What exactly is causing supply chain bottlenecks that have created shortages and contributed to higher prices? The Federal Trade Commission (FTC) is launching an investigation to find out.
The agency specifically wants to know if any companies have taken advantage of the situation to raise prices or to engage in “anti-competitive” behavior. It’s asking Walmart, Amazon, Kroger, C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Co, Inc. Procter & Gamble, Tyson Foods, and Kraft Heinz to provide detailed information about their supply chains and the problems they are facing.
The FTC points out that this is not part of any law enforcement action. It’s conducting the investigation under Section 6(b) of the FTC Act, which authorizes the agency to conduct wide-ranging studies.
“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,” said FTC Chair Lina Khan.
“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.”
Problems started with the pandemic
Supply chain issues began fairly early in the COVID-19 pandemic, and the situation hasn’t gotten much better. Container ships are still backed up in West Coast ports like Long Beach and Los Angeles and are waiting to unload.
Factories in Asia were shut down for several weeks because of the virus and have struggled to catch up. A shortage of computer chips reduced the number of new cars for sale in the U.S. and that, in turn, caused used car prices to skyrocket.
The FTC said its investigation will seek to understand how these disruptions have affected different industries and what effect they have had on consumers. The agency will also try to determine whether some businesses are taking unfair advantage of supply chain bottlenecks to increase their competitive advantage. Specifically, the FTC wants to know how supply chain issues are contributing to rising prices.
What the FTC wants to know
To comply with the FTC order, the companies that are contacted will be required to detail the biggest factors disrupting their ability to obtain, transport, and distribute their products. The agency also wants information about the impact these disruptions are having in terms of delayed and canceled orders, increased costs and prices, and the products, suppliers, and inputs that have been most affected.
At the same time, the White House is reaching out to grocers and retailers to learn how supply chain issues are affecting the economy. President Biden met with a number of business leaders on Monday to get their input. A White House official says other fact-finding events will be held later in the week.