Strict advertising rules around infant formula milk are leading to “historically high” prices for UK parents, the Competition and Markets Authority (CMA) said today.
The watchdog said its investigation into formula prices had found that current regulations, which heavily limit how brands can advertise their products, were hindering price competition.
It said that since price reductions could not be promoted there had been a softening of competition on price.
The CMA, which began investigating the formula market in February after prices rose by 25 per cent over two years, expressed concern that with strict advertising limits, manufacturers were turning to indirect methods to build brand awareness. This included promoting follow-on formulas and growing-up milks as alternatives.
In a statement issued on Friday morning, the watchdog said: “The way in which parents and carers behave in this market, understandably driven by a desire to do what is best for their baby, with price used by some as a proxy for quality.
“For many, the decision to formula feed is made in vulnerable circumstances, for clinical reasons, in healthcare settings after birth.
“Many parents and carers are, naturally, not focused on comparing products and prices when they need to make a decision to start buying formula, and once they have found a product that works well for their baby they are reluctant to switch.
“This brand loyalty means new entrants face considerable barriers to win the trust of parents and carers and gain market share while remaining within the regulatory constraints.”
The CMA said it would release a report in October with recommendations for the government to help lower prices and increase choices for parents.
It added that given the “pressing impact” on parents and carers it would not be launching an in-depth market investigation at this stage and said: “It is important that the UK, Northern Ireland, Scottish and Welsh governments have the opportunity to consider our emerging findings in the context of their policy goals and priorities.”