'The nationwide formula shortage is a story of corporate power and monopolies,' said Rep. Ilhan Omar.
While acknowledging that the ongoing Covid-19 pandemic has caused supply chain issues, the letter also suggests that “the gradual consolidation of the baby formula market may be worsening these disruptions and deficiencies,” highlighting that Abbott Nutrition, Nestlé, Perrigo, and Reckitt Benckiser collectively control about 90% of the U.S. market.
“This type of high market concentration may come at the cost of decreasing market redundancy and flexibility while increasing the risk of sector-wide shortages — even if a single plant ceases manufacturing,” the document notes, referencing Abbott’s recent facility closure and recall. The lawmakers are also concerned about how the Special Supplemental Nutrition Program for Women, Infants, and Children could be contributing to “such alarmingly high concentration” in the industry, due to exclusive contracts granted for the program, which boosts formula access for low-income families.
“We must make sure that no corners are being cut on any level when nutritional formula is such a necessity for many Americans,” the letter asserts. “That is why we are requesting that the FTC use its 6 authority to conduct a wide-ranging study on the consolidation of the nutritional formula industry.”The FTC should work with other federal partners to provide a report on the economic and health impacts of the formula industry’s fragile supply chain and manufacturing capabilities.
The Democrats are hoping for a response from Khan within the next month. Their call for FTC action came within hours ofon financial documents and whistleblower testimony about how Abbott used recent windfall profits to enrich shareholders even as equipment at a factory that was later shut down in connection with bacterial contamination “was failing and in need of repair.”
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