CMA identifies 'significant' concerns over infant formula market

(Sharecast News) - The Competition and Markets Authority said on Friday that it will press ahead with its study of the infant formula and follow-on market after finding earlier this year that prices remained at historically high levels. The regulator, which launched an investigation in February, said it had decided not to carry out a full-scale investigation "at this stage".

The CMA took action at the time because it was concerned that suppliers may face insufficient incentives to offer infant formula at competitive prices, and that parents and carers may not always have the information they need to make well-informed choices.

For public health reasons, the advertising of infant formula is restricted, and other promotional and commercial activities are also restricted to avoid inducing the purchase of infant formula, the CMA noted.

It said on Friday that since price reductions cannot be promoted, this has the effect of "softening competition" on price.

"The CMA has identified significant concerns that the combined effect of the current regulatory framework, the behaviour of manufacturers and suppliers and the needs and reactions of people buying formula, are resulting in poor market outcomes," it said in a statement.

"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 expects to publish an interim report setting out its concerns along with provisional recommendations for action in October this year.