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Danone Responds to Antitrust Probe with 7% Price Cut on Baby Formula

 |  January 10, 2024

French multinational company Danone has announced a 7% reduction in the wholesale price of its powdered Aptamil infant formula in the UK, effective from Monday. This move comes in response to an ongoing investigation by the country’s antitrust regulator, the Competition and Markets Authority (CMA), into the escalating prices within the infant formula market.

The CMA initiated the probe late last year after uncovering a 25% increase in baby formula prices over the past two years. The regulatory body also noted that 85% of the market is dominated by two companies, with Danone holding a substantial 70% market share. The investigation aims to comprehend consumer behavior, identify barriers to entry and expansion for formula makers, and assess whether regulatory changes are necessary.

Danone’s price reduction specifically applies to its powdered Aptamil formulas available in UK stores. However, it excludes liquid milks and the company’s other brand, Cow & Gate, according to a spokesperson for Danone.

The infant formula market is heavily regulated to guarantee infants receive safe and adequate nutrition. Interestingly, the CMA found minimal distinctions between various brands despite the range in prices.

Read more: Turkey Probes Nestlé, Danone For Price-Fixing

In response to the investigation’s commencement, a Danone spokesperson stated that the company had diligently worked to absorb cost increases, make savings, and minimize any price hikes. However, the spokesperson did not elaborate on the pricing discrepancy between Cow & Gate and Aptamil.

The CMA plans to release an update on its review in mid-2024, aiming to gain insights into consumer behavior and determine whether any regulatory adjustments are necessary. The investigation also reflects wider concerns about rising prices in the consumer goods sector across Europe, prompting political pressure and disputes between retailers and manufacturers.

As part of this broader trend, Danone’s decision to cut prices may serve as a proactive response to antitrust scrutiny, aligning with the broader industry’s need to address public concerns about affordability and fair competition. Meanwhile, the regulatory landscape remains a focal point, with the CMA poised to play a crucial role in shaping the future dynamics of the infant formula market.

Source: Fortune