such surveys are carried out on a random basis.

For example, this month, 27 drug companies, including Boehringer Ingelheim GmbH, Astellas Pharma Inc, GSK, Baxter and MSD, have been chosen for the survey, together with large domestic pharmaceutical and medical device companies.

Wang Zhile, president of the Beijing New Century Academy on Transnational Corporations and a senior researcher on foreign direct investment, said that an anti-monopoly investigation is necessary to build up a healthier market.

He said the move encourages all companies — local or foreign — to play by the rules.

He said it is vital for the government to adopt proper and internationally recognized methods in investigations to yield a fair result.

Bloomberg News contributed to this story.