President Biden’s Competition Executive Order’s “Encouragement” to the FTC and DOJ Antitrust Division

On July 9th, President Biden issued a broad-based Executive Order “to promote competition in the American economy.” In the White House’s own words:

“President Biden is taking decisive action to reduce the trend of corporate consolidation, increase competition, and deliver concrete benefits to America’s consumers, workers, farmers, and small businesses. Today’s historic Executive Order established a whole-of-government effort to promote competition in the American economy. The Order includes 72 initiatives to be undertaken by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy.”

Of course, the president’s power is limited, particularly in the case of independent agencies like the Federal Trade Commission (and the Federal Communications Commission) and parts of the government with a significant tradition of independence such as the Antitrust Division of the Department of Justice. For these agencies, the directives of the Executive Order are couched in terms of “encouragement.” Nonetheless, we would expect the agencies to “get the message” and embark relatively promptly on their “assigned” initiatives.

We have pulled out the initiatives specifically earmarked for the FTC and the DOJ’s Antitrust Division:

1. Labor Markets

In the Order, the president:

• Encourages the FTC to ban or limit non-compete agreements.
• Encourages the FTC to ban unnecessary occupational licensing restrictions that impede economic mobility.
• Encourages[1] the FTC and DOJ to strengthen antitrust guidance to prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information with one another.

2. Health Care

The Order tackles four areas where lack of competition in health care increases prices and reduces access to quality care — prescription drugs, hearing aids, hospitals, and health insurance.

With respect to prescription drugs, the Order “encourages the FTC to ban “pay for delay” and similar agreements by rule.”

With respect to hospitals, in the Order, the president underscores that hospital mergers can be harmful to patients and encourages the Justice Department and the FTC to review and revise their merger guidelines to ensure patients are not harmed by such mergers.

3. Agriculture

Most of the Order’s focus on competition in the agriculture sector is appropriately aimed at the Department of Agriculture, including the Packers and Stockyard Administration, which has competition authority over certain agriculture sectors. However, the Order also specifically: “Encourages the FTC tolimit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs — such as when tractor companies block farmers from repairing their own tractors.”

4. Technology

With all the competition focus on “big tech” in Congress, in the Executive Branch, and the courts, the White House’s fact sheet summary of technology initiatives are worth quoting in full:

"The Order tackles three areas in which dominant tech firms are undermining competition and reducing innovation:

Big Tech platforms purchasing would-be competitors: Over the past ten years, the largest tech platforms have acquired hundreds of companies — including alleged “killer acquisitions” meant to shut down a potential competitive threat. Too often, federal agencies have not blocked, conditioned, or, in some cases, meaningfully examined these acquisitions.

In the Order, the president:

• Announces an Administration policy of greater scrutiny of mergers, especially by dominant internet platforms, with particular attention to the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by “free” products, and the effect on user privacy.

Big Tech platforms gathering too much personal information: Many of the large platforms’ business models have depended on the accumulation of extraordinary amounts of sensitive personal information and related data.

In the Order, the president:

• Encourages the FTC to establish rules on surveillance and the accumulation of data.

Big Tech platforms unfairly competing with small businesses: The large platforms’ power gives them unfair opportunities to get a leg up on the small businesses that rely on them to reach customers. For example, companies that run dominant online retail marketplaces can see how small businesses’ products sell and then use the data to launch their own competing products. Because they run the platform, they can also display their own copycat products more prominently than the small businesses’ products.

In the Order, the president:

• Encourages the FTC to establish rules barring unfair methods of competition on internet marketplaces.

Cell phone manufacturers and others blocking out independent repair shops: Tech and other companies impose restrictions on self- and third-party repairs, making repairs more costly and time-consuming, such as by restricting the distribution of parts, diagnostics, and repair tools.

In the Order, the president:

• Encourages the FTC to issue rules against anticompetitive restrictions on using independent repair shops or doing DIY repairs of your own devices and equipment."

5. Banking and Consumer Finance

The White House points to around 10,000 bank closures over the last two decades, mostly by mergers and acquisitions, and with a disproportionate impact on communities of color. As a consequence, one initiative in the Order is to encourage “DOJ and the agencies responsible for banking (the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency) to update guidelines on banking mergers to provide more robust scrutiny of mergers.”
 

Initial “Hot Take”

President Biden appointed a strong proponent of aggressive antitrust enforcement and interpretation, Timothy Wu, to the Administration. The Order establishes the White House Competition Council, led by the Director of the National Economic Council, to coordinate and encourage the initiatives.

To the degree the president currently has the power to do so, today’s Order begins to put “meat on the bones” on the Democratic policy tilt toward stronger competition enforcement. In the coming months, the agencies, here the FTC, are already moving forward under new Chair Lina Khan, and the DOJ begin to act on these initiatives.

All companies and entities in the economy will be potentially affected by these 72 initiatives. They bear close monitoring and perhaps participation in their development. We will be happy to discuss any of this in more detail with our clients and friends.

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