FTC investigating whether baby formula makers engaged in collusion in state contracts

The Federal Trade Commission (FTC) is investigating whether baby formula makers colluded on bidding for state contracts, agency documents show.

The commission opened the probe last year into bidding on state contracts for the Department of Agriculture’s Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), which provides free formula to low-income families. The investigation was first reported by the Wall Street Journal on Wednesday.

In late January, the FTC requested information and documents from Abbott Laboratories, one of only three manufacturers that have bid on WIC contracts since 1996. The commission later denied a request from the company to limit the scope of the investigation, which was posted on the agency website in late April.

The commission said in its request to Abbott that it was looking into “whether any company that manufactures, markets, or sells Infant Formula Products has engaged or is engaging in any unfair method of competition.”

FTC Secretary April Tabor noted in the April response to Abbott that the WIC contracts may create incentives for collusion, where “incumbent WIC contract holders agree not to bid against each other so that they can continue enjoying dominant positions in non-WIC markets in their respective states.”

An Abbott spokesperson said in a statement that the company is cooperating with the FTC’s requests. However, the company previously said in its March petition to the commission that it was “unaware of any factual basis to support the WIC-related investigation.”