The Competition and Markets Authority of the United Kingdom (CMA) has released a flawed report on the infant formula market, warning that parents are paying high prices due to regulatory and commercial factors. This paper raises possible solutions to make the infant formula market more accessible to consumers.
The report highlights four key areas of concern:
- Regulations with unintended effectsCurrent regulations, aimed at encouraging breastfeeding, prohibit promotion and discounts on infant formula. However, these restrictions have led companies to use other forms of differentiation, such as branding and indirect quality messages, which can be confusing for consumers.
- Little information for parentsThe CMA found that many parents buy infant formula without being given the clear and impartial information needed to make an informed choice. By opting for more expensive formulas, parents assume that a higher price equals better quality, something the NHS denies.
- Limited price competition: Regulations and brand loyalty reduce incentives to compete on price, allowing cost increases to be passed on to consumers without barriers. Formula prices have increased by between 18% and 36% over the past two years.
- Confusion between infant and follow-on formulas: Follow-on formulas and growth milks use presentations similar to those of infant formulas, generating confusion in consumers and favoring sales of infant formulas.
CMA proposals
The CMA proposes several options to improve the market and reduce parental spending:
- More information in hospitals: Provide parents with unbiased information and highlight that all formulas meet nutritional requirements, reducing the weight of the brand in the purchasing decision.
- In-store advertising and promotion: Allow more information on prices and nutrition at points of sale, which would encourage price competition.
- Strengthening labelling regulations: Implement clearer standards to avoid similarity between labels of infant formulas and follow-on formulas, reducing the role of the brand as an indicator of quality.
- Other support measures:While not proposed as a primary recommendation, the CMA suggests that the government could explore price controls or public provision of formulas should prices continue to rise.
The CMA has opened a consultation period until 29 November 2024, during which it hopes to receive feedback from a range of stakeholders, including consumers and businesses, in order to refine its recommendations. Its final report will be published in February 2025.
