President Biden clearly laid out his vision for the American economy in his July 9 executive order, which puts antitrust regulation center stage. The order aims to promote the interest of American workers, businesses and consumers by laying out actionable steps for regulatory bodies to take in the next 300 days.
The goal of the order is to help workers, small businesses, entrepreneurs, farmers and consumers by encouraging market entry and movement through agency regulation and coordination. The order mentions a number of current legislative instruments, noting that nonenforcement of these laws threatens the United States’ “economic standing in the world.”
While the order is a clear message to all agencies and industries, Biden specifically calls out:
- Health care
- Drug manufacturers/life sciences
- Information technology
- Real estate
- Alcohol distributors
Specific guidance differs among industries, but it focuses on three directives: to foster an open market, increase transparency and standards to help both small businesses and consumers, and increase the presence and enforcement of governing agencies.
Here are 10 things you need to know about the recent executive order.
1. Creation of The White House Competition Council
The EO sets clear guidance for the council to work across agencies to address overconcentration, monopolization and unfair competition. It will be led by the Director of the National Economic Council and will operate within the Executive Office of the President. The council will create procedures and best practices to help agencies coordinate when jurisdictions overlap and identify potential legislative changes.
2. Call to agencies
The order sets forth 72 initiatives for more than a dozen agencies. It clearly states action items that must be conducted in defined time frames. The order sets goals for stricter enforcement of current statutory mandates and encourages the adoption of added regulation that limits and discourages barriers to market entry. It cites antitrust laws as the “first line of defense against the monopolization of the American economy.”
3. Increased scrutiny of mergers and acquisitions
As the economy trends towards big business and one-stop shops, this order encourages agencies to “cooperate fully” in the oversight of who operates in their markets. Specifically, they should share relevant information, solicit views of the Attorney General or Chair of the FTC and cooperate with DOJ and FTC oversight activities.
The order issues strong guidance but leaves space for agencies to set clear regulations. One such recommendation is to review horizontal and vertical merger guidelines.
Specific mention is made of the merger trends in banking, information technology, maritime, transportation and health care. The order calls for scrutiny to ensure Americans have choices in these industries and leaves room to look at prior mergers that were not previously challenged.
The FTA and DOJ are jumping into action and have already released a joint statement confirming that they will review merger guidelines.
4. Limits on noncompete clauses in employment contracts
Worker mobility is a motivating factor of this bill, which notes that large corporations’ noncompete clauses hinder movement in the market. Read our breakdown to learn more about specific issues that may affect your business’s current contracts.
5. Reviewing extensive licensing restrictions
The order calls out industries where licensing restrictions rule out economic operation and limit small business’s chances for success. This includes restrictions imposed by manufacturers that prevent competition by stopping businesses from fixing their own equipment, specifically in the agriculture industry. Another example the order notes is unnecessary trade practice regulations, such as bottle size regulations, used to keep independent distillers from distributing their own product.
6. Assessment of intellectual property concerns on competition
While recognizing that innovation is key to a successful American economy, this order strongly encourages agencies and industries to make sure restrictions do not unnecessarily reduce competition in the market by limiting entrants. Specific attention is put on life sciences, telecommunications, agriculture and health care. This guidance aims to avoid anticompetitive extensions of market power and protect standard-setting processes from abuse.
The order directs the Secretary of Agriculture to submit a report to the Chair of the White House Competition Council that describes anti-competition concerns and ways to address those concerns across intellectual property, antitrust and other relevant laws. It also asks the FDA to outline concerns about the patent system to make sure the it encourages innovation without delaying generic drug and biosimilar competition.
7. Increased access to open market
Not only does the order call for enforcement of current regulations and increased scrutiny of the market, it directs agencies to consider added regulation and legislative action to ensure this vision for a competitive economy is sustainable. It asks several federal agencies to identify threats to competition and barriers to new entry, specifically in highly regulated industries, and issue a report on their findings. It also encourages agencies to use their statutory rulemaking authority to control unfair data collection and surveillance practices, anticompetitive conduct and agreements, and exclusionary practices.
8. Consumer-friendly information and data sharing
Transparency is mentioned seven times throughout the order. Some suggestions laid out for agency implementation include data sharing and increased requirements on consumer labels.
A focus on consumer options is evident in the many calls for guidance and regulation on data transparency and consumer communication. Agencies are encouraged to require increased consumer access to data, more standardized options and detailed fee and industry requirements.
9. Foster agency and corporate cooperation with governing bodies
Collaboration is a recurring theme. The order prompts businesses to work with all governing bodies and collaborate internally to ensure the commitment to a competitive market.
10. Review of industry regulations
The order argues that restrictive industry regulations act as a barrier for entry to the marketplace, which widens racial, income and wealth inequality. Strict industry regulation and agency inaction are cited as barriers for a competitive economy that supports businesses entering the marketplace.
The EO aims to help small businesses enter the market and succeed, which gives consumers choices and promotes healthy competition. This means more opportunities for small businesses and heightened scrutiny on regulations for large corporations. We’ve highlighted the major changes this order could bring for each industry below.