May 24, 2022 - Economy

FTC launches probe into baby formula shortage

A few canisters of baby formula sit on mostly empty shelves at the store

Empty shelves formerly full of baby formula are visible in a pharmacy in Lafayette, Calif., amid an ongoing shortage. Photo: Smith Collection/Gado/Getty Images

The Federal Trade Commission is launching a probe into reports that baby formula sellers have engaged in deceptive practices, price gouging or other illegal tactics amid widespread shortages.

Why it matters: Parents have been scrambling to find baby formula after the collision of supply chain issues, a massive recall and the temporary shut down of a large Abbott Nutrition factory in Michigan.

Driving the news: The FTC said it would examine reports of "exorbitant" prices and the "current concentration" of the baby formula industry, which is largely controlled by four companies.

  • "The FTC is launching a public inquiry to identify the factors that contributed to the shortage or hampered our ability to respond to it," said FTC Chair Lina Khan in a statement. "Learning from this experience can help determine how we can minimize the risk of similar shortages in the markets for other life-sustaining products."
  • The announcement comes ahead of a congressional hearing Wednesday, when officials from Abbott, the FDA and other industry leaders are poised to testify.

Worth noting: The agency said it would coordinate with the USDA, which administers the Special Supplemental Nutrition Program for Women, Infants and Children (“WIC”), which accounts for about half of the baby formula market.

  • "Concentration in the infant formula market has created market fragilities that, combined with certain features of the program, may impede WIC’s ability to quickly respond to lengthy product recalls, factory shutdowns, or other disruptions," the FTC said.
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