CMA to scrutinise infant formula market through a market study
The market study into infant formula is part of the CMA’s ongoing work to contain cost of living pressures in the groceries sector.
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The Competition and Markets Authority (CMA) has today launched a market study into the supply of infant formula in the UK, after publishing its initial findings and committing to look at the sector in further detail in November last year.
By launching a market study, the CMA will now be able to use its compulsory information gathering powers, rather than rely on firms providing information voluntarily. Any recommendations to government resulting from the work will now also have a formal status.
The CMA intends to conduct the market study as swiftly as possible and with the intent of publishing a final report in September 2024. As outlined in the invitation to comment, the CMA’s infant formula market study will gather additional evidence on:
- consumer behaviour, the drivers of choice, and the information and advice available to consumers to support their decisions
- the role of the regulatory framework and its enforcement in influencing market outcomes
- the supply-side features of the market (such as barriers to entry and expansion)
Following this, it will consider whether there are problems in the market and, if so, what actions could or should be taken to address these. This could include making recommendations to government – for example, on the regulations governing how infant formula is marketed, or on the information provided to parents to help them choose an infant formula brand.
Today’s update follows the CMA’s Autumn 2023 report into price inflation and competition in the Groceries sector, which found that the average price of infant formula had risen by 25% over the previous 2 years and that families could make significant savings of more than £500 over the first year of a baby’s life, through buying cheaper infant formula options.
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’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.
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. That’s why we’ve now decided to take forward our work on infant formula as a market study, using our formal legal powers.
More information is available on the CMA’s Infant Formula Market Study case page.
Notes to editors:
- The CMA is now inviting comments from interested parties. It will continue to engage closely with key stakeholders, including governments in all 4 UK nations, other public authorities, third-sector bodies, and representative groups. The CMA will also (alongside the publication of the invitation to comment, and market study notice) issue requests for information to suppliers and retailers of infant formula.
- The CMA’s market study will look into infant formula, including formulas labelled by manufacturers as foods for special medical purposes that are sold direct to consumers without prescription – for example, certain ‘anti-reflux’ and ‘comfort’ formulas. The study will also consider follow-on formula. This is because it is a substitute for infant formula for babies aged 6 to 12 months, and because it’s subject to different marketing regulations that may affect the operation of the infant formula market. The study will also consider milks marketed for children over 12 months of age – in particular, ‘growing up’ and ‘toddler’ milks to the extent that these impact how the markets for infant and follow-on formula operate. These milks are often packaged in a similar way and sold alongside infant and follow-on formula.
- Market studies examine why particular markets may not be working well for consumers. They may lead to a range of outcomes, including a) making recommendations to the government to change regulations or public policy; b) encouraging businesses in the market to self-regulate; c) taking consumer or competition law enforcement action against firms; d) making a reference for a more in-depth (phase 2) market investigation; e) “clean bill of health”.
- A market study formally begins with the publication of a Market Study Notice by the CMA.
- The CMA must within 12 months of publication of a market study notice publish a market study report setting out its findings and the action (if any) it proposes to take. For more information on the CMA’s market study process, visit: Market studies and investigations - guidance on the CMA’s approach.
- For more information on the CMA’s work in the groceries sector to date, visit: The CMA’s action to help contain cost of living pressures collection page.
- All enquiries from the general public should be directed to the CMA’s General Enquiries team on [email protected] or 020 3738 6000.
- All media enquiries should be directed to the CMA Press Office by email on [email protected] or by phone on 020 3738 6460.