Extending restrictions on the marketing of infant formula

Commission proposes to authorise extending the restrictions on the marketing of infant formula

The Commerce Commission has reached a preliminary view that it should allow members of the Infant Nutrition Council (INC) to restrict their advertising and marketing of infant formula for children up to 12 months of age, for a period of five years.

The INC has asked for authorisation to amend the definition of “Infant Formula” in its Code of Practice, so that the current restrictions on the advertising and marketing by INC members of infant formula for children up to six months of age apply to infant formula for children up to 12 months of age. The Commission’s preliminary view is that, while this amendment to the Code of Practice may lessen competition, the reduction in competition is likely to be outweighed by the public benefits.

In 2015 the Commission granted authorisation to members of the INC to restrict their advertising and marketing of infant formula for children up to six months of age. If the Commission decides to authorise the INC to comply with the amended Code of Practice, it proposes to revoke the 2015 authorisation on the grounds that the new authorisation constitutes a material change in circumstances since the 2015 authorisation was granted.

“Restrictions on advertising and marketing activities typically limit the information available to potential consumers about the benefits of certain products and often deprive manufacturers and marketers of the opportunity to undertake future advertising and marketing activities. The restrictions could therefore lessen competition,” said Chairman Dr Mark Berry.

“However, in this instance authorising the amendment to the INC’s Code of Practice is likely to have significant public health benefits. While the public health benefits of breastfeeding appear greatest for children aged up to six months, the benefits for children aged six to 12 months also appear significant. The amendment to the Code of Practice is supported by public health bodies. Moreover, as we found in 2015, authorising the amendment to the Code of Practice is unlikely to impact the price that consumers pay for infant formula,” said Dr Berry.

For these reasons, the Commission’s draft decision is that it should grant authorisation to the INC to comply with its amended Code of Practice.

Interested parties are welcome to make submissions on the draft decision. Submissions are due by 5pmon 17 September 2018 and can be sent to registrar@comcom.govt.nz, with the reference “Infant Formula” in the subject line.

Read the draft determination.

Background
The INC is the association for the infant formula industry in Australia and New Zealand. Its membership is comprised of manufacturers, marketers and importers of infant formula.

The INC’s authorisation application for the amendment to the Code of Practice only relates to infant formula for children aged up to twelve months of age. Other milk formula products, such as toddlers’ milk, do not form part of the application.

Authorisation requirements
The Commission may grant authorisation under section 58 of the Commerce Act for certain arrangements that may otherwise breach the Commerce Act, if it is satisfied that the public benefits of the arrangements outweigh the detriments arising from the loss of competition. The granting of an authorisation protects the applicant from court action under the Commerce Act by the Commission and private individuals.

Under section 62(1) of the Commerce Act, the Commission must prepare a draft decision before determining an application for authorisation of an agreement. The draft decision sets out the Commission’s preliminary view on whether or not we are likely to grant an authorisation, and the reasons for that view.

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