The UK’s CMA proposes ending the ban on baby formula promotions to reduce costs for parents amid a market dominated by a few companies. Key recommendations include NHS-branded formula and clearer nutritional guidance.
The UK’s Competition and Markets Authority (CMA) has proposed ending the long-standing ban on baby formula price promotions, with the goal of easing the financial burden on parents struggling with rising costs. This recommendation comes as part of the CMA’s interim report on the baby milk formula market, highlighting a need for significant market reforms to make formula more affordable and accessible for families across the country.
The CMA’s proposed changes include the introduction of NHS-branded baby formula, the provision of unbranded baby milk in hospitals, and greater transparency regarding infant nutrition. While the report stops short of recommending price controls, it suggests that lifting the ban on price promotions could stimulate competition and lead to lower prices. CMA Chief Executive Sarah Cardell emphasized the issue, stating, “We’re concerned that companies don’t compete strongly on price, leading many parents to pay more,” noting that parents often perceive higher prices as an indication of better quality.
Currently, the UK’s baby formula market is dominated by just three companies—Danone, Nestlé, and Kendamil—which together control over 90% of the market share. Prices for baby formula have risen significantly in recent years, with increases ranging from 18-36% depending on the brand. According to CMA analysis, switching to a lower-priced brand could save parents up to $625 during a baby’s first year.
The National Childbirth Trust (NCT), a leading parenting charity, supported the CMA’s call for market reforms, stating that high formula milk prices are forcing new parents to make tough choices between what they believe is best for their babies and essential living costs.
Under current regulations, promotions for baby formula are treated similarly to those for tobacco or lottery tickets, where discounts and loyalty points are prohibited in order to encourage breastfeeding, as recommended by the NHS. However, the CMA argues that the promotion ban may be limiting competition, contributing to higher prices for consumers.
Some retailers have already begun to challenge the promotion restrictions. Asda, for example, has started allowing loyalty points for baby formula purchases, while Iceland has expressed dissatisfaction with the existing regulations.
In addition to recommending the lifting of the price promotion ban, the CMA’s report highlights concerns about misleading branding, such as terms like “advanced” or “premium,” which could imply quality differences despite all formula products meeting the same UK nutritional standards. Other recommendations include separating infant and follow-on formula brands to prevent brand loyalty bias and ensuring clearer, impartial information on nutritional sufficiency for parents.
While price caps are not currently part of the CMA’s recommendations, the report suggests they could be considered if prices do not decrease following the removal of promotional restrictions.
The CMA initiated this investigation in response to the significant price hikes in baby formula and plans to release its final report in February 2024. Both Danone and Nestlé have supported clearer information for parents, while Kendamil, which is the only UK-based formula manufacturer, is working to reduce prices to help UK families.
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