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Baby formula milk market comes under the spotlight

Baby formula milk market comes under the spotlight
Paloma Kubiak
Written By:
Paloma Kubiak

The competition regulator is probing the infant formula industry following concerns over pricing and marketing which means parents may not be making informed choices.

The market study by the Competition and Markets Authority (CMA) will look at the supply of infant formula in the UK, requiring firms to provide information, rather than relying on them to give it voluntarily.

It will examine what information and advice is available to buyers to help them decide on their purchase, how regulation influences the market, as well as barriers to entry and expansion.

Depending on what it finds, the CMA could make recommendations to the Government, such as how the baby formula milk is marketed or what information needs to be included to help people choose a brand.

It comes after the CMA revealed that the average price of infant formula had risen 25% over the previous two years. However, families could make significant savings of more than £500 over the first year of a baby’s life by buying cheaper infant formula options.

But, while retailers are allowed to cut the price of baby formula, they’re prohibited from advertising it.

Last year, Iceland publicly announced that it had cut the price of formula milk following feedback from customers that many were struggling to feed their babies as a result of the cost-of-living crisis.

Earlier this year, the frozen food retailer also called for a change in the law to allow supermarkets greater freedom on baby formula pricing to make it more affordable for families. It published an amendment to the Digital Markets, Competition and Consumers Bill, urging cross-party politicians to back the change.

It was also one of the first supermarkets to cut formula milk pricing after manufacturer Danone agreed a 7% price drop on Aptamil products.

‘Cost of infant milk remains at historically high levels’

Sarah Cardell, CEO of the CMA, said: “Infant formula is a key part of the weekly shop for many parents across the UK, who rely on these products to ensure their baby gets all the essential nutrients they need.

“Whilst it’s a positive sign that prices of some products have fallen since our update last November, the cost of infant milk remains at historically high levels. We’re concerned that parents don’t always have the right information to make informed choices and that suppliers may not have strong incentives to offer infant formula at competitive prices.”

Cardell added: “We are determined to ensure this market is working well for the many new parents who depend on infant formula, and it’s essential that any changes we propose are based on evidence and a strong understanding of the market. That’s why we’ve now decided to take forward our work on infant formula as a market study, using our formal legal powers.”

Under current rules, the CMA must, within 12 months of publication of a market study notice, publish a report setting out its findings and the action (if any) it proposes to take.