The Competition and Markets Authority (CMA) has launched a market study into the supply of baby formula in the UK.
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. The 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).
The CMA will then 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 baby formula is marketed, or on the information provided to parents to help them choose a baby formula brand.
The move 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, 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.
“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.”
