UK Regulator Proposes State-Backed Formula to Lower Baby Formula Costs

The UK government may step in to reduce the soaring prices of baby formula, with the possibility of introducing a state-backed, low-cost formula brand under a familiar name such as the NHS, according to The Guardian and the UK’s competition watchdog, the Competition and Markets Authority (CMA). The proposal is part of the CMA’s interim report, which highlights concerns over a lack of competition in the market, leading to inflated prices that often exploit parents’ desire for quality and reassurance.

According to The Guardian, the CMA’s report points out that many parents may be unintentionally overpaying for formula, as higher prices are often equated with better quality. The watchdog also warned that this situation is exacerbated by the insufficient competition between manufacturers, allowing companies to charge higher prices without pressure to lower them. Sarah Cardell, CEO of the CMA, stated that the situation is particularly problematic for parents who may be making formula choices under vulnerable circumstances, often with limited or unclear information about what is best for their child.

In its interim report, the CMA proposed a number of recommendations to address these issues. One key suggestion is that the government could intervene directly by procuring its own affordable baby formula from third-party manufacturers and selling it under a trusted name, such as the NHS. This move, according to The Guardian, would provide an alternative for parents, introduce more choice into the market, and help drive prices down across the sector.

The regulator also suggested that the government could take further steps, such as imposing a price or profit-margin cap on retailers to reduce costs for consumers more swiftly. These measures are viewed as “backstop” options, meaning they would be last-resort interventions if other recommended actions do not sufficiently address the underlying pricing problems.

Read more: UK’s CMA Raises Concerns Over Boparan’s Feed Mill Acquisition

Another proposal is to extend existing advertising restrictions on infant formula to include follow-on formulas, or even to prohibit all brand-related advertising. This measure aims to challenge the market’s reliance on advertising to create perceived differences in quality between brands, which can lead parents to assume higher-priced formulas are of superior quality.

In addition to the CMA’s findings, retail executives like Richard Walker, CEO of Iceland, have also called for direct government action to curb price exploitation in the formula market. Walker has advocated for a price cap to protect parents from the current price volatility and ensure that baby formula remains affordable.

While the CMA acknowledges that its initial recommendations—such as clearer product labeling and more transparent in-store promotions—could help guide parents toward more cost-effective choices, it also warns that entrenched consumer behaviors and the emotional nature of the decision-making process could limit their effectiveness. Given this, the CMA argues that more direct government intervention may be necessary to ensure prices are brought down in a way that is both immediate and sustainable.

The Guardian reports that the CMA’s final report, which will be released early next year, will provide a clearer roadmap for potential interventions. However, with the ongoing challenges parents face in the current market, the regulator’s proposals suggest that more decisive government action may be on the horizon to ensure baby formula is both affordable and accessible for all families.

Source: The Guardian