FTC Launches Baby Formula Shortage Investigation

Featured, National

Federal Trade Commission building | Image by DCStockPhotography

The Federal Trade Commission opened an investigation into the national baby formula shortage on Tuesday, focusing in part on how corporate mergers shaped the productive capacity of the industry and may have played a role in the supply crisis.

Parents have struggled to find baby formula ever since the Abbott Nutrition facility in Sturgis, Michigan, shut down in February due to possible bacterial contamination. Abbott Nutrition halted production at the facility after four infants who consumed products from the plant became seriously ill. Two of them died.

FTC Chair Lina Khan said in a statement, “While the [FTC] does not regulate the safety or manufacturing of the impacted products, it can take steps to address any anticompetitive, unfair, or deceptive acts or practices that have contributed to or are worsening this problem. The FTC can also examine the infant formula industry to identify the factors that created such a fragile market, where a single disruption at a single plant can jeopardize supply.”

Four companies manufacturing baby formula in the United States currently control 90% of the domestic market: Abbott Nutrition, Mead Johnson Nutrition, Nestle USA, and Perrigo.

Khan also stated the FTC would investigate any price gouging that may have occurred online. She said in her statement:

While [buying and] reselling these products is not illegal and may serve a useful function, using ‘bots’ or other automated tools to divert large amounts of supply of life-sustaining products from ordinary retailers and then prey on desperate families may constitute an unfair practice under the FTC Act.”

The investigation will also examine whether “unlawful forms of economic discrimination” by formula manufacturers and distributors limit supply to rural and inner-city retail markets.

President Joe Biden ordered the FTC to investigate the shortage earlier in the month.     

The Food and Drug Administration recently arrived at a deal with Abbott Nutrition to reopen the Sturgis plant. Abbott Nutrition is now under stricter oversight, but the facility may open as soon as June 4. However, it will take some time to restart production and get the national supply back to where it was before February.

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