The U.S. Federal Trade Commission (FTC) has launched an inquiry into the ongoing shortage of infant formula in the country. The inquiry seeks information from the public regarding the nature and prevalence of any deceptive, fraudulent, or otherwise unfair business practices during the shortage.
A statement from FTC chair Lina M. Khan said that the agency will examine whether any formula manufacturers or distributors are engaging in unlawful discrimination that may be limiting remaining infant formula supplies at smaller retailers. The agency says it will also examine the pattern of mergers and acquisitions in the infant formula market to better understand current concentration, how it came to be, and how that should inform future merger review.
The request for information seeks public comment about the following topics:
- Instances where families have experienced fraud, deception, or scams when attempting to purchase infant formula or been forced to purchase formula from online resellers at exorbitant prices;
- Consumer experiences with purchasing infant formula through the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) throughout the crisis;
- Retailers’ experiences obtaining brands not ordinarily covered by their state’s WIC programs and their experiences working with distributors and manufacturers throughout the crisis;
- Whether small and independent retailers have faced particular difficulties accessing limited supplies of infant formula compared to large chain retailers;
- The impact of mergers and acquisitions on the number of infant formula suppliers, capital investment, and total manufacturing capacity;
- The impact of state WIC competitive bidding on the number of infant formula suppliers, capital investment, and total manufacturing capacity;
- The impact of FDA regulations on the number of infant formula suppliers, capital investment, and total manufacturing capacity, including capacity located outside the U.S.; and
- Whether there are other regulatory barriers that have prevented companies located outside the country from entering the infant formula market.
The FTC says it will work with USDA, which administers WIC, to analyze the results of the public inquiry. WIC represents approximately 50% of the infant formula market and is a vital source of nutrition for mothers and families. However, concentration in the infant formula market has created market fragilities that, combined with certain features of the program, may impede WIC’s ability to quickly respond to lengthy product recalls, factory shutdowns, or other disruptions.
Comments must be received no later than June 24, 2023.