NHS-branded baby formula could be sold to stop parents paying ‘over the odds’

NHS-branded baby formula could be sold at a lower cost than those offered by existing manufacturers in a bid to drive down prices, a regulator has suggested.

The Competition and Markets Authority (CMA) said on Friday that the baby formula market needs shaking up as, under existing rules, dominant companies such as Danone and Nestle have “limited incentives” to compete on price. The CMA said the UK needs better public health messaging to help parents choose between brands, while it is also looking into a potential price cap, though it stopped short of recommending one.

Sarah Cardell, chief executive of the CMA, said: “This is a very important and unique market. We’re concerned that companies don’t compete strongly on price and many parents – who may be choosing infant formula in vulnerable circumstances and without clear information – opt for more expensive products, equating higher costs with better quality for their baby.

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“We have identified options for change, but now want to work closely with governments in all parts of the UK, as well as other stakeholders, as we develop our final recommendations. Importantly, any changes must continue to support regulation that ensures all formula gives babies the nutrition they need to thrive – as well as supporting governments’ aims on breastfeeding.”

The CMA said it would consult on its findings and issue a full report next year. The watchdog laid out a number of concerns about the market which “appear to be contributing to parents paying over the odds”. The market is currently dominated by Danone and Nestle, which make up about 85% of sales.

One possible solution put forward would be for the Government to “procure infant formula from a third-party contract manufacturer at a competitive price point”. The Government “may be able to use an established brand name for its infant formula, such as ‘NHS’, or invest in establishing a new brand”, it added.

The recommendation would ultimately amount to a state-issued product entering the market to compete with existing ones. Meanwhile, it could also set a maximum price on infant formula or enforce a cap on profit margins.

Richard Walker, the boss of Iceland, has previously called for a price cap, describing current market practices as “exploitation” of parents.