UK regulator halts in-depth probe into infant-formula market despite price concerns

UK – The UK’s Competition and Markets Authority (CMA) has decided not to pursue an in-depth market investigation into the country’s infant-formula sector despite identifying “significant concerns.”

This decision follows a six-month market study initiated in February, during which the CMA noted a 25% rise in infant-formula prices between March 2021 and April 2023.

The study revealed that Danone and Nestlé control 85% of the UK baby-formula market. Danone owns the Aptamil and Cow & Gate brands, while Nestlé owns SMA.

Meanwhile, this concentration of market share has raised concerns about weak price competition and the influence manufacturers have on brand choices.

Danone and Nestlé have stated they absorbed increasing costs to provide value to consumers. However, the CMA previously reported that these companies raised unit prices more than their costs increased, boosting profitability.

The scrutiny of the UK infant-formula market came amid broader concerns about ‘greedflation’, where rising grocery prices prompt skepticism of brands’ pricing strategies. Critics argue that macro pressures provide a convenient excuse for companies looking to increase profit margins.

According to the CMA’s update issued on 16 August, the regulator is concerned that many parents and carers are paying more than necessary for infant formula.

The CMA also noted concerns about the lack of information available to parents and carers to make well-informed purchasing decisions. This is a point long-championed by First Steps Nutrition Trust, a UK charity.

Vicky Sibson, the charity’s director, previously stated the need for a public health messaging campaign to inform parents and carers about the nutritional equivalence of all first infant formula, helping them feel more comfortable switching to cheaper products where available.

Despite the concerns raised in the CMA’s update, the regulator will continue its market study on infant formula rather than pursuing an in-depth investigation.

The CMA’s decision not to launch a full investigation at this stage suggested that while the issues identified are significant, they may not yet meet the threshold required for a more extensive probe.

The CMA’s focus remains on understanding the dynamics of the market and ensuring that competition functions effectively.

The regulator’s ongoing study will continue to assess the competitive landscape and the factors influencing prices in the infant-formula sector. The CMA’s findings will inform any future actions or policy recommendations aimed at improving market conditions and ensuring fair pricing for consumers.

The infant-formula market in the UK has long been a subject of concern for consumer advocates and public health experts. The high cost of formula, combined with the influence of major brands, has led to calls for greater transparency and competition.

The CMA’s continued scrutiny of the sector indicates a commitment to addressing these concerns, even if an immediate, in-depth investigation is not deemed necessary at this time.

The CMA’s decision underscores the complexity of regulating a market that is both essential for public health and dominated by a few major players. As the market study progresses, stakeholders will be watching closely to see how the CMA’s findings shape the future of the infant-formula market in the UK.

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