The Competition and Markets Authority announces significant concerns about the ‘behaviour of manufacturers…’
CMA comprehensive update August 2024
The cost of infant formula in the UK and in many other countries has been increasing unjustifiably rapidly, with an average price increase of 24% in two years from 2021 to 2023 with a 45% price increase with one own brand. This is a serious concern for the many low-income families who feed their babies formula when breastfeeding is not possible. The Governments Healthy Start benefits scheme is barely covering the costs of formula, especially the more expensive brands that misleadingly promoted as better.
While the law is clear that commercial promotion of infant formula is illegal, the baby food industry has been exploiting the ‘greed-flation’ issue, and encouraging some NGOs and politicians to call for a weakening of the restrictions on point of sale, two-for-one and reward schemes.
- In Nov 2023 the Government’s COMPETITION & MARKETS AUTHORITY (CMA) published a Corporate report on Price inflation and competition in food and grocery manufacturing and supply.
- January 2024 the CMA announced a review of loyalty pricing by supermarkets.
- In Feb 2024 the CMA announced a market study into infant formula and follow-on formula in the United Kingdom and issued an Invitation to comment
- Baby Milk Action and the Baby Feeding Law Group responded: BMA CMA response BFLG CMA response
- BFLG issued this briefing: Clarifying misconceptions about the UK law on the marketing of infant formula: BFLG-UK briefing documentOn 26th July 2024 the CMA issued a CMA Cost of living update that included comments on Infant formula.
- In August 2024, six months into a detailed examination of whether the market is delivering good outcomes for parents and carers. the CMA issued a comprehensive update: explaining that the CMA will continue with the current market study but will not expand it at this stage to a more in-depth market investigation (which would take a lot longer). The CMA will contain provisional recommendations for governments to consider in its October interim report, with a final report by February 2025.
“Given the pressing impact on parents and carers, the key role of the regulatory framework and the vital public health objectives involved, we want to get as quickly as possible to the point where we have fully diagnosed any problems in the market and so can offer workable options for governments to consider to address these.” “The CMA has decided not to make a market investigation reference at this stage. The CMA has identified significant concerns that the combined effect of the current regulatory framework, the behaviour of manufacturers and suppliers and the needs and reactions of people buying formula, are resulting in poor market outcomes. The CMA considers these concerns will be best addressed by progressing with our market study and developing recommendations to governments to improve these market outcomes rather than moving to a more extensive market investigation. We expect to publish an interim report setting out our concerns along with provisional recommendations for action in October this year.“
The Guardian distorts the CMA report
In contrast on the same day, the Telegraph carried a story with the more accurate headline Baby formula makers face profiteering claims. saying:
“Parents are paying too much for baby formula, the competition watchdog has found after a six-month review into profiteering. The Competition & Markets Authority (CMA) said on Friday it had “significant concerns” that parents are not getting the best value for money as they face “historically high” prices.
It comes after the CMA launched an investigation into the baby formula market in February as it sought to address why prices had risen by 25pc in just two years. The watchdog said: “Based on the evidence we have reviewed to date, we are concerned that many parents and carers are paying more than they need to for infant formula.”
Important points to remember
Marketing controls on formulas are not the cause of the historically high prices in infant formula. The high prices are largely the result of high profit margins and promotion costs: practices that violate globally agreed UN recommendations, seriously undermine breastfeeding and put all infants and young children at risk. Greed-flation is a deliberate strategy to undermine restrictions on point of sale promotions and position global transnational corporations as being on the side of cash-strapped families and deserving of the trust of parents.
“High costs and the increased price of infant formula is not because of legislation and marketing restrictions, but because of prices set by manufacturers and retailers to safeguard very high profit margins (Price inflation and competition in food and grocery manufacturing and supply – GOV.UK). For some product categories, we have observed that large, branded suppliers have pricing power, and have been able to push prices up by more than their input costs”
- Point of sale promotions and loyalty schemes are rarely the answer. To buy a single tin of infant formula could require spending about £1000, in a context where average food spend in the lowest income households is estimated to be £56 a week (Average UK Household Budget 2023 | NimbleFins). In fact, in the UK, there are no legal restrictions preventing families from using general non-specific store gift cards (and equivalents) to buy infant formula, especially when bought along with other groceries. The legislation has a different purpose – to prohibit the use of promotional devices that are specifically devised to induce sales of infant formula directly to consumers at retail level. The UK law says: “There shall be no point-of-sale advertising, giving of samples or any other promotional device to induce sales of infant formula directly to the consumer at the retail level, such as special displays, discount coupons, premiums, special sales, loss-leaders and tie-in sales…. Manufacturers and distributors of infant formula shall not provide, to the general public or to pregnant women, mothers or members of their families, free or low- priced products, samples or any other promotional gifts, either directly or indirectly via the health care system or health workers.”
What do Low-income families need? Leaving aside the obvious need for better support and protection for breastfeeding, a more significant and equitable action to help low-income households who need and want to buy formula would be to lower the cost of all infant formula – for example via a government-instituted price cap or by retailers and manufacturers reducing their profit margins. The value of the Healthy Start scheme needs to be urgently increased. UNICEF: SUPPORTING FAMILIES WITH INFANTS UNDER 12 MONTHS EXPERIENCING FOOD INSECURITY
Is the UK Law too stringent or too weak? Far from having strict legislation, the UK’s controls on the marketing of formulas for babies include many serious loopholes that totally undermine its effectiveness – one key weakness is the scope – that does not cover the unnecessary and risky formulas for babies over 6 months. This is documented in the WHO/UNICEF/IBFAN global status report on national implementation of the International Code of Marketing of Breast-milk substitutes that shows that UK legislation scores just 40/100 compared to World Health Organization recommendations. The law is, however, clear that all commercial promotion of infant formula is illegal in order to protect breastfeeding, ensure safe feeding of those who are not breastfed and prevent parents being misled. The baby food industry, led in the UK by Danone and Nestlé, has been deliberately exploiting the ‘greed-flation’ issue, encouraging some NGOs and politicians to call for a weakening of the restrictions on point of sale schemes instead of calling out the deliberate unjustified price hikes..
Healthy Start Working Group Policy Positions_2023
UNICEF: SUPPORTING FAMILIES WITH INFANTS UNDER 12 MONTHS EXPERIENCING FOOD INSECURITY
In order to achieve its purpose (minimal regulation wherever possible), the industry uses the same six interference tactics used by the tobacco industry:(1) manoeuvring to hijack the political and legislative process; (2) exaggerating economic importance of the industry; (3) manipulating public opinion to gain appearance of respectability; (4) fabricating support through front groups; (5) discrediting proven science; and (6) intimidating governments with litigation. Interference in public health policy: examples of how the baby food industry uses tobacco industry tactics, 2017
Guidance for Advocates of the International Code of Marketing of Breast-Milk Substitutes