President Biden issued an Executive Order on July 9, “Promoting Competition in the American Economy”.  The order specified 72 actions and initiatives by numerous federal agencies aimed at promoting competition and addressing problems identified by the White House.  The order touches numerous aspects of the economy – from banking to transportation to agriculture.  An Executive Order cannot change or override existing statute, but they are often used to give direction to federal agencies in exercising discretion that they have under the law.   For these reasons, the order often “encourages” agencies to take an action or directs them to develop plans for further action.   The White House fact sheet on the order is linked here and a the executive order is linked here.  The order directs all federal agencies to use spending and procurement authorities to create more opportunities for small businesses. The US Government spends about $600B a year procuring goods.

Specifically related to agriculture, the order directs USDA to curb unfair or deceptive business practices and advantages through vigorous enforcement of the Packers and Stockyards Act. These measures include clearly defining a violation of the Act, maintaining that it is unnecessary to “demonstrate industry-wide harm to establish a violation of the Act,” prohibiting grower ranking systems, and adopting anti-retaliation protections. USDA is directed to enhance consumer transparency by clarifying which meat products qualify for the “Product of USA” label. Three reports must also be submitted to the White House Competition Council: 1) outlining steps to support “value-added agriculture and alternative food distribution systems” via model contracts and improved transparency and labeling; 2) examining the effects of retailer consolidation on competition and how funding could improve access to local/regional food markets; and 3) enumerating USDA’s concerns with how the intellectual property system enables anti-competitive behavior by seed/input producers.  As discussed under the Federal Trade Commission, the order encourages the FTC to limit equipment manufacturers’ ability to restrict the use of independent shops or do-it-yourself repairs – often referred to as “Right to Repair.”

For additional background on the order, generally:

Policy Rationale 

  • Lays out the broad reasons for why competition is crucial to American prosperity and economic participants (workers, small businesses, farmers, entrepreneurs, consumers) 
  • Delineates how the negative consequences of corporate consolidation on workers and consumers, providing examples of these effects in the agricultural, information technology, healthcare, and telecommunications sectors 
  • The Administration intends to enforce antitrust laws to combat the ongoing trend in consolidation, abuses in market power, and damaging effects of monopolies and monopsonies. Antitrust law will also be enforced in response to the dominant Internet platforms who employ suspect M&A practices and unfairly leverage network effects.  
  • Statutes that the Administration will likely apply as it ramps up antitrust enforcement include: 
    • Sherman Act 
    • Clayton Act 
    • Packers and Stockyards Act 
    • Celler-Kefauver Antimerger Act 
    • Bank Merger Act 
    • Telecommunications Act of 1996 

Legal Basis for EO 

This section points to the relevant statutes and legislative intent that undergird the order’s rationale for renewed antitrust enforcement. It also identifies the tools at federal agencies’ disposal for protecting fair competition: policing unfair business practices, conducting oversight of mergers & acquisitions, issuing rules promoting new market entrants, and enhancing transparency.  

  • Statutes cited include: 
    • Packers and Stockyards Act 
    • Federal Alcohol Administration Act 
    • Bank Merger Act 
    • Drug Price Competition and Patent Term Restoration Act of 1984 
    • Shipping Act of 1984 
    • ICC Termination Act of 1995 
    • Telecommunications Act of 1996 
    • Fairness to Contact Lens Consumers Act 
    • Dodd-Frank Wall Street Reform and Consumer Protection Act 

Interagency Cooperation 

The order encourages agencies to collaborate in policing anticompetitive behavior and reviewing mergers should there be overlapping jurisdictions. Suggested avenues for collaboration include coordinating antitrust investigations, sharing relevant information, and requesting input from the Attorney General or FTC Chair. 

White House Competition Council 

This section establishes a White House Competition Council within the EOP charged with coordinating USG efforts to address “overconcentration, monopolization, and unfair competition.” The Council will be led by the Assistant to the President for Economic Policy and chaired by the Director of the National Economic Council (Brian Deese). Standing members consist of mostly cabinet secretaries with the heads of independent agencies (FTC, FCC, CFPB, etc.) invited at the Chair’s discretion. 

Financial Services 

The order encourages the DOJ, Federal Reserve, FDIC, and Comptroller of the Currency to update merger oversight guidelines under the Bank Merger Act and Bank Holding Company Act of 1956. 

Worker’s Rights 

The order encourages the Federal Trade Commission (FTC) to issue rules prohibiting non-compete clauses or other agreements that would limit workers’ mobility. 

FTC Rulemaking Authority (Data Privacy, Agriculture, Wireless Providers, Healthcare) 

The order encourages the FTC to consider updating rules that would limit data collection and surveillance practices, permit the “right-to-repair,” and prohibit delayed entry of generic drugs. 

 Beer, Wine, and Spirits 

The order directs the Treasury Department to submit a report detailing any unlawful trade practices, consolidation trends, and unnecessary regulations such as bottle sizes, permitting, or labeling that hinder competition. The Treasury is directed to consider new rules to update how the Alcohol and Tobacco Tax and Trade Bureau conducts oversight and to reduce barriers for smaller market participants. 

FCC (Telecommunications) 

The order encourages the FCC to: 

  • implement net neutrality rules 
  • institute rules for future spectrum auctions to enhance competition in industries reliant on radio spectrum 
  • support the development and adoption of 5G Open Radio Access Network protocols and software 
  • limit unreasonable early termination fees 
  • restore the “Broadband Nutrition Label” detailing provider prices and performance 
  • require broadband service reports to report their prices and subscription rates to the FCC 
    • issue rule prohibiting landlords from entering exclusive agreements with ISPs 

DOT (Airlines, Railroads, Shipping) 

The order directs DOT to appoint members of the Advisory Committee for Aviation Consumer Protection, publish a proposed rule requiring airlines to refund baggage fees for significantly delayed flights, and consider a rule requiring clear disclosure of baggage/change/cancellation fees upon purchase of a ticket. Further, the Surface Transportation Board is directed to strengthen regulations concerning reciprocal switching agreements and ensure that passenger rail rights-of-way are respected. The Federal Maritime Commission is encouraged to prevent shipping companies from imposing excessive “detention and demurrage” charges on American exporters. 

HHS (Healthcare) 

HHS is directed to consider issuing a proposed rule permitting over-the-counter hearing-aids, promote price transparency initiatives in accordance with the No Surprises Act, and provide standardized plan options in the national Health Insurance Marketplace. HHS must also submit a plan to combat high prescription drug prices and price gouging within 45 days, streamline the approval process for generic drugs, and collaborate with states and tribes to import prescription drugs from Canada. 

Department of Commerce (Healthcare, Big Tech) 

The order directs the Department of Commerce to consider not finalizing new provisions on “march-in rights and product pricing” that would preclude the agency from using march-in rights to possibly lower drug prices. Moreover, Commerce is directed to submit a report detailing recommendations for improving competition and user benefit in the mobile application ecosystem. 

Defense 

The order directs DOD to consider antitrust laws and corporate consolidation when assessing the economic forces influencing the “national security innovation base.” Further, it directs DOD to submit two reports to the White House Competition Council: 1) assessing competition in the defense industrial base and where it may be lacking and 2) outlining a plan for avoiding contract terms that complicate DOD’s ability to repair equipment in the field. 

Financial Services 

The order encourages the Consumer Financial Protection Bureau to consider a rulemaking permitting consumer financial data portability to ease the cost of switching banks. 

Department of the Treasury (Worker’s Rights, Financial Services) 

The order directs Treasury to submit two reports: 1) addressing how labor markets are affected by the absence of competition and 2) competition’s impact on Big Tech’s foray into consumer finance. 

Categories: LatestNews