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12/03/2021

Grocery Industry Comes Under Investigation Over Supply Chain Operations

The grocery industry is the target of a probe by the Federal Trade Commission (FTC), which has launched an investigation into supply chain disruptions.
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warehouse worker

Nine large retailers, wholesalers, and consumer goods suppliers have been asked by the agency to turn over information to 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,” the FTC wrote.

Inquiries have been sent to Walmart, Amazon, Kroger Co., C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Co, Procter & Gamble Co., Tyson Foods and Kraft Heinz Co.

[What 5 Major Retailers Are Saying About the Supply Chain Crunch]

“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. 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,” FTC Chair Lina M. Khan said in a statement. “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.”

The FTC’s investigation aims to study the cause behind the supply chain disruptions and if those causes are leading to specific bottlenecks, shortages, anticompetitive practices or contributing to rising consumer prices. The nine companies are asked to provide the FTC with the specific primary factors disrupting their ability to obtain, transport and distribute their products, as well as the impact of these disruptions on orders, costs and prices. The agency also wants to know which products and suppliers are most impacted, how stores are allocating products when they are in short supply and what companies are doing to mitigate the issues. 

The National Grocers Association (NGA) responded to the investigation, noting it will help the agency get to the root of the supply chain issues. 

“This study is a key first step in promoting competition in the food supply chain and we were pleased to see the FTC move forward with a unanimous vote," said Chris Jones, senior vice president of government relations and counsel of NGA. "It will shine a light on what our members already know: that dominant grocery power buyers are using their size to demand better terms, better prices, and better products from suppliers, leaving their competitors and American consumers to pay the bill. These actions leave independent grocers short-handed on key products their customers need and force small, independent grocers and their customers to bear a disproportionate burden of surging food price inflation during supply chain crunches.”