Chinese milk firm admits internet rumour scam

China's biggest milk producer, Mengniu, yesterday announced that internet rumours about rival dairy company Yili were spread by a Mengniu manager in a plot to boost his sales.

Police said the manager has been arrested, along with three employees of a Beijing marketing firm accused of helping him whip up the scandal.

"We deeply apologise!" Mengniu said on Friday.

Mengniu said a manager in its milk division, An Yong, had hoped to increase his sales bonuses by driving customers away from Yili, where he used to work. The rumour campaign, which started in July, was elaborate and costly, but Mengniu said An acted without the knowledge of company executives.

Police said writers pretending to be pregnant women and others posted nearly 100 comments online to spread rumours that Yili milk formula contained fish oil that might cause premature sexual development in babies, according to the state Xinhua News Agency.

The scare stirred memories of the 2008 uproar over milk laced with the industrial chemical melamine that sickened hundreds of thousands of children and was blamed for killing six.

A dairy farmer and a milk salesman were executed and 19 other people were jailed for their role in selling tainted milk.