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Federal Trade Commission wants to know causes of empty shelves and sky-high prices – launches inquiry into supply chain disruptions

The Federal Trade Commission (FTC) is the latest entrant to enter the fray to try and identify the issues surrounding the massive supply chain disruptions faced by the US market and consumer.

As per a press release, the FTC has ordered nine large retailers, wholesalers, and consumer good suppliers to provide detailed information required to 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.

The orders issued under Section 6(b) of the FTC Act, authorizes the FTC to conduct wide-ranging studies that do not have a specific law enforcement purpose.

The orders are being sent to Walmart Inc., Amazon.com, Inc., Kroger Co., C&S Wholesale Grocers, Inc., Associated Wholesale Grocers, Inc., McLane Co, Inc. Procter & Gamble Co., Tyson Foods, Inc., and Kraft Heinz Co. The companies will have 45 days from the date they received the order to respond.” the release said

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.

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.

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Apart from getting a better understanding of the reasons behind the disruptions, the study will also examine whether supply chain disruptions may have led to bottlenecks, product shortages, anticompetitive practices, or has in any way contributed to rising consumer prices.

The order requires the companies to detail

  • the primary factors disrupting their ability to obtain, transport and distribute their products;
  • the impact these disruptions are having in terms of delayed and canceled orders, increased costs and prices;
  • the products, suppliers and inputs most affected;
  • the steps these companies are taking to alleviate disruptions; and
  • how they allocate products among their stores when they are in short supply.

The FTC also requires the companies to provide internal documents regarding 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. These comments provide an opportunity for market participants to surface additional issues and examples of how supply chain disruptions are affecting competition.

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