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INFANT FORMULA PRICE FIXING ALLEGED BY FLORIDA ATTORNEY GENERAL

Executive Summary

INFANT FORMULA PRICE FIXING ALLEGED BY FLORIDA ATTORNEY GENERAL in a civil complaint filed Jan. 3 in the federal District Court for the Northern District of Florida. Filed against Abbott Labs, American Home Products and Bristol-Myers Squibb, the suit alleges "that the companies violated state and federal antitrust laws through infant formula price fixing and a marketing scheme which discourages competition and unduly drives up prices," Attorney General Bob Butterworth said in a same-day statement. The complaint secondly alleges that Abbott and Bristol-Myers Squibb "rigged" rebate bids for the states' Women, Infants and Children (WIC) supplemental nutrition program. Abbott's Ross Labs markets Similac, BSM's Mead Johnson division markets Enfamil, and AHP's Wyeth-Ayerst makes SMA -- together accounting for nearly all of the U.S. formula market. The Florida complaint alleges that the wholesale price of formula rose 155% between December 1979 and December 1989, compared to increases of 36% for milk, 42% for dairy products and 51% for groceries overall. A Florida health official said the state is particularly concerned about prices of infant formula for those not assisted by WIC, maintaining that formula can consume most of the budget for families who are poor but just above WIC eligibility levels. He estimated that formula retails for an average of $ 2 per can in Florida. The price for WIC participants now is about 50" and is slated to decrease to 35-40". Florida has been able to maintain rebates due to the size of its program, the official said. The program had 191,000 enrollees in November 1990, including 67,000 infants receiving formula. Rebate savings have allowed the state to expand enrollment by one- third. The Federal Trade Commission last year launched an inquiry in infant formula pricing ("The Pink Sheet" June 4, T&G-8) and subpoenaed information from the three companies in September. All three are in the process of providing that information and issued statements denying any anticompetitive or collusive behavior as alleged by FTC or Florida.
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