FTC initiates baby formula probe into price gouging, deceptive practices and supply chain breakdown

The Federal Trade Commission launched an investigation on Tuesday into the baby formula shortage and whether suppliers engaged in “deceptive, fraudulent or otherwise unfair business practices” to capitalize on the situation, as well as how the supply chain meltdown may have contributed to the emergency.

The commission is urging Americans to speak out on whether they think policies created by the federal and state governments contributed to the crisis. This move comes as President Joe Biden is flying formula into the country from abroad and is belatedly pushing for faster production of baby formula. Many Americans reportedly want to know why he did not act months ago to head off the catastrophic shortage.

“We have been monitoring and will continue to monitor the ongoing infant formula shortage which is causing enormous anxiety, fear, and financial burden for American families,” FTC Chair Lina Khan declared in a statement.

“The FTC is launching a public inquiry to identify the factors that contributed to the shortage or hampered our ability to respond to it. Learning from this experience can help determine how we can minimize the risk of similar shortages in the markets for other life-sustaining products,” she announced.

“Discriminatory terms and conditions can exacerbate the inability of some grocers, pharmacies, and other stores to source products in short supply, impacting both rural and inner-city communities in particular,” Khan noted.

The FTC will conduct an analysis of the shortage alongside the Department of Agriculture, which administers the government’s nutrition program for women, infants, and children (WIC). WIC participants buy approximately half the baby formula in the U.S., making it the nation’s largest purchaser of formula.

“The agencies will use this analysis to help determine what policy changes might be necessary to promote competition and resiliency in the infant formula market to prevent future shortages,” Khan said.

The commission “seeks public input on whether the FTC itself or state or federal agencies may have inadvertently taken steps that contributed to fragile supply chains in the market for these crucial products for many American families.”

The FTC is also inquiring about “instances where families have experienced fraud, deception, or scams when attempting to purchase infant formula or been forced to purchase formula from online resellers at exorbitant prices.”

Authorities are inquiring “whether small and independent retailers have faced particular difficulties accessing limited supplies of infant formula compared to large chain retailers.”

Four manufacturers, Abbott, Mead Johnson Nutrition, Nestle USA, and Perrigo, produce more than 90 percent of the nation’s baby formula supply, which appears to be part of the problem in itself. The FTC will also examine the pattern of mergers and acquisitions in the formula market.

Approximately 43 percent of baby formula products were reportedly out of stock last week across the nation, according to CBS. Families hit hardest by the shortage have babies with special dietary needs, especially those who cannot tolerate milk.

The Biden administration is placing the blame on formula manufacturer Abbott Nutrition, which was forced to shut down its Michigan plant over bacterial contamination when two babies allegedly died after being exposed to it. Abbott claims that the bacteria was never in the products they sold but they shut down anyway out of an abundance of caution.

Abbott has now come to an agreement with the FDA and will resume production. However, it will ostensibly be weeks before that formula hits the market.

Biden’s Fly Formula project flew roughly 78,000 pounds of baby formula into Indianapolis, Indiana from Ramstein Air Base in Germany in its first shipment over the weekend.

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