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18 May, 2017
On 10 May 2017, the Competition Commission of Singapore (the "CCS") published a report on a year-long inquiry that it had conducted on the supply of infant formula milk.
One of the findings in the report was that while the producers of infant formula milk did not adopt any anti-competitive practices, e.g. price fixing, they have been adopting aggressive tactics in the marketing of their products to consumers.
For instance, some of these producers make payments to or sponsor private hospitals in Singapore to distribute the producers' goods.
Another tactic that producers have used is to leverage research and development to keep introducing new ingredients that have purported health benefits, but which are unsubstantiated, to their products. This is to enhance the "premium" image of their products as well as to establish customer loyalty. Because parents may not adequately comprehend the nutritional content of infant formula milk and the dietary requirements of their children, parents may assume that pricier products are of better quality, which may not necessarily be true. Also, many consumers tend to prioritise the brand name, nutrition and safety of infant formula milk, and often continue purchasing the brand of milk that their children had consumed since birth in hospitals.
This factor, along with the significant amounts invested by producers in marketing and research and development, have resulted in a surge in wholesale prices and, as well as retail prices for infant formula milk. In fact, this increase in retail price outweighs that of other dairy goods and household essentials.
In response, the Singapore Government has plans to tighten the rules to promote more price competition. This includes evaluating import requirements to allow for cheaper options of infant formula milk to enter the Singapore market, and expanding the range of options that hospitals currently offer.
Additionally, the Government intends to ramp up efforts to educate the public to support breastfeeding.
More details can be found in the CCS's media release here, in the CCS's report here, and in an article by The Straits Times here.
For further information, please contact:
Andy Leck, Principal, Baker & McKenzie.Wong & Leow
andy.leck@bakermckenzie.com
