Britain's competition watchdog said the government may consider offering its own low-cost baby formula under brands such as NHS to combat high prices and lack of choice on the market.
The Competition and Markets Authority (CMA) said another “backstop” measure the government could consider would be to regulate retailers and set price or profit margin caps as a way to bring down prices for parents more quickly. He said it was true.
The potential action forms part of the CMA's interim report on the infant formula market, after the watchdog identified that a lack of competition in the market was leading to soaring prices. This took advantage of the ingrained belief among parents that the quality of their products was good. children.
The CMA's report sets out a number of potential recommendations, including extending the advertising ban for infant formula to follow-on formulas and going so far as to “ban all brand-related advertising”.
Sarah Cardel, chief executive of the CMA, said: “Many companies are not competing strongly on price and may be choosing infant formula in vulnerable situations or without clear information. “We are concerned that parents are choosing more expensive products.” We believe that the higher the cost, the higher the quality for the baby. ”
The preliminary findings will be reflected in the final report due to be published early next year, but the CMA said it was not actively recommending anything at this stage, but that the government was “aiming to directly reduce prices”. It also includes a number of backstop measures that may be implemented in the future. ”.
One option is for the government to source its own infant formula from a third-party manufacturer at a competitive price and sell it under an established name such as the NHS, or invest in creating a new brand for the market. is.
The CMA said: “This intervention aims to introduce greater choice and lower price points for parents.” “In turn, this could put downward pressure on other manufacturers' prices.”
Another option is to introduce regulations capping the maximum price of infant formula or capping profit margins, something the Greek government announced earlier this year with the aim of making the product more affordable for parents. This was done.
Icelandic representative Richard Walker called on the UK government to introduce a price cap to stop “exploitation” of parents in the infant milk market.
The CMA said other measures recommended by the CMA, such as clearer, more accurate and fairer information in in-store promotions, may not be able to bring down prices and parents may stop buying expensive items. He said there may be cases where the government intervenes directly. Better quality price.
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“Parental behavior in this market is understandably driven by a desire to do what's 'best' for the baby, which, at least for now, drives down prices and gives parents the confidence to purchase cheaper options. This may mean that these measures have limited effectiveness in the short to medium term,'' the CMA said. “Further interventionist measures may therefore be needed to bring down market prices more directly and reliably.”
The CMA began investigating the UK market in November last year after finding manufacturers had increased prices by 25% over two years, managing to increase profit margins during the cost of living crisis.
According to the CMA, the two largest companies, Danone and Nestlé, account for 85% of sales.
The regulator said it was concerned that the number of own-label products was so limited that there were too few choices on the market and that few parents would switch to the cheaper products available.
