Media Releases

Commerce Commission reaches preliminary view to authorise restrictions on the marketing of infant formula

3 March 2015

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 under six months of age.

The INC has asked for authorisation of its Code of Practice, which places restrictions on the advertising and marketing of infant formula by INC members. The Commission’s preliminary view is that, while the Code of Practice may lessen competition, the reduction in competition is likely to be outweighed by the public benefits.

“Restrictions on marketing and advertising activities typically limit the amount of information available to consumers, reducing competitive pressure and making consumers worse off. In this instance, however, authorising the INC’s Code of Practice is likely to have significant public health benefits,” said Commerce Commission Chairman Dr Mark Berry.

“In particular, it is widely agreed that there are a variety of health benefits from breastfeeding, which could be adversely affected by the unrestricted marketing and advertising of infant formula. Moreover, authorising the INC’s 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 for its Code of Practice.

Interested parties are welcome to make submissions on the draft decision. Submissions are due by 24 March 2015 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 its Code of Practice only relates to infant formula for children under six months of age. Other milk formula products, such as follow-on formula and 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 agreements that may otherwise breach the Commerce Act, if it is satisfied that the public benefits of the agreements 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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