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Food sector caught in FTC supply chain probe

Editorial credit: Felix Lipov / Shutterstock.com Federal Trade Commission 2020

A group of nine consumer good suppliers, retailers and wholesalers—including several goliaths in the food industry—must turn over supply chain-related information to a government agency.

The Federal Trade Commission said it is trying to understand what is causing supply chain disruptions and how such disruptions are adversely affecting consumers and competition in the economy.

The agency issued orders to Amazon.com Inc., Associated Wholesale Grocers Inc., C&S Wholesale Grocers Inc., Kraft Heinz Co., Kroger Co., McLane Company Inc., Procter & Gamble Co., Tyson Foods Inc. and Walmart Inc. The companies have 45 days from receipt of the order to respond.

“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,” FTC Chair Lina Khan said in a Nov. 29 news release. “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.”

A trade association that represents the consumer packaged goods industry—including food and beverage brands—expressed concerns that the agency, through its investigation, was seeking to assign blame rather than identify solutions to the ongoing supply chain crisis.

“The FTC’s announcement forces us to ask if it is seeking understanding or looking for a villain,” Geoff Freeman, president and CEO of the Consumer Brands Association, said in a news release. “We welcome the federal government’s engagement and focus on solving the problems responsible for this crisis: relentless demand, exorbitant wholesale and shipping costs, trucking capacity constraints and a profound labor shortage that have created the perfect supply chain storm.”

FTC said it is assessing the reasons behind supply chain disruptions and whether such disruptions are resulting in anticompetitive practices, shortages, specific bottlenecks, or contributing to increasing consumer prices. Its orders to Amazon and the others were issued under Section 6(b) of the FTC Act, which authorizes the agency to conduct studies that do not have a specific law enforcement purpose, according to FTC’s news release.

“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,” Khan added.

Finally, the agency is requesting voluntary comments from consumers, consumer goods suppliers, retailers and wholesalers concerning how supply chain issues are impacting competition in the consumer goods market.

White House roundtable

This week, Walmart CEO and president Doug McMillon was among those participating in a White House roundtable on the supply chain.

During the meeting, McMillon underscored “efforts in recent weeks of industry and the federal government to work together to ease congestion at West Coast ports that has enabled the retailer to move products more efficiently inland to their stores,” according to a Nov. 30 blog post from Doug Baker, vice president of industry relations with the Food Marketing Institute (FMI), whose members include Walmart.

The leaders of two other FMI member companies—Food Lion and Kroger—also spoke with President Joe Biden on the supply chain during the Nov. 29 roundtable, according to Baker.

“Overall, the message from food retailers was clear—while much work remains to alleviate the bottlenecks in the supply chain, our industry is doing everything it can to keep food and product on the shelves,” Baker said.

In Dec. 1 remarks, the president outlined steps taken to reduce congestion at the U.S. ports and otherwise address supply chain challenges, including an extension of flexibility allowing truckers to drive additional hours when hauling such critical goods as gas, food and medical supplies.

“By working with business and labor, my administration has been able to handle the huge surge in goods moving through some of our biggest ports,” Biden said. “And that has translated into shelves across our country being well-stocked.”

 

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