Not to Be Ignored: President Biden’s Antitrust Executive Order

7 Min Read By: Barbara T. Sicalides, Kasia Hebda, Daniel N. Anziska

On July 9, 2021, President Biden signed a broad Executive Order on Promoting Competition in the American Economy.  This Executive Order—along with the related Fact Sheet and the President’s remarks at its signing—suggest that the administration is committed to an aggressive and coordinated approach to competition issues, especially in the areas of labor markets, agriculture, healthcare, and the tech sector.  While many are skeptical that the Executive Order will change anything, the ability of the antitrust enforcement agencies to tie up mergers, challenge business decisions, and influence the courts—and the ripple effect on private actions—should not be ignored or underestimated.  After summarizing the Executive Order, we recommend certain steps aimed at mitigating antitrust risks in the current political environment.   

The White House was critical of past corporate consolidation across 75% of U.S. industries and argued that consolidation had increased prices for consumers, decreased wages for workers, and even hindered growth and innovation by making it more difficult for small and independent businesses.  The Executive Order establishes what the White House refers to as a “whole-of-government effort to promote competition in the American economy,” encouraging 72 initiatives by more than a dozen agencies.

The Executive Order creates the White House Competition Council (the “Council”) within the Executive Office of the President as part of the plan to institute the coordinated and aggressive approach to competition-related matters across federal agencies.[1]  The Council will work to implement the policies and the specific initiatives described in the Executive Order.

1. Labor and Noncompetes

The executive order places particular focus on labor issues and encourages the Federal Trade Commission (“FTC”) to ban or limit employee noncompete arrangements to increase economic mobility by making it easier for employees to change jobs. This effort builds on the Department of Justice’s (“DOJ”) recent efforts to challenge employee no-poach agreements as criminal antitrust violations. Companies considering business noncompetes should continue to ensure that such agreements are narrowly tailored for a legitimate business purpose. Similarly, the executive order encourages the FTC to ban unnecessary occupational licensing requirements.

2. Merger Enforcement

The executive order introduces uncertainty for businesses planning mergers or other actions that may raise competition issues. In fact, the order appears to invite such uncertainty by, among other things, supporting the “challenge [of] prior bad mergers that past administrations did not previously challenge.”

The executive order also urges the FTC and DOJ to review and revise their Merger Guidelines, which the FTC and DOJ immediately took up by announcing their plan to review the guidelines “to determine whether they are overly permissive.” The executive order also specifically asks the agencies to scrutinize and reconsider their approach to mergers in the hospital, banking and consumer finance, and Big Tech spaces.  Some anticipated changes include lowering the concentration thresholds for presumptively anticompetitive mergers, refining potential competition prohibitions, and eliminating or greatly limiting the efficiencies defense.

 

The Executive Order also directed a number of actions aimed at specific sectors of the economy and even set short deadlines for some:

Labor Markets

  • Use FTC rulemaking authority to limit the use of non-compete clauses.
  • Use FTC rulemaking authority to limit unfair occupational licensing restrictions.
  • Revise the Antitrust Guidance for Human Resource Professionals jointly issued by the DOJ and FTC in October 2016 to limit the ability of employers to collaborate to suppress wages or reduce benefits.

Intellectual Property

Healthcare

  • Food and Drug Administration (“FDA”) to work with states and tribes to import drugs from Canada.
  • Within 120 days, Department of Health and Human Services (“HHS”) to propose rules to make hearing aids available over the counter.
  • Within 45 days, HHS to increase support for generic drugs and issue a plan to combat high prescription drug prices and price gouging.
  • HHS to implement federal legislation to address surprise hospital billing.
  • HHS to standardize plan options in the National Health Insurance Marketplace to make it easier for people to comparison shop.
  • FTC to implement a rule that bans “pay for delay” agreements.
  • DOJ and FTC to revise merger guidelines so that patients are not harmed by hospital mergers.

Transportation

  • Within 45 days, Department of Transportation (“DOT”) to propose rules that require airlines to refund fees for services that are not provided, such as baggage fees when luggage is substantially delayed.
  • Within 90 days, DOT to consider rules that require airlines to clearly disclose to customers any ancillary fees, such as for baggage, ticket changes, or cancellations. 

Agriculture

  • Department of Agriculture (“USDA”) to consider new rules under the Packers and Stockyards Act to address the unfair treatment of famers and improve competition in markets for their products.
  • USDA to consider new rules regarding when meat products can have “Product of USA” labels.
  • Within 300 days, USDA to develop a plan to increase farmers’ and small food processors’ access to retail market and submit a report to the Chair of the Council.
  • FTC to propose rules that limit equipment manufacturers from restricting farmers from repairing their own equipment.

Internet Service

  • Federal Communications Commission (“FCC”) to conduct future spectrum auction under rules that avoid excessive concentration of spectrum licenses.
  • FCC to prohibit internet service providers from charging excessive early termination fees.
  • FCC to establish rules that prevents landlords from making deals with ISPs to limit tenants’ choices.
  • FCC to restore Net Neutrality rules.
  • FCC to establish rules that requires broadband providers to provide a consumer label with clear information about prices and fees, performance, and network practices and to require those providers to report broadband price and subscription rates to the FCC for dissemination to the public.

Technology

  • Make it Administration policy to enforce antitrust laws in the area of new industries and technologies, and to scrutinize mergers by dominant internet platforms when 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.”
  • FTC to establish rules pertaining to data collection and surveillance that may damage competition, consumer autonomy, and consumer privacy.
  • FTC to establish rules against unfair competition in major internet marketplaces.

Banking and Consumer Finance

  • Within 180 days, DOJ and federal banking agencies to review current practices and adopt for greater scrutiny of mergers under the Bank Merger Act and the Bank Holding Company Act of 1956.
  • Consumer Financial Protection Bureau (“CFPB”) to use rulemaking to make consumer financial data more portable and make it easier for consumers to switch banks.

The Executive Order does not immediately change the existing antitrust framework, but businesses should be prepared for a near-term change in enforcement by the relevant agencies.  Companies should consider or be prepared to take steps such as those identified here:

  • Agreements or policies affecting employee freedom of movement should be assessed for less restrictive alternatives and focused as narrowly as possible to accomplish procompetitive objectives.
  • Compliance programs should be updated to shift focus from only or primarily customers/consumers to include competitors.
  • Given calls to abandon proof of a relevant product market, companies that have previously relied on a broad market definition when assessing the lawfulness of their actions should reexamine such actions to determine how their actions have affected their competitors.
  • Existing or contemplated discount, rebate, pricing, or other promotional allowance programs that cover 30% or more of the total U.S. market, particularly those that go back to dollar zero, apply retroactively, or allow for the claw back of credits already awarded, should be reassessed.
  • Agreements or programs that require or strongly encourage exclusive or bundled purchases should be reviewed.
  • Practices or programs that have generated multiple or significant complaints of foreclosure from customers or critical inputs should be examined.

[1] The Council will be led by the Assistant to the President for Economic Policy and Director of the National Economic Council as Chair, and includes the Secretaries of the Treasury, Defense, Agriculture, Commerce, Labor, Health and Human Services, Transportation, the Attorney General, and the Administrator of the Office of Information and Regulatory Affairs. 

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