By Eric Huang.    Photo: @frimufilms

The supply chain interrupted by the pandemic is a major factor in the inflation that consumers are seeing now.

The global supply chain crisis has always been an important issue for the Biden government. Especially after the two traditional American shopping seasons of Thanksgiving and Christmas, the dilemma of not being able to buy on the shelves occurred, the U.S. federal government has made every effort to deal with this crisis caused by the epidemic! 

In response, the Federal Trade Commission (FTC) recently ordered nine large retailers, wholesalers, and consumer goods suppliers to provide detailed information to help the FTC clarify the reasons behind continued supply chain disruptions and how these disruptions can cause serious consumer disruptions. And the ongoing difficulties and harm to competition in the American economy.

The FTC is issuing the orders under Section 6(b) of the FTC Act, which authorizes the Commission 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.

“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.” 

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; the impact these disruptions are having in terms of delayed and canceled orders, increased costs and prices; the products, suppliers and inputs most affected; and the steps the companies are taking to alleviate disruptions; and 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 FTC is also seeking opinions from retailers, consumer product suppliers, wholesalers, and consumers on how supply chain issues affect competition in the consumer product market. These comments provide market participants with an opportunity to reveal other issues and examples of how supply chain disruptions affect competition.

Economists point out that the supply chain interrupted by the pandemic is a major factor in the inflation that consumers are seeing now. The US Department of Labor said earlier this month that consumer prices have soared at the fastest rate in three decades, and its consumer price index has risen by 6.2% in the past 12 months.

Although the global supply chain crisis is frustrating and major retailers are also facing a crisis of lack of labor, many large US retailers report that they are looking for ways to put their products on shelves in time for the next holiday shopping season.

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents.