The UK’s Competition and Markets Authority (CMA) is set to scrutinise the infant formula market through a formal market study which aims to contain cost-of-living pressures in the UK groceries sector.
The CMA opened, on 20 February 2024, a formal market study (2 pages / 153 KB) into the supply of infant formula and follow-on formula across the UK. The study is part of the CMA’s wider ongoing work seeking to address cost-of-living pressures in the groceries sector and beyond that are facing UK consumers. The market study launch follows an initial assessment, published in November 2023, focusing on retail competition in the groceries sector. The CMA’s initial findings at the time indicated that infant formula prices had risen by 25% over the past two years.
The launch of the study, under the Enterprise Act 2002, will allow the CMA to analyse the sector in greater detail. For example, the authority will now be able to use its compulsory information gathering powers rather than relying on firms providing information voluntarily. Suppliers as well as retailers may face requests for information as the CMA carries out the market study.
The CMA will investigate a range of infant formula products, including those labelled by manufacturers as foods for special medical purposes sold without the need for prescription such as “anti-reflux” or “comfort” formulas. Additionally, the study will consider follow-on formula products as these products are often a substitute for infant formula for babies aged between six and 12 months. Firms marketing formulas specifically for children 12 months or older, for example “growing up” or “toddler” milk, will also see their products reviewed. The CMA’s inclusion of these products aims to identify the impact, if any, these products may have on how the market for infant or follow-on formula operates.
Factors such as consumer behaviour, the drivers of choice and information available to consumers to support purchase decisions and the role of regulatory framework, such as its enforcement in influencing market outcomes, will be analysed. The CMA has also set out to gather evidence on the supply-side features of the market, such as barriers to entry and expansion.
Any identified concerns and suggested methods to address these will be set out in a market study report. This may include things such as recommendations to government on regulating how infant formula is marketed, or rules on the information manufacturers are required to provide to help purchasers make their choice.
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 is 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 are concerned that parents do not always have the right information to make informed choices and that suppliers may not have strong incentives to offer infant formula at competitive prices.”
The CMA is inviting comments from all interested parties including suppliers, retailers, and consumers until 14 March 2024. It intends to publish a final report in September 2024, although by law the CMA has 12 months to complete the market study – in this case until 19 February 2025.
This is the third recent statutory market study undertaken by the CMA that examines cost-of-living considerations. Last year the CMA completed its road fuel market study and plans to complete its ongoing housebuilding market study and publish a final report on 26 February 2024.
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