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FTC Orders Retailers to Submit Information on Supply Chain Disruption

FTC orders retailers to submit information on supply chain disruptions
Walmart set up a temporary contaner yard near the SoCal ports (Joe Metzger/LinkedIn)

Published Dec 1, 2021 8:31 PM by The Maritime Executive

The U.S. Federal Trade Commission has become the latest agency to begin investigations into the supply chain disruptions in the United States. The agency which works to promote competition, and protect and educate consumers, has ordered nine large retailers, other large wholesalers, and consumer good suppliers to turn over information that will help the FTC shed light on the causes behind ongoing supply chain disruptions and how these disruptions are causing serious and ongoing hardships for consumers and harming competition in the U.S. economy.

Among the companies the FTC is seeking information from are Walmart, Amazon, Kroger, C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Co., Procter & Gamble, Tyson Foods, and Kraft Heinz. The companies have 45 days from the date they received the order to respond.

“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 study will shed light on market conditions and business practices that may have worsened these disruptions or led to asymmetric effects,” said FTC Chair Lina Khan. “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.”

In addition to better understanding the reasons behind the disruptions, the study will examine whether supply chain disruptions are leading to specific bottlenecks, shortages, anticompetitive practices, or contributing to rising consumer prices.

The orders require the companies to detail the primary factors disrupting their ability to obtain, transport and distribute their products as well as the impact these disruptions are having in terms of delayed and canceled orders, increased costs and prices. They will also be exploring the products, suppliers, and inputs most affected and the steps the companies are taking to alleviate disruptions. The FTC is also asking for information on how they allocate products among their stores when they are in short supply.

The FTC also is requiring the companies to provide internal documents regarding the supply chain disruptions, including strategies related to supply chains, pricing, marketing, and promotions, costs, profit margins, and sales volumes, selection of suppliers and brands, and market shares.

In addition, the agency is soliciting voluntary comments from retailers, consumer goods suppliers, wholesalers, and consumers regarding their views on how supply chain issues are affecting competition in consumer goods markets. According to the FTC. these comments will provide an opportunity for market participants to surface additional issues and examples of how supply chain disruptions are affecting competition.

The FTC’s study comes as some of the major retailers reported that they are seeing an increase in velocity through the ports and that the Biden administration’s efforts are beginning to have an impact on the flow of goods. As the problems began to emerge, merchants for Walmart chartered this own ships to bring products to the world’s largest retailer while Amazon hired general cargo ships to bring containers to the U.S. Walmart’s CEO told a White House meeting that his company has also begun creating temporary container yards away from the ports to use as their own staging areas to alleviate the delays experienced at major ports. In a LinkedIn posting, Walmarts’ EVP of Supply Chain Operations posted a picture of a temporary yard the giant retailer created by renting vacant space near the ports of Los Angles and Long Beach which is processing over 500 containers a day. A similar effort near Savannah is helping the port to predict it might clear its backlog by mid-December.