The UK infant formula market is being investigated by regulators due to concerns that parents could save up to £500 in their baby’s first year. The Competition and Markets Authority (CMA) stated that while prices had fallen a little, they still remained “at historically high levels” after having previously risen by 25% over two years. This investigation will allow the regulator to use its legal powers to acquire information from firms that it previously had to rely on being provided voluntarily, facilitating a more comprehensive look into the primary players’ structures.
Only two companies, Danone and Nestle, dominate the market. Danone commands 71% through its production of Aptamil and Cow & Gate, while Nestle retains 14% of the market through its production of SMA. The CMA is concerned that parents lack the information necessary to make informed decisions about which brand to buy and that the market was not functioning in a way that did encourage lower prices.
This industry review could also lead to the implementation of recommendations to change how formula is marketed and how information is provided to new parents. The CMA plans to release its final report in September and will be investigating what is causing consumers to show reluctance in switching brands and whether or not they have access to adequate information.
The competition watchdog has already completed its initial report on the industry, which found that formula suppliers had raised prices by more than their costs. Normally shoppers would be expected to switch to cheaper brands when available; however, this has not been shown to be the case in the infant formula market
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