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FTC launches probe into supply chain snarls

Big retailers, suppliers asked for documents on distribution strategies, sourcing and cost increases

The Federal Trade Commission wants to to find out if companies like Walmart used their size to overcome supply chain problems at the expense of consumers and smaller businesses. (Photo: Walmart)

The Federal Trade Commission on Monday ordered nine large retailers, wholesalers and consumer goods suppliers to provide detailed information that will help it investigate how supply chain disruptions are causing hardships for consumers and harming competition.

The agency is authorized under law to conduct wide-ranging studies that don’t have a specific law enforcement purpose. 

The orders were sent to Walmart (NYSE: WMT), Amazon (NASDAQ: AMZN), Kroger (NYSE: KR), C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Co., Procter & Gamble (NYSE: PG), Tyson Foods (NYSE: TSN), and Kraft Heinz (NASDAQ: KHC).

The companies have 45 days from the date they receive 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,” Chairperson Lina Khan said in a statement. “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 seeking a better understanding of the reasons behind the disruptions, the study will examine whether supply chain disruptions are leading to specific bottlenecks, shortages and anticompetitive practices, or contributing to rising consumer prices.

The orders require the companies to detail:

  • Primary factors making it difficult to obtain, transport and distribute their products.
  • The impact disruptions are having in terms of delayed and canceled orders.
  • Increased costs and prices.
  • Products, suppliers and inputs most affected.
  • Steps the companies are taking to alleviate disruptions.
  • 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. 

Freight transportation prices have jumped in the past year because of strong demand for imported goods and limited capacity across all transport modes.

The CEOs of Walmart and Kroger were among a group of business leaders who participated in a roundtable meeting with President Joe Biden at the White House on Monday to outline how their companies have overcome supply chain bottlenecks and prepared for the holiday shopping season. The group told the president that they had built up solid inventory levels, especially for seasonal items, by diversifying their supply base, sourcing new products and planning ahead on international shipping.

Walmart chief Doug McMillon said the retailer has seen improved cargo flows through the ports of Los Angeles and Long Beach since the Biden administration started pushing stakeholders last month to cooperate more on finding solutions to the gridlock caused by record import volumes.

“Retailers are experiencing a double whammy and getting hit from both a cost and service perspective. This has affected every industry and every mode of transportation. Ports continue to experience backlog and domestic transportation such as trucking has suffered due to the lack of drivers and labor available and equipment shortages,” said Fabricio Faggiani, senior consultant with procurement specialist Proxima.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.


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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, Eric was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. He has appeared on Marketplace, ABC News and National Public Radio to talk about logistics issues in the news. Eric is based in Vancouver, Washington. He can be reached for comments and tips at [email protected]