"This is to avoid whipping up the issue and creating a negative influence in society."
Earlier reports in Chinese state media have said the city government in Shijiazhuang,
sat on a report from Sanlu about the contamination for more than a month while Beijing hosted the Olympic games.
Several senior officials, including the city's communist party chief, have been sacked for the attempted cover-up.
On Wednesday the Sanlu group was issued with its first legal challenge over the scandal when the parents of a one-year-old boy filed a lawsuit blaming the company's products for sickening their son.
The scandal over milk and milk products tainted with the industrial chemical melamine has sickened more than 50,000 children across China and led to the deaths of at least four babies.
The scare has seen hospitals across China besieged by crowds of anxious parents worried about their children's health.
Supermarkets have also reported plummeting sales of dairy products, threatening bankruptcy for dairy farmers across China.
Melamine is believed to have been deliberately added at some point in the supply chain to disguise milk that had been watered down to fool quality checks and increase profits.
If ingested the chemical can cause kidney stones and other potentially fatal complications, especially in young children.
Since the scandal broke scores of countries around the world have banned Chinese dairy imports, or ordered them to be taken off shelves, after it became clear that the contamination had affected dozens of products.