The Supply Chain Matters blog highlights this week’s actions taken by the Federal Trade Commission, along with another White House meeting, each focused on ongoing supply chain disruptions.
The United States Federal Trade Commission (FTC) is ordering nine large U.S. retailers, wholesalers, and consumer goods providers to provide added detailed information related to the ongoing 2021 supply chain disruptions.
According to an agency release, the probe is reportedly not part of any enforcement action but rather is directed at helping the FTC to shed additional light on how these disruptions are causing “serious and ongoing hardships for consumers and harming competition in the U.S. economy.”
These orders were directed at retailers Amazon.com, Kroeger and Walmart along with wholesalers Associated Wholesales Grocers, C&S Wholesale Grocers, and McLane Company. Consumer product goods companies included in this inquiry were Kraft Heinz Company, Procter & Gamble, as well as Tyson Foods.
FTC Chairperson Lina M. Khan indicates in the press release:
“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. 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.”
What is likely unprecedented is that the FTC action requires that these specific companies “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.” This latter requirement seems especially onerous given the level of detailed analysis being sought.
The companies have 45 days to respond with the requested information.
Biden Meets with Major Retailers
Separately, President Joseph Biden held a meeting on Monday of this week with executives from several U.S. major retailers and grocers including Best Buy, CVS Health, Kroeger, Walmart and others. This meeting was to discuss the ongoing supply chain disruptions and how the U.S. government is directing its resources to assist in alleviating some of these disruptions. The President met with CEO’s of major companies earlier this month as well with a similar agenda related to overcoming supply chain disruptions.
According to a White House press statement, the CEOs thanked President Biden for the U.S. government’s focus on supply chain bottlenecks and the productive partnership that the President has established with the private sector to tackle these disruptions.
The business leaders reportedly noted the strength of their supply chains, especially for seasonal items, and highlighted ways they had planned ahead, diversified their supplier base, sourced new products, and have partnered closely with suppliers to be ready to meet the ongoing holiday demand levels. Participants further noted that the backlog at the ports of Los Angeles and Long Beach has decreased, with Walmart CEO Doug McMillon specially citing a 51 percent improvement in his company’s throughput at the ports due to the work of the Biden-Harris Port Envoy.
Other government actions announced this week include a Department of Transportation extension of flexibility in the number of hours truck drivers can drive long distances and a Federal Maritime Commission moratorium allowing users of port terminal gates o be exempted from paying added fees for night and weekend pickup of shipping containers. Global container shipping line CMA CGM has further agreed to an incentive program for empty shipping containers to be retrieved from the major U.S. ports of Los Angeles and Long Beach over the next 90 days.
Added Supply Chain Matters Perspectives
While the role of the U.S. federal government in directly alleviating the effects of the ongoing global supply chain disruptions, and especially this 2021 holiday fulfillment quarter have limited effect, they do provide a basis for any future policy actions.
The FTC request for added information has from our lens, an implication for determining cause and effect actions that have occurred with a potential for determining whether certain supply chain participants or services providers have exercised particular market or other influences that have resulted in these ongoing cascading disruptions and lack of overall supply chain operational coordination. The information requested is detailed and likely subject to lot of interpretation or resistance in sharing.
Governmental actions are by nature bureaucratic and subject to extended time dimensions compared to actions of private industry.
None the less, they can provide a catalyst as to whether the dynamics of competitive markets for products and services remain somewhat balanced, and whether some corporations, retailers or global services providers are exercising added market influences. One of the most concerning areas at this point is supply chain driven cost inflation that can harm economies and lead to other harmful implications.
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