FTC Votes to Begin Inquiries into Supply Chain Disruptions

What Happened: The day before Thanksgiving, the Federal Trade Commission (FTC) voted 4-0 to use its authority under Section 6(b) of the FTC Act to order nine companies to provide answers on the impact of competition in the ongoing supply chain disruptions.

The Bottom Line: As Hunton previously reported, lobbying efforts by various independent businesses seem to be the driving force behind this upcoming study. Companies that receive these orders should consult with counsel regarding how best to respond, particularly given the context of the study and the potential for follow-on enforcement actions.

The Full Story:

Last week’s vote comes after FTC commissioners agreed to a one-week delay. According to Republican Commissioner Christine Wilson, the additional time was to ensure the orders were narrowly tailored and that the right questions were being asked. Wilson said staff was consulting “supply chain experts.”

At the open FTC meeting on November 18, the FTC heard public comments from various independent retailers and groups, such as the National Grocers Association, the National Association of Convenience Stores, and the Economic Liberties Project.  Focusing on supply chain woes, several commenters reiterated complaints about large retailers’ buyer power, and their ability to obtain lower prices, better delivery terms, and favored product sizes throughout the pandemic.  On the same day as the FTC meeting, the White House put out a statement that certain large retailer stores “are fully stocked” as ports are now moving goods more quickly.

The orders are available on the FTC’s website here, and were issued to nine companies (3 each) in the retail, wholesale, and supply chain sectors.

The orders include both interrogatories and document requests, and have a return date of 45 days.  In addition to questions about companies’ policies during supply shortages, the orders also include inquiries about the use of trade promotions and category captain services.  Moreover, the FTC press release states that “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.”

The Hunton Andrews Kurth Antitrust and Consumer Protection team is at the forefront of advising retailers on supply chain antitrust issues. Kevin Hahm is the former head of the FTC division focused on transactions in the retail and consumer goods space. Hunton partners Ryan Phair and Phyllis Marcus work extensively with retailers on antitrust and consumer protection litigation and counseling matters, including extensively on Robinson-Patman and other antitrust issues arising out of supply chain relations. All three are members of the firm’s Retail and Consumer Products multi-disciplinary group.