WASHINGTON — The Federal Trade Commission (FTC) is asking tough questions to major companies about why the supply chain is so clogged.
The agency has ordered nine large retailers, wholesalers and consumer goods suppliers to “provide detailed information that will help the FTC shed light on the causes behind ongoing supply chain disruptions and how these disruptions are causing serious and ongoing hardships for consumers and harming competition in the U.S. economy,” according to an FTC news release.
The orders are being sent to Walmart Inc., Amazon.com, Inc., Kroger Co., C&S Wholesale Grocers, Inc., Associated Wholesale Grocers, Inc., McLane Co, Inc. Procter & Gamble Co., Tyson Foods, Inc. and Kraft Heinz Co.
The companies will have 45 days from the date they received 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 M. Khan said.
“I am hopeful the FTC’s new … study will shed light on market conditions and business practices that may have worsened these disruptions or led to asymmetric effects. 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.”
In addition to better understanding the reasons behind the disruptions, the study will examine whether supply chain disruptions are leading to specific bottlenecks, shortages, anticompetitive practices or contributing to rising consumer prices, the news release stated.
The orders require the companies to detail the primary factors disrupting their ability to obtain, transport and distribute their products; the impact these disruptions are having in terms of delayed and canceled orders, increased costs and prices; the products, suppliers and inputs most affected; and the steps the companies are taking to alleviate disruptions; and how they allocate products among their stores when they are in short supply.
The FTC is also requiring the companies to provide internal documents regarding the supply chain disruptions, including strategies related to supply chains; pricing; marketing and promotions; costs, profit margins and sales volumes; selection of suppliers and brands; and market shares.
In addition, the agency is soliciting voluntary comments from retailers, consumer goods suppliers, wholesalers, and consumers regarding their views on how supply chain issues are affecting competition in consumer goods markets. These comments provide an opportunity for market participants to surface additional issues and examples of how supply chain disruptions are affecting competition.
Meanwhile, U.S. manufacturing activity grew at a faster pace in November with producers trying to keep up with demand amid ongoing supply shortages and delays.
The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its index of manufacturing activity rose to a reading of 61.1 in November, just above September’s 60.8.
Any reading above 50 indicates growth in the manufacturing sector. The manufacturing sector has recorded 18 straight months of growth going back to spring of 2020 when the pandemic broke.
Sub-categories of new orders, production and employment all grew at a faster pace in November, though many respondents commented that they are still struggling to hire, despite some modest progress over the past three months. ISM’s report said that 86% of the employment comments related to hiring, with 51% of those respondents saying they are struggling to fill positions, an increase from October.
Businesses are also struggling to keep their inventories stocked due to elevated demand. ISM’s customer’s inventories index registered a reading of 25.1 in November, the 62nd straight month that it’s been what is considered too low. While it’s not good for stores to have sparse or empty shelves, it will likely spur more production ahead to remedy that situation, the ISM report said.
Prices are still elevated, but retreated somewhat in November to a reading of 82.4 from 85.7 in October.
Thirteen of the 15 manufacturing categories reported growth last month, led by apparel and furniture. The only two that contracted were printing and primary metals.
ISM said the broad sentiment of its panel remained strongly optimistic, but they “remain focused on the importance of improving supply chain issues to respond to ongoing high levels of demand,” said Timothy R. Fiore, head of ISM’s manufacturing survey committee.
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