FTC probes grocery and meat supply chain and spiking prices

The two largest U.S. supermarket chains, the leading grocery wholesaler and the No. 1 chicken processor are among nine companies ordered by the Federal Trade Commission to turn over detailed information for its study of “empty shelves and sky-high prices.” The commission said it would investigate the causes of supply chain disruptions and the hardships imposed on consumers.

“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,” said FTC chair Lina Khan. FTC commissioners voted unanimously for the investigation on Monday, the same day President Biden met retail leaders to discuss the holiday season outlook.

“This study is a key first step in promoting competition in the food supply chain,” said the National Grocers Association. The trade group for independent grocers said “dominant grocery power buyers” bullied their way to the front of the line with foodmakers and left small grocers and their customers bearing “a disproportionate burden of surging food price inflation during supply chain crunches.”

The U.S. inflation rate hit 6.2 percent for the 12 months ending in October, the highest in three decades. Food inflation was 5.3 percent. Housing, food and energy account for half of consumer spending.

Orders for detailed information will be sent to Walmart and Kroger, the two biggest supermarket chains; C&S Wholesale Grocers, the largest grocery wholesaler; Tyson Foods, the top chicken processor; two foodmakers, Kraft Heinz Co. and Procter & Gamble; e-commerce giant Amazon; Associated Wholesale Grocers; and McLane Co., which distributes food and nonfood merchandise to retailers and restaurants, said the FTC. The investigation is based on a section of law that allows the independent agency to conduct wide-ranging studies. Companies have 45 days to respond.

“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,” said the FTC. In a release, the agency said it was studying the “causes of empty shelves and sky-high prices.”

The orders require companies to detail the major factors in supply chain disruptions, the impact of the disruptions on delayed or canceled orders, increases in costs or prices, how they allocate products among stores when supplies are limited, steps taken to alleviate disruptions and the suppliers and inputs that are affected the most.

Walmart chief executive Doug McMillon, one of the executives at the White House on Monday, said “port and transit delays are improving,” particularly in Southern California ports.

Biden has suggested the FTC look into the oil industry to see if any gasoline price gouging has occurred as the economy re-opens. When a reporter asked on Tuesday if the FTC’s Khan had recommendations for the president, White House press secretary Jen Psaki replied, “You should know, as an independent agency, she’ll make that decision. And I expect that you would all hear about it, should she make a decision.”