UK could issue NHS-branded baby formula to stop people paying ‘over the odds’
The competition watchdog said the market is dominated by two companies, which have ‘limited incentives’ to compete on price under existing rules.
Parents could one day be able to buy NHS-branded baby formula at a lower cost than those offered by existing manufacturers, as part of an effort to stop companies charging too much.
The Competition and Markets Authority (CMA) said on Friday that the baby formula market, dominated by Danone, Kendal and Nestle, which together make up more than 90% of sales, needs shaking up.
It said companies have “limited incentives” to compete on price under existing rules, with parents often assuming that more expensive products mean higher quality baby formula for children.
The CMA said the UK needs better public health messaging to help parents choose between brands, while it is also looking into a potential price cap, though it stopped short of recommending one.
Sarah Cardell, chief executive of the CMA, said: “This is a very important and unique market. We’re concerned that companies don’t compete strongly on price and many parents – who may be choosing infant formula in vulnerable circumstances and without clear information – opt for more expensive products, equating higher costs with better quality for their baby.
“We have identified options for change, but now want to work closely with governments in all parts of the UK, as well as other stakeholders, as we develop our final recommendations.
“Importantly, any changes must continue to support regulation that ensures all formula gives babies the nutrition they need to thrive – as well as supporting governments’ aims on breastfeeding.”
The CMA said it would consult on its findings and issue a full report next year. The watchdog laid out a number of concerns about the market which “appear to be contributing to parents paying over the odds”.
One possible solution put forward would be for the Government to “procure infant formula from a third-party contract manufacturer at a competitive price point”.
The Government “may be able to use an established brand name for its infant formula, such as ‘NHS’, or invest in establishing a new brand”, it added.
The recommendation would ultimately amount to a state-issued product entering the market to compete with existing ones.
Meanwhile, it could also set a maximum price on infant formula or enforce a cap on profit margins.
Richard Walker, the boss of Iceland, has previously called for a price cap, describing current market practices as “exploitation” of parents.
