President Joe Biden signed an executive order (EO) to combat the increased consolidation in the United States’ (U.S.) economy and its anti-competitive effects. The sweeping, EO, “Promoting Competition in the American Economy,” would remake how the U.S. government regulates and polices antitrust and competition policy. And, to no great surprise, the largest U.S. technology companies would see many of their practices and acquisitions targeted if this set of interlocking directives is fully carried out.
The President signed this EO shortly after a federal court tossed the Federal Trade Commission and state attorneys general’s antitrust suits against Facebook for its acquisition of former competitors WhatsApp and Instagram. The Congress may also soon be considering antitrust reform legislation as the House Judiciary Committee sent six antitrust bills to the House recently.
In his remarks before signing the EO, Biden asserted that the directive was of a piece with the “American Rescue Plan Act of 2021,” the American Family plan, and the bipartisan infrastructure framework that the White House and a group of Senators agreed to. He claimed:
But to keep our country moving, we have to take another step as well — and I know you’re all tired of hearing me during the campaign and since I’m elected President talk about it — and that’s bringing fair competition back to the economy.
- That’s why today I’m going to be signing shortly an executive order promoting competition to lower price — to lower prices, to increase wages, and to take another critical step toward an economy that works for everybody.
- The heart of American capitalism is a simple idea: open and fair competition — that means that if your companies want to win your business, they have to go out and they have to up their game; better prices and services; new ideas and products.
- That competition keeps the economy moving and keeps it growing. Fair competition is why capitalism has been the world’s greatest force for prosperity and growth.
- By the same token, “competitive economy” means companies must do all they do to do — everything they do to compete for workers: offering higher wages, more flexible hours, better benefits.
- But what we’ve seen over the past few decades is less competition and more concentration that holds our economy back. We see it in big agriculture, in big tech, in big pharma. The list goes on.
- Rather than competing for consumers, they are consuming their competitors. Rather than competing for workers, they’re finding ways to gain the upper hand on labor. And too often, the government has actually made it harder for new companies to break in and compete.
The White House issued a fact sheet highlighting some of the components of the EO:
Today’s historic Executive Order established a whole-of-government effort to promote competition in the American economy. The Order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy. Once implemented, these initiatives will result in concrete improvements to people’s lives. Among other things, they will:
- Make it easier to change jobs and help raise wages by banning or limiting non-compete agreements and unnecessary, cumbersome occupational licensing requirements that impede economic mobility.
- Lower prescription drug prices by supporting state and tribal programs that will import safe and cheaper drugs from Canada.
- Save Americans with hearing loss thousands of dollars by allowing hearing aids to be sold over the counter at drug stores.
- Save Americans money on their internet bills by banning excessive early termination fees, requiring clear disclosure of plan costs to facilitate comparison shopping, and ending landlord exclusivity arrangements that stick tenants with only a single internet option.
- Make it easier for people to get refunds from airlines and to comparison shop for flights by requiring clear upfront disclosure of add-on fees.
- Make it easier and cheaper to repair items you own by limiting manufacturers from barring self-repairs or third-party repairs of their products.
- Make it easier and cheaper to switch banks by requiring banks to allow customers to take their financial transaction data with them to a competitor.
- Empower family farmers and increase their incomes by strengthening the Department of Agriculture’s tools to stop the abusive practices of some meat processors.
- Increase opportunities for small businesses by directing all federal agencies to promote greater competition through their procurement and spending decisions.
The Order also encourages the leading antitrust agencies to focus enforcement efforts on problems in key markets and coordinates other agencies’ ongoing response to corporate consolidation. The Order:
- Calls on the leading antitrust agencies, the Department of Justice (DOJ) and Federal Trade Commission (FTC), to enforce the antitrust laws vigorously and recognizes that the law allows them to challenge prior bad mergers that past Administrations did not previously challenge.
- Announces a policy that enforcement should focus in particular on labor markets, agricultural markets, healthcare markets (which includes prescription drugs, hospital consolidation, and insurance), and the tech sector.
- Establishes a White House Competition Council, led by the Director of the National Economic Council, to monitor progress on finalizing the initiatives in the Order and to coordinate the federal government’s response to the rising power of large corporations in the economy.
In the section of the EO stating new U.S. policy, the White House all but named Google, Facebook, and Amazon as some of the “big tech” companies whose size and tactics have squashed competition and harmed consumers.
The American information technology sector has long been an engine of innovation and growth, but today a small number of dominant Internet platforms use their power to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage. Too many small businesses across the economy depend on those platforms and a few online marketplaces for their survival. And too many local newspapers have shuttered or downsized, in part due to the Internet platforms’ dominance in advertising markets.
Interestingly, in this passage, the other two “big tech” companies, Apple and Microsoft, were not referenced. However, the right to repair suggestion the Biden Administration made to the FTC very much concerns the two companies.
In a separate part of the policy section, the White House turned to internet service providers (ISP) which tend to oppose state and local laws that would allow for municipal broadband, which would create competition in many markets where ISPs face no competitors:
In the telecommunications sector, Americans likewise pay too much for broadband, cable television, and other communications services, in part because of a lack of adequate competition.
The White House referenced the threats posed by the People’s Republic of China (PRC) and the companies the government is allegedly helping such as Huawei, ZTE, and others:
The problem of economic consolidation now spans these sectors and many others, endangering our ability to rebuild and emerge from the coronavirus disease 2019 (COVID-19) pandemic with a vibrant, innovative, and growing economy. Meanwhile, the United States faces new challenges to its economic standing in the world, including unfair competitive pressures from foreign monopolies and firms that are state-owned or state-sponsored, or whose market power is directly supported by foreign governments.
In the heart of the policy section, the President articulated his administration’s antitrust and competition policy:
We must act now to reverse these dangerous trends, which constrain the growth and dynamism of our economy, impair the creation of high-quality jobs, and threaten America’s economic standing in the world.
This order affirms that it is the policy of my Administration to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony — especially as these issues arise in labor markets, agricultural markets, Internet platform industries, healthcare markets (including insurance, hospital, and prescription drug markets), repair markets, and United States markets directly affected by foreign cartel activity.
It is also the policy of my Administration to enforce the antitrust laws to meet the challenges posed by new industries and technologies, including the rise of the dominant Internet platforms, especially as they stem from serial mergers, the acquisition of nascent competitors, the aggregation of data, unfair competition in attention markets, the surveillance of users, and the presence of network effects.
The White House recited the statutes giving the U.S. government the authority to police competition in U.S. markets. It bears note the few decisions cited hail from before the current era of antitrust jurisprudence that places the consumer welfare standard at the center of consideration. Critics of this standard and other neoliberal doctrines claim the gradual defanging of U.S. antitrust law by U.S. courts has allowed the current consolidation across industries to occur. The Biden Administration then sketched out how agencies can address competition without further action from Congress even though the White House is also calling for additional legislation:
(d) These statutes independently charge a number of executive departments and agencies (agencies) to protect conditions of fair competition in one or more ways, including by:
(i) policing unfair, deceptive, and abusive business practices;
(ii) resisting consolidation and promoting competition within industries through the independent oversight of mergers, acquisitions, and joint ventures;
(iii) promulgating rules that promote competition, including the market entry of new competitors; and
(iv) promoting market transparency through compelled disclosure of information.
The EO asserts “[a]gencies can influence the conditions of competition through their exercise of regulatory authority or through the procurement process” and “recognizes that a whole-of-government approach is necessary to address overconcentration, monopolization, and unfair competition in the American economy.” Moreover, the White House added:
Such an approach is supported by existing statutory mandates. Agencies can and should further the polices set forth in section 1 of this order by, among other things, adopting pro‑competitive regulations and approaches to procurement and spending, and by rescinding regulations that create unnecessary barriers to entry that stifle competition.
As always, it remains to be seen, as always, how well the White House will follow through and hold agencies accountable for exercising their authority. Additionally, resources will likely be an issue as many agencies will likely not have idle funds or personnel to immediately throw at implementation of the EO. Moreover, leadership at agencies often turns over as administrations go on, meaning there will be new officials who will need to buy into this EO in order for it to be realized.
The EO directs agencies with overlapping jurisdictions to cooperate and coordinate in executing the EO. Of course, the foremost example of overlap in jurisdictions in between the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC). There are other agencies named in the EO that share antitrust and competition authority with the DOJ and FTC as well. Nonetheless, the EO suggests that agencies play nicely together but does not order them to do so:
(b) Where there is overlapping jurisdiction over particular cases, conduct, transactions, or industries, agencies are encouraged to coordinate their efforts, as appropriate and consistent with applicable law, with respect to:
(i) the investigation of conduct potentially harmful to competition;
(ii) the oversight of proposed mergers, acquisitions, and joint ventures; and
(iii) the design, execution, and oversight of remedies.
(c) The means of cooperation in cases of overlapping jurisdiction should include, as appropriate and consistent with applicable law:
(i) sharing relevant information and industry data;
(ii) in the case of major transactions, soliciting and giving significant consideration to the views of the Attorney General or the Chair of the FTC, as applicable; and
(iii) cooperating with any concurrent Department of Justice or FTC oversight activities under the Sherman Act or Clayton Act.
The EO establishes a White House Competition Council (Council) within the Executive Office of the President that “shall coordinate, promote, and advance Federal Government efforts to address overconcentration, monopolization, and unfair competition in or directly affecting the American economy.” The Council will be chaired by Assistant to the President for Economic Policy and Director of the National Economic Council Brian Deese and is to focus its efforts to:
(b) The Council shall coordinate, promote, and advance Federal Government efforts to address overconcentration, monopolization, and unfair competition in or directly affecting the American economy, including efforts to:
(i) implement the administrative actions identified in this order;
(ii) develop procedures and best practices for agency cooperation and coordination on matters of overlapping jurisdiction, as described in section 3 of this order;
(iii) identify and advance any additional administrative actions necessary to further the policies set forth in section 1 of this order; and
(iv) identify any potential legislative changes necessary to further the policies set forth in section 1 of this order.
The EO further directs agencies to take a range of actions, such as:
(a) The heads of all agencies shall consider using their authorities to further the policies set forth in section 1 of this order, with particular attention to:
(i) the influence of any of their respective regulations, particularly any licensing regulations, on concentration and competition in the industries under their jurisdiction; and
(ii) the potential for their procurement or other spending to improve the competitiveness of small businesses and businesses with fair labor practices.
(b) The Attorney General, the Chair of the FTC, and the heads of other agencies with authority to enforce the Clayton Act are encouraged to enforce the antitrust laws fairly and vigorously.
(c) To address the consolidation of industry in many markets across the economy, as described in section 1 of this order, the Attorney General and the Chair of the FTC are encouraged to review the horizontal and vertical merger guidelines and consider whether to revise those guidelines.
There are a number of technology sector specific provisions like:
(d) To avoid the potential for anticompetitive extension of market power beyond the scope of granted patents, and to protect standard-setting processes from abuse, the Attorney General and the Secretary of Commerce are encouraged to consider whether to revise their position on the intersection of the intellectual property and antitrust laws, including by considering whether to revise the Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments issued jointly by the Department of Justice, the United States Patent and Trademark Office, and the National Institute of Standards and Technology on December 19, 2019.
The White House is asking the FTC to take a range of actions that would affect technology companies. To wit, the FTC is being urged to consider regulating data collection and surveillance, the right to repair consumer electronics, competition in online marketplaces (i.e. Amazon primarily), and other practices:
(h) To address persistent and recurrent practices that inhibit competition, the Chair of the FTC, in the Chair’s discretion, is also encouraged to consider working with the rest of the Commission to exercise the FTC’s statutory rulemaking authority, as appropriate and consistent with applicable law, in areas such as:
(i) unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy;
(ii) unfair anticompetitive restrictions on third-party repair or self-repair of items, such as the restrictions imposed by powerful manufacturers that prevent farmers from repairing their own equipment;
(iv) unfair competition in major Internet marketplaces;
(vii) any other unfair industry-specific practices that substantially inhibit competition.
The White House is urging the Federal Communications Commission (FCC) (but not ordering as the agency is independent) to reinstate net neutrality, revamp spectrum auction processes, continue with 5G Open Radio Access Network (O-RAN) protocols and software, and take a number of actions aimed at making broadband pricing more transparent:
(l) To promote competition, lower prices, and a vibrant and innovative telecommunications ecosystem, the Chair of the Federal Communications Commission is encouraged to work with the rest of the Commission, as appropriate and consistent with applicable law, to consider:
(i) adopting through appropriate rulemaking “Net Neutrality” rules similar to those previously adopted under title II of the Communications Act of 1934 (Public Law 73-416, 48 Stat. 1064, 47 U.S.C. 151 et seq.), as amended by the Telecommunications Act of 1996, in “Protecting and Promoting the Open Internet,” 80 Fed. Reg. 19738 (Apr. 13, 2015);
(ii) conducting future spectrum auctions under rules that are designed to help avoid excessive concentration of spectrum license holdings in the United States, so as to prevent spectrum stockpiling, warehousing of spectrum by licensees, or the creation of barriers to entry, and to improve the conditions of competition in industries that depend upon radio spectrum, including mobile communications and radio-based broadband services;
(iii) providing support for the continued development and adoption of 5G Open Radio Access Network (O-RAN) protocols and software, continuing to attend meetings of voluntary and consensus-based standards development organizations, so as to promote or encourage a fair and representative standard-setting process, and undertaking any other measures that might promote increased openness, innovation, and competition in the markets for 5G equipment;
(iv) prohibiting unjust or unreasonable early termination fees for end-user communications contracts, enabling consumers to more easily switch providers;
(v) initiating a rulemaking that requires broadband service providers to display a broadband consumer label, such as that as described in the Public Notice of the Commission issued on April 4, 2016 (DA 16–357), so as to give consumers clear, concise, and accurate information regarding provider prices and fees, performance, and network practices;
(vi) initiating a rulemaking to require broadband service providers to regularly report broadband price and subscription rates to the Federal Communications Commission for the purpose of disseminating that information to the public in a useful manner, to improve price transparency and market functioning; and
(vii) initiating a rulemaking to prevent landlords and cable and Internet service providers from inhibiting tenants’ choices among providers.
The EO also directs the Department of Defense (DOD) to take action:
(i) ensure that the Department of Defense’s assessment of the economic forces and structures shaping the capacity of the national security innovation base pursuant to section 889(a) and (b) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116-283, 134 Stat. 3388) is consistent with the policy set forth in section 1 of this order;
(ii) not later than 180 days after the date of this order, submit to the Chair of the White House Competition Council, a review of the state of competition within the defense industrial base, including areas where a lack of competition may be of concern and any recommendations for improving the solicitation process, consistent with the goal of the Competition in Contracting Act of 1984 (Public Law 98-369, 98 Stat. 1175); and
(iii) not later than 180 days after the date of this order, submit a report to the Chair of the White House Competition Council, on a plan for avoiding contract terms in procurement agreements that make it challenging or impossible for the Department of Defense or service members to repair their own equipment, particularly in the field.
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