Proposed Lawsuit Filed Against 2 Infant Formula Makers

Infant formula makers Gerber and Perrigo have been hit with a proposed class-action lawsuit accusing them of scheming to artificially drive up prices for “store-brand” formula sold at Walmart, Walgreens, and other retailers, Reuters reported.

The lawsuit, filed Monday in Alexandria, VA, federal court, said Perrigo violated antitrust law by illegally agreeing with Gerber to block competitors from cutting into the market for store-brand formula.

Perrigo is the country’s top supplier of store-brand formula, which is sold under retailers' labels and can cost less than similar branded products. Gerber, according to the lawsuit, agreed to give Ireland-based Perrigo "first right of refusal" to Gerber's excess formula supply, which a competitor otherwise might have used to sell to retailers.

The plaintiffs are four residents of California, Illinois, Michigan, and Pennsylvania who said they had purchased store-brand baby formula and who seek to represent a class of millions of customers.

In its deal with Perrigo, Gerber agreed to keep its excess formula out of the store-brand market, and in exchange "would directly and/or indirectly reap a share of Perrigo's profits," the lawsuit alleged. The consumers asked for a court injunction to bar any anticompetitive deals between Perrigo and Gerber, and they also seek more than $5 million in monetary damages.

Another lawsuit against Gerber and Perrigo took place in Brooklyn, NY federal court by a potential store-brand competitor called P&L Development. A judge in February denied the formula makers' bid to dismiss the case.

The companies in that case said they “compete fairly with other manufacturers of infant formula, including store-brand infant formula manufacturers.”

The consumers' lawsuit cited the earlier case, contending that boxing out P&L Development from the store-brand market has caused them to pay higher prices.