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FTC investigating baby-formula makers on suspected collusion

Yahoo Finance health care reporter Anjalee Khemlani discusses the ongoing investigation by the FTC of baby-formula makers, including Abbott Laboratories, Perrigo, and Nestle, on suspected collusion.

Video transcript

- Meanwhile, the Federal Trade Commission is reportedly investigating if Abbott Laboratories and other formula-makers colluded on bids for state contracts. The FTC is also looking into whether company coordination affected sales more broadly outside of just the formula supply program, this all according to the Wall Street Journal. Yahoo Finance's Anjalee Khemlani joins us now with the details, and I remember those empty shelves, Anj.

ANJALEE KHEMLANI: Yeah, that's actually what spurred, probably, this look from the FTC, looking at whether or not those bids actually give the companies a market domination position. So when they do go out to bid with the states every three to four years, they stay out of each other's territories of who actually wins that bid. And that's what the FTC is looking into.

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Now, we've reached out to the three dominant players in this, and that's-- sorry-- Reckitt Benckiser, Abbott, and Nestlé. Perrigo, which is another dominant market player in the non-WIC category, or the non-women's, infant's, and children's category, which is what this is all about, does have the rights to produce Nestlé's brand, but without the WIC market. So it's an interesting little shift that happened late last year, where they acquired those rights but are not part of this.

We do know that Abbott has tried to push back on the inquiry from the FTC, asking specifically to pare back the amount of information that's required. But the FTC has said that it is going to continue to ask for the same amount of information, looking as far back as 2016. And this is based off of a 2015 USDA report showing that there could have been some of these colluding practices. So that's really what the FTC is focused on.

Of course, this is just starting. We've reached out to all these companies and none have returned requests for comment from Yahoo Finance just yet. And we do know that this is an ongoing issue for these companies.

JULIE HYMAN: Right. And the FTC doesn't always confirm when these things are going on. So the Journal reporting this and and we'll see what ends up happening. It could take some time.