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Baby Formula Companies Face U.S. Price-Fixing Probe : Consumer affairs: Documents have been subpoenaed in the case. It was spurred by welfare officials.

December 31, 1990|From Associated Press

NEW YORK — Federal authorities subpoenaed the records of the nation's biggest baby formula manufacturers after state welfare officials and consumer advocates made allegations of price fixing, a representative of one of the companies said today.

"This is a top-priority, front-burner investigation," said Kevin J. Arquit, head of the Federal Trade Commission's Bureau of Competition. He said authorities have not concluded that price fixing occurred. The companies denied the allegations.

The New York Times reported that records were subpoenaed from Ross Laboratories, a division of Abbott Laboratories; the Mead-Johnson Nutritional Group, a division of Bristol-Myers Squibb Co.; Wyeth-Ayerst Laboratories, a division of American Home Products Corp.; Carnation Co., a subsidiary of Nestle S.A., and Gerber Products Co. The American Academy of Pediatrics also was subpoenaed, it said.

Wyeth-Ayerst spokeswoman Audrey Ashby said the company received the FTC subpoena in September and has begun turning over the requested documents.

"We set prices independently and compete vigorously and independently in all aspects of the infant formula business," Ashby said.

Ross, Mead-Johnson and Wyeth-Ayerst account for about 95% of all baby formula marketed in the United States, while Carnation and Gerber account for about 5%, the newspaper said. The domestic market is worth about $1.3 billion a year, it said.

Infant formula is a major ingredient in food packages given to low-income families who qualify for the Special Supplemental Food Program for Women, Infants and Children. The program serves about 4.4 million people a month and accounts for one-third of the infant formula sold in the United States. The program's funds are limited and higher costs mean that fewer people benefit, Arquit said.

Dennis H. Bach of Iowa, who heads the National Assn. of WIC directors, said baby formula prices "have seemed to go up in lock step over the last 10 years."

Betsy Clarke, director of the WIC program in Oregon, said prices have tripled during the last 15 years, with different companies raising prices by the same amounts within days of each other.

Current retail prices range from $1.80 to $2.30 for a 13-ounce can of concentrated formula.

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