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News for January 22, 2022

FTC Seeks To Unravel Causes of Supply Chain Disruption, Demands Info from Big Companies

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The Federal Trade Commission (FTC) on Monday issued an order to nine major U.S. companies, including Walmart, Amazon, and Procter & Gamble to provide specific information on their operations in an attempt to discover the causes behind the disruptions to supply chains that have slowed the recovery of the economy.  

The commission’s order, which was passed with a 4-0 vote, was approved as President Biden attended a meeting at the White House with corporate chieftains in the latest indication of presidential concern over supply chain issues. According to a report, Biden was scheduled to speak after the meeting with the CEOs of companies like Food Lion, Mattel, and Best Buy. However, the White House rescheduled his comments for Wednesday, explaining that the president was looking forward to spending more time with the CEOs.

Although the FTC move won’t alleviate the economic problems, it could affect future regulatory actions that aim to increase or maintain the competition level in the most critical industries, as per antitrust experts.

It is believed that the White House and some independent analysts have blamed the absence of competition in the supply chain for a lot of the present problems that are causing inflation and hurting the president’s satisfaction ratings. Biden this summer signed an executive order that called for regulators to take a hard line against consolidation in the shipping and freight railway industries as part of the greater competition effort.

“We’ve had an incredible amount of consolidation in the supply chain… That’s why it’s been unable to withstand the kind of shock we’ve seen with the pandemic,” said Diana Moss, president of the American Antitrust Institute. “We are now learning the hard way what 40 years of unbridled consolidation and lax merger enforcement mean.”    

FTC Chairman Lina Khan said the study’s goal will be to “shed light on market conditions and business practices that may have worsened” the supply issues that were the topic of Monday’s White House event.

The commission is an independent organization that shares the responsibility of antitrust enforcement with the Department of Justice and can take action against deceptive practices in business that hurt consumers.

In its supply chain probe, the commission will have to differentiate between price increases that reflect the underlying dynamics of demand and supply and those resulting from improper business connections, said a former FTC official.

FTC lawyers will examine the information from specific companies, looking for signs that producers and wholesalers might have contracts that favor big retailers over smaller ones.

Alongside Walmart, Amazon, and P&G, the trade commission is seeking information from Kroger Co., C&S Wholesale Grocers Inc., Associated Wholesale Grocers Inc., McLane Co., Tyson Foods Inc. and Kraft Heinz Co.

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