FTC Investigates Supply Chain Issues and Impact on Consumers

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The Federal Trade Commission (FTC) has launched an inquiry into the ongoing supply chain disruptions affecting a broad array of goods across the economy. Using a compulsory process to investigate the competitive impact of supply chain disruptions in consumer goods, under Section 6(b) of the Federal Trade Commission Act, 15 U.S.C. § 46(b), the FTC is requiring nine large retailers, wholesalers, and consumer good suppliers to supply information on the causes for the disruptions and the ongoing impact for consumers and competition. Additionally, the FTC is requesting comments from the public, including retailers, suppliers, wholesalers, consumers, and other interested parties.

The FTC intends to understand the disruptions better and “examine whether supply chain disruptions are leading to specific bottlenecks, shortages, anticompetitive practices, or contributing to rising consumer prices.”

Mandatory Responses

Section 6(b) authorizes the FTC to conduct market studies on broad issues without a specific law enforcement purpose. The nine companies that received orders under the FTC market study have 45 days to respond.

These companies must identify the following information:

  • The primary factors that are disrupting the procurement, transportation, and distribution of their products.
  • The impact of disruptions, including on cancelled and delated orders and increased costs and prices.
  • The most affected products, suppliers, and inputs.
  • The actions taken to alleviate disruptions.
  • The allocation of products across locations when in short supply.

The FTC is also requesting internal documents from these companies related to the disruptions, including supply chain strategies, inventory strategies including the use of category captains, pricing, marketing, acceptance or use of trade promotions, costs, profit margins, sales volumes, selection of suppliers and brands, and market shares.

Voluntary Public Comments

In addition to these ordered disclosures, the FTC is requesting voluntary comments from retailers, suppliers, wholesalers, consumers, and other interested parties. The FTC is requesting comments that provide information on related issues and examples of the impacts that supply chain disruptions have had on competition.

For retailers, manufacturers, suppliers, and wholesalers, the FTC is looking for similar information as that outlined for the mandatory respondents, such as the causes, affects, and experiences of disruptions. This would include the competitive effects from disruptions, solutions adopted to alleviate the disruptions, and products and input categories affected. Additionally, the FTC is requesting information on the outlook on disruption over the next quarter and year, the impact of any expected shortages, and the impact of slotting fees or category captains, if applicable.  One question underlying the FTC study appears to be whether large national retailers are getting preferential treatment compared to smaller retailers due to their extensive use of specialized services provided by manufacturers and suppliers.

For consumers, the FTC is requesting comments related to the impact that the disruptions have had on product choice, prices, and choice of retailers.

The public comments will be published on regulations.gov, and as such the FTC has warned to not include any sensitive or confidential information. Additionally, there is a chance that the FTC would follow-up to a public comment with a mandatory order for information.

Voluntary comments are due to the FTC on January 29, 2022.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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