FTC launches second probe into Abbott’s alleged involvement in baby formula shortage

USA —Abbott Laboratories is facing further investigation into its alleged involvement in last year’s baby formula shortage, which resulted in millions of American families struggling to find essential nutrition products for their infants, Bloomberg reports.

The US Federal Trade Commission (FTC) recently issued a civil investigative demand to Abbott, as part of the agency’s ongoing probe into companies that participate in bids for formula contracts.

If the FTC finds evidence of anticompetitive behavior, such as price collusion with other manufacturers, it could potentially file a lawsuit against Abbott.

Abbott, along with peers Nestle SA, Perrigo Co., and Mead Johnson Nutrition Company, has long dominated the infant formula market in the US.

The risks posed by this level of market consolidation became apparent last year when several infants became sick after consuming formula produced by Abbott’s plant in Sturgis, Michigan.

The plant was shut down, resulting in a nationwide shortage of powdered infant formula. The Sturgis facility had been responsible for producing around 20% of the country’s infant formula, including Similac, the most popular brand.

Around 70 million cans and containers of Similac, as well as specialty formulas EleCare and Alimentum, were recalled last year.

Despite other companies increasing their production and the US government relaxing import restrictions to combat the shortage, families continued to face difficulties in finding essential formula for their infants.

Abbott’s disclosure shows that the U.S. government is still investigating the issue, several months after pledging to hold companies accountable for their involvement in the shortages.

Last month, the US Department of Justice launched a criminal investigation related to Abbott’s manufacturing of formula.

In May, Abbott entered a five-year consent decree with the DOJ that gives the US Food and Drug Administration additional oversight of the Sturgis facility.

In addition to the ongoing investigations, Abbott has also received a subpoena from the US Securities and Exchange Commission’s Enforcement Division, which has requested information relating to Abbott’s powdered infant formula business and related public disclosures.

The FTC has previously opened an inquiry into the infant formula market, which lawmakers had urged it to investigate.

The agency sought information from the public on whether consolidation contributed to the shortage, and a report on its findings is expected to be released in the spring.

Abbott is also facing several civil lawsuits related to its production of certain powdered infant formula products.

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