July 9, 2022 marked the one-year anniversary of President Biden’s Executive Order (EO) on Promoting Competition in the American Economy, which we initially described as a sweeping whole-of-government competition policy with potentially wide-ranging implications. So where are we after one year? Have the federal agencies deputized by the EO issued regulations or taken the enforcement actions called for by the President? To date, every agency identified in the EO has taken some action, with only three exceptions: the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. But are these actions meaningful, or mere lip service by agencies that have already moved on to other priorities?

The EO established the White House Competition Council—composed of ten Cabinet members and the heads of seven independent agencies—to coordinate the implementation of each of the EO’s 72 initiatives for “deliver[ing] concrete benefits to America’s consumers, workers, farmers, and small businesses.”[1] The Council itself has not met since January 2022, but some of its members have used the one-year anniversary to tout their achievements. Three members of the administration—including the Commerce Secretary and Brian Deese, the chair of the Council—published an op-ed lauding the progress agencies have made towards President Biden’s directive to restore competition, lower prices, raise wages, and increase innovation and productivity in the economy.[2]

On the anniversary itself, Chair Brian Deese gave a speech celebrating the “landmark” EO and stressing the administration’s commitment to “structural changes that promote competition.”[3] The speech highlighted several developments, big and small, and cryptically mentioned that there would be “more announcements coming soon.”[4] But, in trying to assess what to make of all this, three agency actions that were not mentioned by the Chair might provide insights about the things to come:

1. The Treasury Department Released a Report on the State of Competition in U.S. Alcohol Markets

  • In February 2022, pursuant to the EO, the Treasury Department issued a report summarizing the findings from an investigation into competition in the U.S. markets for beer, wine, and spirits. In the report, the Treasury Department warned that increasing consolidation across markets for alcohol distribution, retail, and production may offset the competitive benefits from the explosive growth in “craft” production over the last half century.[5] In particular, the report found that state regulatory regimes may be exacerbating the problem by limiting vertical integration (i.e., production, distribution, and sales) while allowing horizontal consolidation, especially among distributors. For example, as distributors consolidate, small brewers and market entrants are less able to find a distributor, thereby limiting their potential for growth.
  • The Treasury Department’s conclusion was that the DOJ and the FTC must “continue to vigorously enforce the antitrust laws.” To do that, the Treasury Department recommended that they consider the effects on distribution when craft brewers are acquired by major brewers, question efficiency claims, and evaluate how vertical consolidations may lead to the exclusion of new market entrants.[6] With these recommendations as guideposts, the DOJ and the FTC—and possibly state antitrust authorities—may likewise be emboldened to evaluate proposed mergers in the industry more closely and consider some of the broader implications for the industry highlighted in the report.

2. The Department of Defense Published a Report on the State of Competition in the Defense Industry Suggesting Greater Future Coordination with Antitrust Agencies

  • In reviewing mergers in the defense sector, the FTC and DOJ typically look to the DoD for guidance as to whether or not a transaction is likely to be harmful. The DoD is often the main or sole customer of the merging parties. Historically, DoD has taken national security and other issues into account in addition to potential harm to competition when assessing the merits of a proposed deal. At times, for national security reasons, the DoD has signaled comfort with deals that might result in a lessening of competition and allowed those deals to close.
  • Last year, shortly after issuance of the EO, FTC Chair Khan responded to a letter from Senator Elizabeth Warren expressing skepticism about the level of competition in the defense industry and signaling that the antitrust agencies should be more aggressive in their review of defense sector deals, even where the DoD does not express concerns. She noted that “it is the antitrust agencies that determine whether a transaction should be challenged, and DoD approval is not required prior to consummation.”[7]
  • report focused on potential competition issues in the defense sector.[8] The report raises some issues that appear to track the concerns raised by Chair Khan and other Neo-Brandeisians, including consolidation generally, vendor lock-in associated with intellectual property and data rights limitations, and labor issues. The DoD also offered several recommendations, including strengthening merger oversight by supporting the FTC and the DOJ in antitrust investigations and advising them on defense markets; creating best practices for handling intellectual property to avoid “unnecessary anticompetitive consequences” such as vendor lock‑in; and emphasizing “increasing competition in priority industrial base sectors” to further increase small business opportunities.[9]
  • [10] The DOJ speculates that the two companies are currently the only competitors for a contract with the National Security Agency (NSA), which is part of the DoD, and on this basis alleges that the acquisition “would eliminate competition for the defense contract, leaving NSA to face a monopoly bidder.”[11] The DOJ claims that the two companies competed “by offering more-talented personnel, lower costs, and a reduced markup” for their services, which means that the acquisition would result in “higher prices, lower-quality services, and less innovation for NSA’s [] project.”[12] The DOJ described this as a “heads Booz Allen wins, tails American taxpayers lose” scenario.[13] On July 8, 2022, the DOJ filed an emergency motion for preliminary injunction to enjoin the acquisition.[14] The court scheduled a mid-September hearing on the DOJ’s request for a preliminary injunction blocking the acquisition, which would be followed by a full trial, if necessary.[15] The DOJ’s effort to block Booz Allen’s acquisition of EverWatch is consistent with two themes in the DoD’s February 2022 competition report: concern about the non‑pricing effects of consolidation and a desire to leverage small businesses to grow the defense industrial base.

3. Partnerships between the Federal Maritime Commission (FMC) and the DOJ, and the National Labor Relations Board (NLRB) and the DOJ, Underscore the Administration’s Commitment to Enforcement in Ocean Shipping and Labor Markets

  • In February 2022, the Federal Maritime Commission (FMC) and the DOJ reaffirmed their commitment to “jointly enforcing competition laws and strengthening their cooperation to promote competition in the ocean freight transportation system.”[16] One notable aspect of this renewed partnership is that it provides a mechanism for the FMC and the DOJ to share information. Because the ocean shipping industry is highly regulated, the FMC opening its books to the DOJ may spark a flurry of enforcement activity. In fact, President Biden even highlighted this development in his State of the Union address.[17]
  • In July 2022, the National Labor Relations Board (NLRB) and the DOJ entered into a Memorandum of Understanding (MOU) that affirms each agency’s commitment to increased coordination and information sharing to protect American workers from anti-competitive interference.[18] Each agency will designate liaisons who will serve as points of contact, and they will work together on coordination for investigations, enforcement, training, and education. The agencies announced the MOU one day after the DOJ announced a civil settlement of wage-fixing claims in the poultry‑processing industry.[19]

Conclusion

On the one-year anniversary of the President’s antitrust EO, the most concrete results have not been groundbreaking, at least not yet. But several of the agency actions to date are suggestive of what this next year under the EO might bring.

The most obvious expected trend for this next year is a further increase in enforcement activity. The agencies have been more aggressive in their engagement with industry and have expressed an increased willingness to litigate. Similarly, the Treasury and DoD reports signal an increased openness for enforcement to be spearheaded by the DOJ and the FTC. These developments were not surprising but have begun to expose one of the weaknesses in the EO: most federal agencies are not equipped or empowered to enforce the antitrust laws, and those agencies charged with enforcement—mainly the DOJ and the FTC—have relatively limited mandates and resources. We expect the tension between the aims of the EO and the practical limitations of the agencies and the law to grow next year.

A second outcome for next year will be enhanced information exchanges across agencies. The information sharing agreements between the DOJ and the FMC, and the DOJ and the NLRB, may lead to even more antitrust scrutiny of the ocean shipping industry and labor markets, respectively.

Third, beyond additional enforcement zeal and information exchanges, the EO mandate is still widely expected to enhance the overall scope of antitrust enforcement, with various federal agencies reviewing their respective industries—healthcare, finance, food and agriculture, technology, transportation, and defense—and looking for opportunities to advance the administration’s agenda.[20] With all this interest and activity, we anticipate that next year will bring continued and expanded enforcement across a wider range of industries and issues.

Finally, rulemaking remains just outside the frame, but also will likely appear this next year, particularly as a way for the Biden administration to fulfill its goals in the event that it is unable to persuade Congress to implement statutory changes.