UK – The UK’s Competition and Markets Authority (CMA) has recommended lifting the ban on price promotions for baby milk formula, arguing that the current rules force parents to pay more than necessary.
The CMA’s interim report highlighted that the baby formula market needs reform to reduce financial pressure on families, as prices have surged significantly in recent years.
The ban on promotions, which prevents discounts, loyalty points, or other price incentives, was introduced to promote breastfeeding, which the NHS advocates as the healthiest option for infants.
However, the CMA found that this policy has unintended consequences, including limiting price competition and driving up costs for parents who rely on formula.
The report noted that formula prices have increased by 18% to 36% between December 2021 and December 2023, depending on the brand.
Three companies—Danone, Nestlé, and Kendamil—control over 90% of the UK’s baby formula market. The CMA expressed concern that the lack of competition in this concentrated market has led to inflated prices.
According to the watchdog, parents could save up to £500 in a baby’s first year by opting for lower-cost formula products.
CMA Chief Executive Sarah Cardell stated that companies do not compete effectively on price, leading many parents to believe that more expensive formulas are of higher quality.
This misconception often drives families to spend more than necessary, particularly in vulnerable situations where clear information is not readily available.
The CMA’s report proposed several changes, including allowing formula prices and discounts to be advertised. This would enable companies to compete more actively on price, potentially lowering costs for consumers.
Additionally, the watchdog recommended separating baby milk brands from follow-on formulas for older infants to reduce confusion among parents.
Another suggestion was for the government to issue NHS-branded baby formula, which could be sold at a lower price.
The CMA also called for clearer, standardized packaging in hospitals to prevent any association between specific brands and medical endorsement.
Furthermore, it suggested that the government improve the availability of impartial information about formula nutrition and costs.
While the CMA did not recommend imposing price caps, it acknowledged that such measures could directly lower prices if necessary. However, there are concerns that caps could lead to supply shortages.
The CMA launched its investigation due to growing concerns about rising formula prices. The final report, expected in February 2025, will provide a comprehensive review of the industry and propose further measures to address the challenges faced by parents.
In response, major formula manufacturers, including Danone, Nestlé, and Kendamil, expressed their willingness to cooperate with the CMA to improve market outcomes.
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