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The UK’s Competition and Markets Authority has suggested a ban on baby milk price promotions should be lifted in order to help parents avoid paying over-inflated prices for formula. The watchdog’s interim report into the sector called for a shake-up, particularly for parents who struggle to pay for baby milk formula. The report suggested removing branding from hospital baby milk and issuing NHS-branded milk. However, it didn’t go so far as to recommend price controls but pointed out that this remained an option, given that parents have borne the brunt of price increases in what is a virtual oligopoly market for years.
The CMA’s interim report noted that three companies – Danone, which produces Cow & Gate and Aptamil; Nestle, the maker of SMA; and Kendamil – control over 90% of the UK market. The range in prices between different brands has seen increases of between 18% to 36% over the last two years. The report also found that parents could save as much as £500 in the first year of their baby’s life if they were to switch to lower priced brands. Maxine Palmer from the parenting charity NCT said that baby formula milk providers were taking advantage of parents, with costs rocketing, and said that a lack of accountability, regulations or guidance was compounding the issue.
Current regulations prohibit promotions such as loyalty points and discounts, as these are designed to encourage breastfeeding, which the NHS states is healthier for children. But the CMA indicated that its unintended consequence has been to put a stop to competition over pricing, leading to higher prices for consumers. It also suggested that allowing price publicity would help encourage price competition. Despite the regulations, ASDA began granting loyalty points for purchases of baby milk from January this year, whilst Iceland has also criticised the rules. In addition, the report suggested it was hard to assess formula quality, as different words are used to make products stand out.
The CMA made other recommendations, including strengthening existing rules to apply online, and providing parents with impartial information about nutritional sufficiency at the point of sale. It also said that the National Health Service should provide more information about why follow-on milk is not necessary, and suggested the use of standardised packaging in hospital, which would prevent traditional brands from being associated with any particular health authority
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