FTC Announces 6(b) Study of Supply Chain Disruptions and Expansion of Criminal Referral Program
November 23, 2021, Covington Alert
On November 18, 2021, the Federal Trade Commission held an open meeting to discuss the agency’s efforts to launch a Section 6(b) study of ongoing supply chain issues among retailers and consumer good firms. Section 6(b) of the Federal Trade Commission Act empowers the agency to require that a company file an annual or special report to the agency in response to questions about business practices. In this study, the Commission will be exploring whether supply chain disruptions stemming from the coronavirus pandemic have led to bottlenecking, shortages, anticompetitive conduct, or higher consumer prices. The Commission ultimately delayed the vote on whether to launch the study, but the final vote should occur as soon as Wednesday, November 24. Each Commissioner is expected to vote in favor of the study.
Following the Thursday vote, the Commission also issued a press release on the agency’s unanimous decision to expand its criminal referral program for corporate violations of competition and consumer protections laws. The new policy statement provides that the agency plans to work with criminal law enforcement authorities to deter unlawful conduct through methods like publicly reporting on the FTC’s criminal referral efforts on a regular basis; developing guidelines to ensure criminal law violations—particularly by major corporations and their executives─ are promptly identified; and holding regular meetings with federal, state, and local criminal authorities to facilitate the coordination.
Chair Lina Khan remarked that the Commission is “redoubling” its efforts to coordinate criminal investigations of very large firms and hopes that criminal prosecution, as opposed to civil fines, will better deter future activity. Commissioners Rebecca Slaughter, Noah Phillips, and Christine Wilson also voiced support for the policy statement with Commissioner Noah Phillips noting that criminal enforcement authorities have requested more referrals from the Commission. The Commission highlighted recent criminal referrals that it had made for both consumer fraud and competition issues.
Last week, on November 19, the Commission also announced five new members would join the agency’s Office of Policy Planning to assist the Chief Technology Officer in exploring emerging technology issues and to take another look at the Commission’s merger review policies. Olivier Sylvain will serve as Senior Advisor on Technology to the Chair; Meredith Whittaker will serve as Senior Advisor on Artificial Intelligence to the Chair; Amba Kak will serve as a Senior Advisor on Artificial Intelligence; and Sarah Myers West will serve as an Advisor on Artificial Intelligence. John Kwoka will join as Chief Economist to the Chair, working with competition economists and attorneys on the Commission’s merger review policies.
Covington will continue to monitor these issues.
If you have any questions concerning the material discussed in this client alert, please contact the members of our Antitrust/Competition practice.
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