USA – Amid ongoing concerns regarding the resilience and competitiveness of the US infant formula market, the Federal Trade Commission (FTC) has released a report urging regulatory measures to boost competition and improve supply chains.
The report, unveiled this week, looked into the root causes of infant formula shortages experienced across the United States in 2022.
It revealed the necessity for policymakers to reassess existing policies to ensure a more robust and stable infant formula supply chain moving forward.
The FTC’s findings, based on a Request for Information launched in 2022, also noted a market characterized by the dominance of a lot of manufacturers over the past two decades.
Key players such as Abbott Laboratories, Mead Johnson (a subsidiary of Reckitt Benckiser Group), Nestlé, and Perrigo have held sway over the market, with Abbott’s Similac formula brand claiming a substantial 27% market share in 2022.
However, the closure of Abbott’s facility in Sturgis, Michigan, in 2022 underscored the vulnerability of the market.
Nestlé’s subsequent sale of its US and Canada rights to the Gerber Good Start formula brand to Perrigo further highlighted the need for regulatory scrutiny.
According to the report, of particular concern is the concentration of specialist formula production among a select few companies, leaving infants reliant on these products susceptible to supply disruptions, as evidenced by recalls in 2022.
The FTC has also flagged risks associated with single-supplier contracts, particularly with the US Department of Agriculture’s Women, Infants and Children (WIC) program, which could lead to market distortions and hinder competition.
Moreover, public submissions noted challenges stemming from the Food and Drug Administration’s (FDA) requirements for infant formula production, which may inhibit market expansion and innovation while increasing manufacturing costs.
Rebecca Kelly Slaughter, US attorney and FTC commissioner, emphasized the urgency of addressing market consolidation in critical sectors like infant formula.
She highlighted the complexity of factors contributing to the 2022 formula shortage and underscored the FTC’s commitment to crafting policies that enhance market resilience.
Recent developments, such as Walgreens Boots Alliance’s settlement following accusations of price gouging on infant formula products during the 2022 shortage, underscored the need for vigilant oversight and proactive regulatory measures.
As the FTC continues its efforts to safeguard competition and consumer welfare in the infant formula market, stakeholders await further developments aimed at ensuring a more stable and accessible supply of infant nutrition products for families across the nation.
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