UK watchdog proposes sweeping changes for baby formula industry

Baby formula could be placed in standardised packaging in hospitals, the UK competition watchdog has suggested, while parents should be allowed to use gift vouchers and loyalty card points to buy formula milk, as part of efforts to combat soaring prices and lack of choice in the market.

Labelling of infant formula in hospitals or other healthcare locations should be standardised, the Competition and Markets Authority (CMA) suggested, with formula put into non-branded containers to tackle the power of marketing, or the NHS could offer its own variety.

The CMA proposed five measures on Friday that it said would improve outcomes for parents and could allow them to save £300 a year by switching to a lower-priced brand, after a year-long study into the infant formula market.

However, the regulator decided against recommending regulations, such as a price cap on formula or a profit-margin cap, which the Greek government did last year with the aim of making products more affordable.

The CMA said such a move would “involve significant risks” and could push up the prices of cheaper formula products to reach the ceiling, leading to some parents “missing out on cheaper options on the market”.

It also said a price cap could be difficult to implement, but that the government could keep this option as a “backstop” if its proposals did not manage to reduce prices.

The watchdog said parents often chose a brand of formula for their baby at a time when they were vulnerable, often in hospital immediately after birth, when they did not have “clear, accurate and impartial information needed to make informed decisions”. As a result, many chose a more expensive, branded product, as they assumed it would be higher quality, and then they remained loyal to that brand.

Sarah Cardell, the chief executive of the CMA, said many parents who “need, or choose, to formula feed, pick a brand at a vulnerable moment, based on incomplete information, often believing that higher prices must mean better quality”.

She added: “This is despite NHS advice stating that all brands will meet your baby’s nutritional needs, regardless of brand or price.”

Under the proposals, parents would be provided with more information in shops, with all brands displayed together, to remind them that all formula products meet babies’ nutritional and safety needs, while allowing them to make quick and easy price comparisons.

The ban on advertising of formula should be extended to follow-on milks, aimed at older babies, the CMA recommended.

Advertising of baby formula, as well as price reductions and deals, have been restricted to avoid discouraging breastfeeding.

The CMA launched its investigation into the UK market in November 2023 after finding that manufacturers raised prices by as much as 36% on some brands in two years and managed to increase profit margins during the cost of living crisis.

The watchdog previously found that three companies – Danone, Nestlé and Kendal – accounted for more than 90% of the market.