The Federal Trade Commission is investigating whether baby formula makers, including Abbott Laboratories, colluded on bids for government contracts.
The bids were administered through a state-level system, which accounts for over half of infant-formula sales under the Agriculture Department’s program.
The program provides a free formula to low-income families.
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FTC launched an investigation in 2022 to determine if baby formula makers colluded to maintain control of markets in states where they held a dominant position.
The agency said the firms would have been incentivized since the sales through the government formula program could increase commercial sales.
The investigation specifically targets Abbott Laboratories, but other major players like Nestlé, which produces the Gerber formula, and Reckitt Benckiser are also mentioned.
Nestlé confirmed receiving an information request from the FTC and stated it had responded accordingly.
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Reckitt expressed compliance with regulatory and enforcement agency requests.
Abbott Laboratories confirmed its cooperation with the FTC’s requests and emphasized its lack of awareness regarding any evidence of collusion or coordination.
The FTC didn’t comment on the investigation, and the documents outlining the probe did not explicitly reference the contamination incident or formula shortage at an Abbott Nutrition production plant in Michigan.
The plant’s contamination, along with pandemic-related supply chain challenges, resulted in a formula shortage, disproportionately affecting low-income parents and those with high-risk infants.
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This shortage prompted a crisis as parents struggled to find the formula their babies relied on.
The Justice Department has initiated a criminal investigation into the Michigan plant, which closed after several infants became ill, with two fatalities linked to the consumption of powdered formula manufactured there.
The FTC’s investigation highlighted the highly concentrated nature of the baby-formula market, with Abbott controlling 48 percent.
Four leading players, Abbott, Reckitt, Nestlé, and Perrigo, dominate 90 percent of the formula market.
The Agriculture Department reported Abbott, Reckitt, and Nestlé held government formula contracts in various states.
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