Thank you for the question.
You're correct. Dairy products are regulated in Canada under federal legislation, the Food and Drugs Act and regulations, and under the dairy product regulations. Where you're incorrect is that the dairy product regulations do allow the use of milk protein concentrates in the formulation of some standardized dairy products.
There is a conflict to some extent between the requirements in the food and drug regulations and those found in the dairy product regulations, but it is our understanding that one of the principles for the interpretation of statutes is that current regulations take precedence over earlier regulations. And since the dairy product regulations are more current with respect to compositional standards, CFIA has used those regulations allowing the use of milk protein concentrate.