Is There Collusion in the Baby-Formula Industry?: FTC Scrutinizes State Contracts Bidding Process

• The Federal Trade Commission's (FTC) investigation concerns potential collusion among baby-formula manufacturers as it examines whether companies like Abbott Laboratories (NYSE: ABT) and other formula manufacturers have engaged in collusion or coordination while bidding for state contracts.

• Furthermore, the agency is also exploring whether the coordination among these companies has had a broader impact on sales outside of the Women, Infants, and Children (WIC) formula-supply program, as stated by FTC Commissioner Alvaro Bedoya.

• Related: Abbott's Baby Formula Brouhaha: Judge Says No Harm, No Foul in Contamination Controversy.

• Abbott Laboratories has stated its cooperation with the FTC's investigation, Wall Street Journal reported.

• In previous correspondence, Abbott's lawyers denied any knowledge of collusion or coordination and expressed confusion regarding the factual basis of the agency's investigation.

• In January, the FTC had initially requested information from Abbott as a part of its investigation into companies bidding for state infant-formula supply contracts.

• Nestlé SA (OTC: NSRGF) (OTC: NSRGY) also received a request for information from the FTC and has responded accordingly.

• Reckitt Benckiser Group Plc (OTC: RBGLY) (OTC: RBGPF), another company frequently awarded WIC contracts, has not commented on the specific government investigations but stated its commitment to complying with regulatory and enforcement agencies' requests.

• While the FTC declined to provide further details, labeling them as nonpublic, the investigation is one among several initiated by federal agencies against Abbott, including a criminal investigation by the Justice Department prompted by the closure of one of Abbott's manufacturing plants last year, which contributed to a nationwide formula shortage.

• The recently revealed FTC documents shed light on Abbott's attempts to limit the information request and the FTC's rejection of their request.

• Price Action: ABT shares closed at $105.74 on Tuesday.

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