Infant-Formula Makers Face Price-Fixing Probe

The Federal Trade Commission has subpoenaed documents at the nation’s major infant-formula makers and a pediatricians group as part of its probe of possible anti-competitive practices in the industry.

Federal officials are investigating, among other things, charges of price fixing and a voluntary ban on consumer advertising that is supported by the American Academy of Pediatrics, one of the groups subpoenaed. The academy and other health groups have said consumer advertising of infant formula will discourage breast-feeding, which medical professionals consider healthier than bottle feeding.

But Debbie Feinstein, assistant to the director of the bureau of competition at the FTC, said the agency was studying whether the voluntary ban on advertising, which is not observed by all the firms, may “make it easier to keep prices above competitive levels.”

She said: “We are basically looking to see if there are any anti-competitive practices.” Feinstein said the agency began its investigation last summer after the heads of social service programs that give food packages to low-income families complained of simultaneous price increases by infant-formula makers.

The FTC has reportedly subpoenaed records from the companies that control most of the estimated $1.4 billion in annual infant-formula sales: Abbott Laboratories, which makes Similac; Bristol-Myers Squibb Co, which makes Infamil; American Home Products Corp, maker of Nursoy, and Gerber Products Co., which makes Gerber formula. Glendale-based Carnation, the maker of Good Start, also said it had been subpoenaed.

“We hear that the (formula) price increases seem to be way ahead of price increases for milk,” the major ingredient in most formulas, Feinstein said. “That deserves further inquiry.”

Feinstein said the investigation was “ongoing” and she did not know when it would be concluded.