Abbott, maker of Similac, said separately on Tuesday that the case came to light in December and the fake goods had been traced and seized by the end of last year, according to a statement on its verified Chinese microblog.
The case is the latest scandal involving food safety in China. In 2008, several infants died and thousands fell ill because of baby milk powder tainted by a chemical additive, driving parents to seek out foreign brands of infant formula.
State media reports have previously said the gang sold more than 17,000 cans, earning nearly 2.0 million yuan (USD 309,000).
National authorities said the fake powder posed no safety risk.
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In a separate case, a Chinese court last month sentenced 10 people to jail for as long as 15 years for selling fake beef jerky, state media reported.
That gang, in the eastern province of Zhejiang, used pork but added flavouring and pigment to make the product appear like beef, the official Xinhua news agency said.