In February 2024, the Competition and Markets Authority (“CMA”) commenced an in-depth study into the supply of infant formula and follow-on formula to consumers in the UK, prompted by concerns that the market may not be conducive to competitive pricing, potentially leaving parents and carers without the necessary information to make well-informed purchasing decisions. You can read our first article about the market study here.

On 16 August 2024 (six months into the study), the CMA announced that it will not make a market investigation reference at this stage, and will instead continue with the market study. It considers this to be the best way to address concerns that the current regulatory framework, combined with the behaviour of manufacturers and suppliers, and the needs and reactions of consumers, are leading to poor market outcomes. It will continue to develop recommendations to governments to improve these outcomes during its progression of the market study.

Please see our article on ‘new’ competition tools from regulators for some interesting updates on market investigation tools globally here.

Next steps

Considering the significant role of public health policy in this market, the CMA aims to engage closely with the UK, Northern Ireland, Scottish, and Welsh governments in developing potential actions that could improve market outcomes. To facilitate this, the CMA plans to publish an interim report in October 2024, providing provisional recommendations for action.

The CMA is also keen to understand any actions that governments plan to take following the final report's publication. Depending on these responses, the CMA may further consider what actions it could take to address the identified concerns. Although an in-depth market investigation is not currently considered the best approach, it may be considered at a later date.

Summary of concerns

Some of the concerns so far identified in the study include:

• weak price competition; 
• the ability of manufacturers to influence brand choices, despite all infant formulas being subject to the same compositional requirements; and
• parents and carers do not have the information they need to make well-informed purchasing decisions. 

These concerns are magnified by the vulnerable circumstances in which many decisions about infant formula are made. Given the cost-of-living pressures, there is a lack of switching by existing customers, and those choosing an infant formula brand for the first time are not typically opting for cheaper alternatives. This situation is causing many parents and carers to pay more than necessary for infant formula.

What is leading these outcomes?

The CMA attributes these outcomes to several factors, including:

• the operation of the regulatory framework (e.g. restrictions on advertising infant formula for public health reasons);
• the behaviour of firms in response to this framework (e.g. building brand awareness and reputation in a way that may influence parents’ and carers’ choices); and 
• the behaviour of parents and carers, who often base their decision on perceived quality rather than price comparison.

For more information, please contact Dr Saskia King, Ariane Le Strat, Tenisha Cramer and Aimee Guzinska-Bowley.

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