The EO establishes the White House Competition Council, led by the Director of the National Economic Council. The White House Competition Council is charged with monitoring the progress associated with the implementation of the EO’s initiatives and coordinating the federal government’s response to anticompetitive behavior that may be driven by large corporations in the economy. While the EO does not establish any immediate requirements for non-federal entities, it does require a number of federal agencies to establish policies in accordance with the EO and propose the necessary changes to implement the EO. These federal agencies are also required in a number of instances to submit reports to the White House Competition Council regarding the current competition landscape in specific markets.
The lengthy EO is organized into six sections: (1) Policy; (2) The Statutory Basis of a Whole-of-Government Competition Policy; (3) Agency Cooperation in Oversight, Investigation and Remedies; (4) The White House Competition Council; (5) Further Agency Responsibilities; and (6) General Provisions. Each section provides guidance to both the federal government and the private sector regarding the ways the Biden administration intends to increase competition and decrease the barriers that are perceived as inhibiting competitive behavior.
At the outset, the EO establishes and reaffirms a number of this administration’s policies related to competition and anticompetitive behavior. The EO affirms that it is the policy of the Biden administration to:
- Enforce existing 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, health care markets (including insurance, hospital, and prescription drug markets), repair markets, and United States markets directly affected by foreign cartel activity.
- Enforce existing 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.
- Challenge transactions whose previous consummation violated the Sherman Antitrust Act (26 Stat. 209, 15 U.S.C. 1 et seq.) (Sherman Act), the Clayton Antitrust Act (Public Law 63-212, 38 Stat. 730, 15 U.S.C. 12 et seq.) (Clayton Act), or other laws. See 15 U.S.C. 18; Standard Oil Co. v. United States, 221 U.S. 1 (1911).
- Promote competition and innovation in firms small and large, at home and worldwide in response to the rising power of foreign monopolies and cartels.
- Aggressively support legislative reforms that would lower prescription drug prices, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and through other related reforms.
- Support the enactment of a public health insurance option.
- Comply with the policy objectives stated in Executive Order 13725 of April 15, 2016 (Steps to Increase Competition and Better Inform Consumers and Workers to Support Continued Growth of the American Economy) and the principles that led to the passage of the Sherman Act; the Clayton Act; the Packers and Stockyards Act, 1921 (Public Law 67-51, 42 Stat. 159, 7 U.S.C. 181 et seq.) (Packers and Stockyards Act); the Celler-Kefauver Antimerger Act (Public Law 81-899, 64 Stat. 1125); the Bank Merger Act (Public Law 86-463, 74 Stat. 129, 12 U.S.C. 1828); and the Telecommunications Act of 1996 (Public Law 104-104, 110 Stat. 56), among others.
The EO details the 14 federal agencies that are charged with administering authorities associated with preventing anticompetitive behavior: (1) the Department of the Treasury, (2) the Department of Agriculture, (3) the Department of Health and Human Services (HHS), (4) the Department of Transportation (DOT), (5) the Federal Reserve System, (6) the Federal Trade Commission (FTC), (7) the Securities and Exchange Commission, (8) the Federal Deposit Insurance Corporation (FDIC), (9) the Federal Communications Commission (FCC), (10) the Federal Maritime Commission (FMC), (11) the Commodity Futures Trading Commission, (12) the Federal Energy Regulatory Commission, (13) the Consumer Financial Protection Bureau (CFPB), and (14) the Surface Transportation Board (STB). These agencies are responsible for policing unfair, deceptive, and abusive business practices; promoting competition within industries through the independent oversight of mergers, acquisitions, and joint ventures; promulgating rules that promote competition, including the market entry of new competitors; and promoting market transparency through compelled disclosure of information. These agencies will likely take the lead in implementing the EO and driving the changes that the EO requires through their exercise of regulatory authority or through the procurement process.
Section 5 (Further Agency Responsibilities of the EO) calls upon the different federal agencies to take a number of specific actions in support of the administration’s stated policy objectives. Many of these action items focus on labor and employment, health care and medicine, transportation, agriculture, technology, and defense procurement.
Labor and employment
The EO calls on federal agencies to take actions against practices that impede worker mobility, suppress wages, and restrict competition. Specifically, the EO:
- Encourages the FTC to ban or limit non-compete agreements.
- Encourages the FTC to ban unnecessary occupational licensing restrictions that impede economic mobility.
- Encourages the FTC and the Department of Justice (DOJ) to strengthen antitrust guidance to prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information.
Health care and medicine
The EO tackles a number of areas where the lack of competition in health care may increase prices and reduce access to quality care. Specifically, the EO:
- Directs the FDA to work with states and tribes to safely import prescription drugs from Canada, under the Medicare Modernization Act of 2003.
- Directs HHS to increase support for generic and biosimilar drugs, which provide low-cost options for patients.
- Directs HHS to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging.
- Encourages the FTC to ban “pay for delay” and similar agreements by rule.
- Directs HHS to consider issuing proposed rules within 120 days for allowing hearing aids to be sold over the counter.
- Underscores that hospital mergers can be harmful to patients and encourages the DOJ and the FTC to review and revise their merger guidelines to ensure patients are not harmed by such mergers.
- Directs HHS to support existing hospital price transparency rules and to finish implementing bipartisan federal legislation to address surprise hospital billing.
- Directs HHS to standardize plan options in the National Health Insurance Marketplace so people can comparison shop more easily.
The EO addresses issues unique to the transportation sector, primarily resulting from the fact that the air travel, rail travel, and shipping industries are now dominated by large corporations. To combat the identified issues, the EO:
- Directs the DOT to consider issuing clear rules requiring the refund of fees when baggage is delayed or when service is not actually provided (i.e., when the plane’s Wi-Fi or in-flight entertainment system is not in service).
- Directs the DOT to consider issuing rules that require baggage, change, and cancellation fees to be clearly disclosed to the customer.
- Encourages the STB to require railroad track owners to provide rights of way to passenger rail and to strengthen their obligations to treat other freight companies fairly.
- Encourages the FMC to ensure vigorous enforcement against shippers charging American exporters exorbitant fees.
Because key agricultural markets have become more concentrated and less competitive in recent years, the Biden administration has recognized that the markets for seeds, equipment, feed, and fertilizer are now dominated by a few large companies. Accordingly, family farmers and ranchers now have to pay more for these inputs. Additionally, domestic farmers are being threatened by the import of meat by foreign corporations that often use labels that mislead customers about the origin of that meat. To combat these issues and others, the EO:
- Directs the Department of Agriculture (USDA) to consider issuing new rules under the Packers and Stockyards Act that will make it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers who speak out about bad practices.
- Directs the USDA to consider issuing new rules defining when meat can bear “Product of USA” labels, so that consumers have accurate, transparent labels that enable them to choose products made here.
- Directs the USDA to develop a plan to increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmers’ markets and developing standards and labels so that consumers can choose to buy products that treat farmers fairly.
- Encourages the FTC to limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do their own repairs, even when farm equipment manufacturers put policies in place that attempt to block farmers from repairing their own farm equipment.
The EO addresses a number of issues the administration has identified that limit competition, raise prices, and reduce choices for Internet services. In the EO, the FCC is encouraged to:
- Prevent Internet Service Providers (ISPs) from making deals with landlords that limit tenants’ choices.
- Revive the “Broadband Nutrition Label” and require providers to report prices and subscription rates to the FCC.
- Limit excessive early ISP subscription termination fees.
- Restore Net Neutrality rules that have been weakened by the policies of the prior administration.
The EO also tackles three areas in which dominant tech firms are perceived as engaged in behaviors that ultimately undermine competition and reduce innovation. Consistent with the Biden administration’s policy to increase scrutiny of mergers, especially by dominant Internet platforms, with particular attention on the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by “free” products, and the effect on user privacy, the EO encourages the FTC to:
- Establish rules on surveillance and the accumulation of data.
- Establish rules barring unfair methods of competition on Internet marketplaces.
- Issue rules against anticompetitive restrictions on using independent repair shops or doing repairs of personal devices and equipment without voiding product warranties.
Banking and consumer finance
To combat what the administration calls excessive bank consolidation, which it views as having created increased costs for consumers, denied credit opportunities for small businesses, and generally harmed low-income communities, the EO:
- Encourages the DOJ and the agencies responsible for banking (the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency) to update guidelines on banking mergers to provide more robust scrutiny of mergers.
- Encourages the CFPB to issue rules allowing customers to download their banking data and take it with them.
The administration is focused on ensuring that the Department of Defense’s (DOD’s) assessment of the economic forces and structures shaping the capacity of the national security innovation base under sections 889(a) and 899(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 its policies and is committed to ensuring that anticompetitive practices, behaviors, and conduct are not barriers to the DOD having access to the broadest base of suppliers to meets its procurement needs. As such, the EO requires the DOD to:
- 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.
- Submit a report to the Chair of the White House Competition Council, a plan for avoiding contract terms in procurement agreements that make it challenging or impossible for the DOD or service members to repair their own equipment, particularly in the field.
Although the EO will not immediately drive changes because its initiatives will be subject to rule-making and regulatory processes, its goals are expected to significantly impact the areas of labor and employment, health care and medicine, transportation, agriculture, technology, and defense procurement in the months and years ahead. In light of the breadth of this EO and the potential for Congress to enact laws that align with the EO’s directives, it is important for stakeholders in the private sector to closely monitor the EO and the way that the federal agencies handle implementation. For example, industry stakeholders will need to monitor whether the EO’s recommendations are ultimately implemented because independent federal agencies, such as the FTC and the FCC, are not obligated to carry out White House directives.
Reed Smith is carefully monitoring this developing topic. Watch for additional updates from our team on the requirements of this EO and its expected implementation.