Abbott Laboratories voluntarily shut down a baby formula plant in February 2022 due to unsanitary conditions, precipitating a nationwide baby formula shortage that continues to be a source of stress and difficulty for parents of infants and toddlers.
Now, the Federal Trade Commission (FTC) is probing Abbott and other large manufacturers that together control nearly the entire infant formula market for allegedly colluding on bids for government contracts.
Some observers at the height of the formula shortage, such as political commentator Tucker Carlson, honed in on the government’s Women, Infants, & Children (WIC) program, which they claimed encouraged an oligopoly by just a few manufacturers, of which Abbott was the most significant player.
Carlson noted that WIC is the largest purchaser of baby formula. Data from the United States Department of Agriculture (USDA), which administers the WIC program, show that WIC purchases more than half of the infant formula consumed in the United States.
Because WIC functions by buying large quantities of what it requires, any supplier that can get such a massive and consistent source as a revenue stream would have an advantage over its competition.
Recently, the FTC picked up on the implications of so few companies bidding to become sole suppliers for lucrative government contracts and is investigating the most prominent manufacturers — Abbott, Nestlé, and Reckitt — for potential collusion.
The FTC is apparently concerned that, by colluding to divvy up the market through WIC and other government contracts, manufacturers could keep out competitors, lowering the number of suppliers and manufacturers. When the Abbott facility closure disrupted the established supply chain, the systemwide shortages fueled by a lack of options in suppliers and manufacturers led to a formula scarcity panic.
Abbott is already under criminal investigation related to the shuttering of its manufacturing plant in Sturgis, Michigan. A whistleblower has accused Abbott and its employees of engaging in a coverup of the contamination at the plant.