Abbott’s Similac® formula alone controls 51% of the market. Between 1980 and 1993, its price increased by just over 200%. The main ingredient, milk, increased in price by just 35%. Both of its competitors increased prices in line with Abbott’s increases.

This is an example of lock-step pricing. The members of the oligopoly felt immune from price competition and were able to ignore consumer resistance to price increases.

The ex-President of Abbott, Jack Schuler, warned the board in the late 1980s that "formula was a generic product ... if it came out that we were rip-off artists, it would have hurt."

The Federal Trade Commission (FTC) finally investigated the matter. In 1992, they stated that there was evidence of collusion between Abbott-Ross, Mead Johnson, and Wyeth. Some 15 states also recently sued Abbott Laboratories and Bristol-Myers Squibb Co. over price fixing. Residents of these states can now claim monetary refunds. There has been some confusion over what exactly the action involves.

The 15 states are Alabama, Colorado, Florida, Illinois, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Nevada, North Carolina, North Dakota, South Dakota, Tennessee, West Virginia, and Wisconsin

Perhaps baby formula has become too expensive. According to the Associated Press, a Texas man stole a $60 container of Similac at gunpoint from a Fort Worth supermarket. In fact, Similac was being stolen regularly by organized crime gangs and fenced on the street. According to the AP, "The buyers, police speculate, are possibly mom-and-pop grocery stores and low-income mothers who can't afford the retail price."

One woman's experience of baby formula marketing provides a concise account of the "formula wars".

Abbott

http://www.abbott.com

http://www.similac.com

Bristol-Myers Squibb

http://www.bms.com

Federal Trade Commission

http://www.ftc.gov

Texas Babymilk Robberies

http://www.texaswest.com/html/news/010796.html#2.1

Woman's Account of the "formula wars"

http://www.zipmall.com/bab-bott.htm