FTC launches investigation into infant formula makers over nationwide shortage

The Federal Trade Commission on Tuesday launched an investigation into infant formula producers to seek out out whether or not company mergers contributed to a nationwide shortage by concentrating the trade.

FTC Chair Lina Khan stated that the fee would additionally examine whether or not formula makers and distributors engaged in unlawful financial discrimination that restricted availability at some retailers.

“Discriminatory phrases and circumstances can exacerbate the lack of some grocers, pharmacies, and different shops to supply merchandise in brief provide, impacting each rural and inner-city communities specifically,” Khan stated in a press release Tuesday.

Parents throughout the nation have struggled to seek out formula for his or her infants at shops after Abbott Nutrition shut down its plant in Sturgis, Michigan, in February as a consequence of bacterial contamination. Four infants who consumed formula made on the plant had been hospitalized with bacterial infections, and two of them died. Abbott has stated there’s “no conclusive proof” that its formula led to the hospitalizations and deaths.

Four producers — Abbott, Mead Johnson Nutrition, Nestle USA and Perrigo — management 90% of the U.S. market. The home provide chain is well disrupted when one plant goes offline.

The FDA and Abbott reached an settlement to reopen the Michigan plant to assist ease the shortage, topic to circumstances the corporate has to satisfy to make sure the plant meets U.S. meals security requirements. The settlement, referred to as a consent decree, is enforceable by federal courts. The firm faces the specter of $30,000 day by day fines if it fails to conform.

President Joe Biden requested the FTC earlier this month to analyze the infant formula shortage to seek out out whether or not producers contributed to it by holding formula from smaller retailers. He additionally requested the fee to cease any people or companies from making the most of the shortage by value gouging dad and mom.

Khan stated the FTC would use the total pressure of the regulation towards anybody who’s discovered to be scamming households attempting to purchase formula, together with via on-line bots that mechanically buy and resell formula at exorbitant costs.

“While reselling these merchandise shouldn’t be unlawful and will serve a helpful operate, utilizing ‘bots’ or different automated instruments to divert massive quantities of provide of life-sustaining merchandise from bizarre retailers after which prey on determined households might represent an unfair apply beneath the FTC Act,” Khan stated.

The FTC additionally requested the general public to submit feedback to a federal website about whether or not any state or federal companies might have by accident taken actions that contributed to the shortage.

Biden has invoked the Defense Production Act, a regulation handed in response to the Korean War, to assist producers increase manufacturing by ordering suppliers to prioritize the supply of child formula components. The U.S. can also be airlifting the equal of 1.5 million eight-ounce bottles of formula from overseas, in response to the White House.

The U.S. House Energy and Commerce Committee’s Oversight and Investigations subcommittee will maintain a public listening to Wednesday on the newborn formula shortage. It will function testimony from the Food and Drug Administration head Robert Califf and executives from formula producers Abbott, Gerber and Reckitt.