UK competition watchdog to investigate baby formula market | UK News

An investigation will be launched into the baby formula market, according tothe competition watchdog.

The Competition and Markets Authority said infant formula prices have increased 25% over two years, which is faster than the cost increases companies have shouldered.

Just two suppliers account for 85% of infant formula sales, it said, and there is ‘very limited availability’ of own-brand alternatives.

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Aldi is the only supermarket to offer an own-brand alternative, meaning few parents have switched as prices have risen.

‘We’re concerned that parents may not always have the right information to make informed choices and that suppliers may not have strong incentives to offer infant formula at competitive prices,’ said CMA chief executive Sarah Cardell.

Richard Walker, chair of supermarket Iceland, announced the retailer has reduced the cost of formula in store, and called for a price cap to be installed.

He wrote: ‘This damning CMA report reveals infant forma suppliers have been profiteering during the cost of living crisis.

‘Our market is dominated by two major players, who have raised their prices by more than 25%.

‘This is exploitation, we need to stop this immediately. Iceland Foods are now selling formula at cost.

‘We urgently need a price cap installed, and clarification around price promotions and allowing cash equivalents.’

Together with Metro and Feed, Iceland is calling on the government to slash the red tape to let grocers pass on savings to parents and let them accept loyalty points, store cards or food bank vouchers as payment.

Baby formula law, covered by the Food for Specific Groups (Information and Compositional Requirements) Regulations 2016, which implemented EU policy, aligns with guidelines by the World Health Organization (WHO), the government has long said.

More than 50,000 people have signed the Formula For Change petition, with Mr Walker saying: ‘With the Metro Formula for Change campaign, I admire anyone willing to put their head above the parapet to stick up for struggling families.

‘Ultimately, like Metro.co.uk and Feed,’ Mr Walker adds, ‘we’re just trying to do what’s right.’

As costs start coming down some companies do not plan to cut their prices, instead passing on the savings through promotions, the watchdog has warned.

Tesco and Sainsbury’s now only offer most of their discounts to loyalty scheme members, risking the creation of a two-tier system, the CMA said.

The watchdog said it will launch a new investigation into the loyalty schemes.

The CMA said on Wednesday that most of the food price inflation in recent years has been driven by the rises in costs that companies have faced.

But the watchdog said there is evidence that some branded producers are adding extra profits on top of the price rises caused by their cost increases.

While retailers can negotiate with the suppliers, they can be at a disadvantage.

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