Commission Authorises The Restrictions On The Advertising And Marketing Of Infant Formula

The Commerce Commission has granted authorisation to the current and future members of the Infant Nutrition Council Limited (INC) to restrict their advertising and marketing of formula products for infants aged up to 12 months old.

In assessing the INC’s most recent application (the third since 2015), the Commission has not identified any significant changes in the infant formula industry or in the actions of the members of the INC that will substantially impact its previous assessments of these restrictions.

After consulting on its draft determination, the Commission found that the public benefits of the proposed arrangements are likely to outweigh the detriments from the reduction in competition.

“After considering submissions received from a range of stakeholders, and considering the relevant benefits and detriments, the Commission’s view is that the proposed arrangements would result in public benefits, including important public health outcomes for parents and infants resulting from the protection of breastfeeding rates. In the Commission’s opinion, these benefits are likely to outweigh the detriments arising from the lessening of competition caused by the restrictions on advertising and marketing of infant formula products” said Division Chair Sue Begg.

The written reasons for this decision are available here.

Background
The INC is a company representing the major manufacturers and marketers of infant formula and other early life nutrition products in Australia and New Zealand. The INC considers the restrictions requiring authorisation are important for New Zealand to meet its obligations under the World Health Organisation’s International Code of Marketing of Breast Milk Substitutes (WHO Code). In particular, the WHO Code aims to protect and promote breastfeeding, and to restrict the marketing of breast milk substitutes in ways that could undermine this aim.

The INC’s authorisation application only relates to infant formula for children aged up to 12 months of age. Other milk formula products, such as toddler milk, did not form part of the application.

The Commission’s authorisation does not limit the public’s ability to purchase infant formula or to obtain information about suitable products that may meet their needs. The public will continue to be able to obtain information on infant formula from, for example, health professionals.

Authorisation requirements
The Commission may grant authorisation under sections 58(1) and (2) of the Commerce Act 1986 (the Act) for agreements that may otherwise breach the Act if it is satisfied that the agreement will in all the circumstances result, or be likely to result, in such a benefit to the public that the conduct should be permitted.

The Commission may also grant authorisation under sections 58(6B) and (6D) of the Act for agreements that contain a provision that is, or might be, a cartel provision and the Commission is satisfied that the agreement will in all the circumstances result, or be likely to result, in such a benefit to the public that the conduct should be permitted.

The granting of an authorisation protects the applicant from court action under the Act by the Commission and private individuals.

A copy of the guidelines can be found on the Commission’s website.

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