The FTC has voted to issue special orders directing nine large U.S. retailers and wholesalers to explain the reasons behind the ongoing supply chain crisis and how these disruptions are resulting in “serious and ongoing hardships for consumers” and harming competition in the economy.
Under Section 6(b) of the Federal Trade Commission (FTC) Act—which gives the agency the authority to conduct studies unrelated to law enforcement issues—orders have been issued to Walmart, Amazon, Kroger, C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Co., Procter & Gamble, Tyson Foods, and Kraft Heinz Co.
“Supply chain disruptions are upending the provision and delivery of a wide array of goods, ranging from computer chips and medicines to meat and lumber. I am hopeful the FTC’s new 6(b) study will shed light on market conditions and business practices that may have worsened these disruptions or led to asymmetric effects,” said Chair Lina M. Khan in the press release.
According to the order, the commission wants companies to explain why their ability to “obtain, transport, and distribute” products has been disrupted and the impacts these have had on the business, such as increased costs. The agency wishes to find out more about what the companies have done to mitigate these issues and ensure there are no shortages and furtherance of anticompetitive practices.
FTC has also asked companies to provide internal documents on strategies they have undertaken during the current market crisis that include marketing, pricing, profit margins, sales volumes, and selection of suppliers.
Furthermore, FTC is soliciting additional “voluntary” information from dealers and consumers to find out how supply chain issues have affected “competition in consumer goods markets,” one of the agency’s primary purposes.
President Biden had met with CEOs of major U.S. retailers in a Cyber Monday roundtable where he was assured that shortages are being managed and shelves are stocked with enough supplies to prevent any holiday shopping disruptions.
Walmart CEO Doug McMillon praised the administration’s efforts to ease the freight congestion through extending port hours, while Food Lion CEO Meg Ham claimed that the “food supply chain remains robust and there is ample product available for customers on our shelves.”
However, the economy is facing inflationary price hikes not seen in 31 years and overall food prices have gone up 5.2 percent with Thanksgiving staples like turkey costing almost 16 percent more than last year. The average consumer has lost confidence in the market supply and has started shopping earlier this holiday season to ensure sufficient stocks are available.
“The FTC has a long history of pursuing market studies to deepen our understanding of economic conditions and business conduct, and we should continue to make nimble and timely use of these information-gathering tools and authorities,” added Khan.
The companies have 45 days to respond to the order.