UK regulator decides against in-depth probe of baby formula market

(Reuters) - Britain's competition regulator has decided against launching a more extensive market investigation into the supply of infant formula after an initial study, it said on Friday.

The Competition and Markets Authority (CMA) said its study launched in February had identified significant concerns about the infant formula market and that it will recommend change, but it stepped back from a lengthier probe.

A more extensive investigation would have been lengthy and depending on its outcome could have resulted in remedies being imposed on specific companies and possibly fines.

The cost of baby milk formula was in the spotlight during Britain's inflation-driven cost of living crisis, with media reports saying that some struggling parents had resorted to watering it down to feed their children.

The CMA said last November that ineffective competition in the baby formula market could be leading to parents paying higher prices.

It noted then that prices had risen 25% in two years. It said two firms controlled 85% of the UK baby formula market, but did not name them. Data from Euromonitor showed they were Danone and Nestle. Prices have since fallen.

The watchdog said on Friday it had identified significant concerns that the combined effect of the current regulatory framework, the behaviour of manufacturers and suppliers and the needs and reactions of people buying formula were resulting in poor market outcomes.

"The CMA considers these concerns will be best addressed by progressing with our market study and developing recommendations to governments to improve these market outcomes rather than moving to a more extensive market investigation," it said.

The regulator plans to publish an interim report with provisional recommendations for action in October, it added.

(Reporting by Shanima A in Bengaluru and James Davey in London; Editing by Devika Syamnath and Jan Harvey)