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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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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