FTC launches investigation into infant formula shortage

A woman shoots for formula milk at Target in Annapolis, Maryland on May 16, 2022, as the nationwide shortage of formula continues due to supply chain crises linked to the coronavirus pandemic that have already taken a toll. tests the country’s infant formula stocks, a problem that was further exacerbated by a major product recall in February.

Jim Watson | AFP | Getty Images

The Federal Trade Commission launched an investigation into infant formula producers on Tuesday to find out whether company mergers contributed to a nationwide shortage by concentrating the industry.

FTC President Lina Khan said the commission will also investigate whether formula manufacturers and distributors have engaged in illegal economic discrimination that has limited availability at some retailers.

“Discriminatory terms and conditions may exacerbate the inability of some grocery stores, pharmacies and other stores to source scarce products, particularly impacting both rural communities and urban centers,” Khan said in a statement Tuesday.

Parents across the country struggled to find formula milk for their babies in stores after Abbott Nutrition closed its Sturgis, Michigan plant in February due to bacterial contamination. Four infants who consumed infant formula produced at the facility were hospitalized with bacterial infections and two of them died. Abbott said “there is no conclusive evidence” that his formula led to hospitalizations and deaths.

Four manufacturers – Abbott, Mead Johnson Nutrition, Nestlé USA and Perrigo – control 90% of the US market. The national supply chain is easily disrupted when a plant goes offline.

The FDA and Abbott have reached an agreement to reopen the Michigan plant to help alleviate the shortage, subject to conditions the company must meet to ensure the plant meets U.S. food safety standards. The agreement, called the consent decree, is enforceable by federal courts. The company faces a $ 30,000 daily fine for non-compliance.

President Joe Biden asked the FTC earlier this month to investigate infant formula shortages to find out if manufacturers have helped that end by withholding formulas from smaller retailers. He also asked the commission to prevent any individual or business from taking advantage of the scarcity of price counterfeit parents.

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Khan said the FTC will use the full force of the law against anyone who is scamming families into trying to buy the formula, including through online bots that automatically buy and resell the formula at exorbitant prices.

“While the resale of these products is not illegal and may serve a useful function, the use of ‘bots’ or other automated tools to divert large quantities of supplies of life-sustaining products from regular retailers and thus pillage desperate families can be a unfair practice under the FTC Act, ”Khan said.

The FTC has also asked the public to send aa comments federal site that any state or federal agencies may have accidentally taken action that contributed to the shortage.

Biden has invoked the Defense Production Act, a law passed in response to the Korean War, to help manufacturers increase production by ordering suppliers to prioritize the delivery of baby formula ingredients. According to the White House, the United States is also airlifting the equivalent of 1.5 million 8-ounce bottles of infant formula from overseas.

The U.S. Chamber of Commerce Energy and Trade Commission Oversight and Investigations Subcommittee will hold a public hearing Wednesday on the shortage of baby formulas. It will contain testimony from FDA Commissioner Robert Califf and executives from formula manufacturers Abbott, Gerber and Reckitt.

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