UK Regulator Opts for Recommendations Over Probe in Baby Formula Market
Britain's competition watchdog decides against extensive investigation into infant formula supply, citing significant concerns. Plans for market improvements through recommendations to be published in October.
The Competition and Markets Authority (CMA) in the United Kingdom has decided not to pursue an extensive market investigation into the infant formula supply, opting instead for recommendations to address identified concerns. This decision comes six months after the initial study was launched in February 2024.
The CMA's choice to forgo a lengthier probe, which could have resulted in company-specific remedies and potential fines, stems from its assessment that market improvements can be better achieved through targeted recommendations to the government. This approach aims to address issues more efficiently than a prolonged investigation.
The infant formula market has been under scrutiny due to its significance in the UK's recent cost of living crisis. In November 2023, the CMA highlighted ineffective competition, noting a 25% price increase over two years. The market is dominated by two firms controlling 85% of the UK baby formula market, identified by Euromonitor data as Danone and Nestle.
"The CMA considers these concerns will be best addressed by progressing with our market study and developing recommendations to governments to improve these market outcomes rather than moving to a more extensive market investigation."
The regulator's concerns encompass the current regulatory framework, manufacturer and supplier behavior, and consumer reactions, all contributing to poor market outcomes. To address these issues, the CMA plans to publish an interim report with provisional recommendations in October 2024.
It's worth noting that infant formula has a complex history and regulatory landscape. The World Health Organization recommends exclusive breastfeeding for the first 6 months of life, but formula remains a crucial alternative for many families. The global infant formula market was valued at $50.46 billion in 2019, highlighting its economic significance.
In the UK, strict regulations govern infant formula marketing, making it illegal to advertise products for babies under 6 months old. This aligns with broader efforts to promote breastfeeding while ensuring safe alternatives are available.
The CMA's decision reflects a balance between addressing market concerns and avoiding potentially disruptive lengthy investigations. As the October report approaches, stakeholders in the infant formula market will be closely watching for recommendations that could reshape this critical industry.
