New York (CNN) — The Federal Trade Commission has launched an investigation into ongoing baby food shortages in the United States, which caused the essential product to be missing from store shelves for several months, to determine whether baby food manufacturers colluded in bidding for state contracts.
The agency, according to documents posted on the agency’s website, is investigating whether Abbott Laboratories and other formula manufacturers “committed or coordinated with another economic operator with respect to bidding” for state contracts.
In addition, the FTC is investigating whether corporate coordination affected sales more broadly, beyond the Women, Infants, and Children (WIC) supply program. The Wall Street Journal was the first to report on the research.
Abbott said in an email to CNN that the company is cooperating with the FTC’s requests.
The company also pointed to its earlier March 16 response to the FTC in which the company said, “Abbott is not aware of any factual basis to support the WIC-related investigation, and the staff has not identified any reason to believe that Abbott or any of its competitors coordinated or colluded with respect to a WIC contract. Abbott has nevertheless agreed to respond to the CID, despite the significant burden and cost to the company, to reassure the FTC that the company’s bids for WIC contracts are free of coordination or collusion.”
According to documents posted to the FTC’s website, Abbott filed a petition with the agency in March to limit the scope of its Jan. 27, 2023, civil investigation request to Abbott.
According to FTC documents, the FTC denied that request in April.
Perrigo said it had not purchased any WIC rights as part of its acquisition of Nestle’s Gateway facility and Good Start formula brand in 2022. As such, it said the WIC rights remained with Nestle. “Perrigo does not participate in WIC and thus Perrigo would not be involved in any FTC investigation on this subject,” the company said in an emailed statement to CNN.
A Nestle spokesperson confirmed to CNN that the company has received a civil inquiry request related to the WIC contract bidding process and has responded to the FTC. The company said it will continue to honor its existing WIC contracts to ensure uninterrupted supply.
Reckitt Benckiser said in an emailed statement to CNN that the company does not comment on specific government investigations. “Reckitt is fully cooperating and complying with all regulatory and enforcement requests we receive,” the statement said. The FTC declined to comment.
The bottle feeding shortage peaked in July 2022, when more than 20% of all formula products – including more than 30% of powdered formulas – were missing from store shelves following a major recall of several baby formula products by a leading manufacturer.
According to market research firm IRI, in February 2023, about a third of families with a baby under 1 year old said they had struggled to get supplies. More critically, more than half said they had less than a week’s worth of supplies on hand.
Acute shortages eased a year later, but the crisis took a heavy emotional toll on families and caregivers.
The FTC began investigating the industry last year on a wide variety of issues, including possible fraud, deception, or scams when people tried to buy baby formula during the shortages. The agency also investigated possible price inflating by online baby food sellers.
The regulator also probed for problems retailers faced in sourcing baby food. Specifically, the FTC sought information on whether small and independent retailers had more difficulty accessing limited supplies of infant formula compared to large retail chains.
More broadly, the FTC also examined the baby food industry, the pattern of mergers and acquisitions between manufacturers of the product and supply chain challenges, and whether there are any regulatory barriers that have prevented baby food brands from entering the US infant formula market.
The-CNN-Wire
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