Baby formula milk prices to be investigated

The UK competition watchdog is investigating the infant formula market after finding parents could be saving £500 in their baby’s first year.

A new investigation into the supply of baby formula milk has been launched by the competition watchdog after it found that prices had soared by 25% in the past two years.

The Competition and Markets Authority (CMA) said it has begun a market study into formula supply following the publication of findings last November of an initial review into the grocery sector.

It said last autumn that the baby formula market was highly concentrated, with just two companies accounting for 85% of sales.

This meant few parents had switched brands as prices rose, with the CMA revealing that infant formula prices were up by a quarter on average over two years.

It found that parents could save more than £500 over the first year of a baby’s life by buying cheaper formula options.

The CMA said on Tuesday that while prices of some products have fallen since November, they remained ‘at historically high levels.’

Sarah Cardell, chief executive of the CMA, said:

‘Whilst it’s 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’re concerned that parents don’t 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 market study will look to gather new evidence on consumer behaviour, and information and advice to support consumer decisions. Alongside the role of regulation in the market and features of the formula market, such as barriers to entry and expansion.

If it finds there are problems in the market, it could take actions including recommending new regulations over how formula is marketed or on the information given to parents to help them choose formula brands.

‘We are determined to ensure this market is working well for the many new parents who depend on infant formula and it’s essential that any changes we propose are based on evidence and a strong understanding of the market’, said Cardell.

Its market study will also look at special medical formula milk, such as anti-reflux and comfort formulas, and so-called follow-on milk, as well as toddler milks.

The CMA plans to produce a final report in September.