Federal Trade Commission launches investigation into infant formula manufacturers over nationwide shortage

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  • The Federal Trade Commission is launching an investigation into whether mergers in the baby formula industry contributed to the current shortage.
  • The FTC also said it would use the full force of the law against individuals or businesses that are taking advantage of the parent’s price reduction.

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The Federal Trade Commission on Tuesday launched an investigation into infant formula manufacturers to determine whether corporate mergers contributed to nationwide shortages by concentrating the industry.

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FTC Chair Leena Khan said the commission will also investigate whether formula manufacturers and distributors engage in illegal economic discrimination that has limited availability at some retailers.

“Discriminatory terms and conditions may exacerbate the inability of some grocers, pharmacies and other stores to source products in short supply, particularly affecting both rural and inner-city communities,” Khan said in a statement on Tuesday.

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Parents across the country have struggled to find formula for their babies at stores after Abbott Nutrition closed their plant in Sturgis, Michigan, in February due to bacterial contamination. Four infants who consumed formula made at the plant were hospitalized due to bacterial infections, and two of them died. Abbott has said that there is “no conclusive evidence” that its formula caused hospitalizations and deaths.

Four manufacturers – Abbott, Mead Johnson Nutrition, Nestle USA and Perigo – control 90% of the US market. The domestic supply chain is easily disrupted when a plant is offline.

The FDA and Abbott reached an agreement to reopen the Michigan plant to help reduce shortages, ensuring the company will meet U.S. food safety standards. The agreement, called a consent decree, is enforceable by federal courts. The company faces the threat of a $30,000 daily fine if it fails to comply.

President Joe Biden earlier this month asked the FTC to investigate infant formula shortages to find out whether manufacturers contributed to it by keeping formula from small retailers. He also asked the commission to prevent any individual or business from taking advantage of the shortfall by the price-raising parent.

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Khan said the FTC will use the full force of the law against anyone who is defrauding families trying to buy formula, including online bots that automatically buy and resell formula at exorbitant prices. We do.

“While reselling these products is not illegal and can serve a useful function, using ‘bots’ or other automated devices to divert large quantities of supplies of subsistence products from ordinary retailers and then to desperate families. Hunting down can be an unfair practice under the FTC Act,” Khan said.

The FTC asked the public a . also asked to submit comments federal website About whether any state or federal agencies mistakenly took actions that contributed to the shortfall.

Biden has enacted the Defense Production Act, a law passed in response to the Korean War, to help manufacturers boost production by ordering suppliers to prioritize the distribution of baby formula ingredients. The US is also airlifting the equivalent of 1.5 million 8-ounce bottles of formula from overseas, according to the White House.

The Oversight and Investigation subcommittee of the US House Energy and Commerce Committee will hold a public hearing on the shortage of baby formula on Wednesday. It will feature testimony from FDA Commissioner Robert Califf and executives from formula makers Abbott, Gerber and Reckitt.

Credit: www.cnbc.com /

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