On July 9, 2021, President Biden signed a far-reaching executive order (the Order) aimed at promoting competition in the American economy. This Order is a “whole-of-government” effort, which establishes a new White House Competition Council and contains 72 initiatives for a dozen federal agencies. These agencies are tasked with implementing policies and rules that target a multitude of sectors, including technology, healthcare, and agriculture, as well as labor markets across sectors. The Biden Administration justified the sweeping order by pointing to an increase in consolidation in American industries, which it argues has driven up prices for consumers.
Increased Merger Scrutiny
As expected, the antitrust agencies – both the Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ) – play a prominent role throughout the Order. Among the various actions the FTC and DOJ are encouraged to take, the Order requests that both agencies enforce the competition laws with vigor and explicitly refers to the agencies’ authority to challenge consummated mergers under the current merger guidelines.
The Order further announces a policy of greater scrutiny of mergers, particularly those in the technology, banking, and hospital sectors. FTC Chairwoman Lina Khan and Acting Assistant Attorney General Richard Powers have already announced that they will begin to review current merger guidelines to determine if they are “overly permissive” in light of current economic trends and therefore require updating. Consequently, banks, technology companies, and hospitals should consider in their deal-planning the possibility of heightened scrutiny of mergers in their sectors.
Although the Order as a whole has received bipartisan praise, President Biden’s labor antitrust proposals have been particularly popular on both sides of the aisle. In fact, labor-related competition issues have received greater scrutiny over the past five years under two separate administrations. The Obama Administration was the first to announce that wage-fixing and no-poach practices could result in criminal liability, but it was during the Trump Administration when the DOJ ultimately brought the first criminal charges for this type of conduct.
The Biden Administration has attributed what it sees as fewer opportunities for workers to a lack of competition among employers. In response, the Order encourages the FTC to ban or limit (i) any unnecessary occupational licensing restrictions; and (ii) non-compete agreements. Non-compete agreements generally prevent workers from going to work for competitors of their former employers. Newly confirmed FTC Chairwoman Lina Khan has previously argued that non-compete agreements diminish workers’ bargaining power. However, these agreements presently are only unenforceable in a few states, including California, and are prohibited for low wage workers in about a dozen more. An outright federal ban would be a significant departure from the current state-by-state approach.
The Order also asks the agencies to reassess the Antitrust Guidance for Human Resource Professionals, which the DOJ and FTC jointly issued in 2016 under the Obama Administration. The Biden Administration argues that workers “may … be harmed by [the] existing guidance” that “allows third parties to make wage information available to employers – and not to workers – in certain circumstances without triggering antitrust scrutiny.” According to the Biden Administration, such data could be used by employers to collaborate to suppress wages and benefits.
In light of this Order, companies are likely to see increased regulatory scrutiny of their employment practices. While the FTC develops new rules, businesses across sectors should reflect on and update their compliance and HR training to ensure that they cover the latest developments related to non-compete agreements and exchange of wage information.
Additional Expansive Initiatives
The other enforcement efforts identified in the Order are wide-ranging and focus on the healthcare, transportation, agriculture, and technology sectors.
Healthcare: The Order encourages the import of prescription drugs from Canada and supports the use of generic and biosimilar drugs. It also encourages the FTC to implement a rule to ban “pay for delay” and allows hearing aids to be sold over the counter.
Transportation: The Order directs the Department of Transportation (DOT) to issue rules requiring transparency of fees and to demand refunds of fees for customers when baggage is delayed or when a service (such as in-flight WiFi) is not provided. It also asks the DOJ to work with regulatory agencies against foreign-owned shipping alliances and monopolized rail routes that the Biden Administration believes have driven up shipping costs.
Agriculture: The Order encourages new rules to allow farmers to sue large agricultural processors if they are either underpaid or retaliated against for speaking out regarding certain bad practices. It also asks the FTC to create rules limiting manufacturers from restricting consumers’ ability to use independent repair shops or DIY repairs, which would impact farmers looking to repair their own tractors, as well as manufacturers of mobile phones and gaming systems.
Technology: The Order encourages the FTC to establish rules on the accumulation of data and to bar unfair methods of competition on internet marketplaces. It also asks the Federal Communications Commission to restore net neutrality rules and would require internet service providers to report their prices and subscription rates to the FTC.
Continued Spotlight on Antitrust
The implementation of the rules and regulations outlined in the Order will take time and will likely be challenged by businesses, so some of the proposals may end up narrowed. However, the Order demonstrates that the Biden Administration will continue to focus on antitrust enforcement and reform in the labor market and beyond. President Biden has appointed many well-known progressive advocates for antitrust reform, including FTC Chairwoman Lina Khan and Tim Wu, who serves as the Special Assistant to the President for Technology and Competition Policy. While the fate of the more controversial antitrust reform bills currently advancing in Congress remains uncertain, the Order illustrates how the Biden Administration is prepared to advance an aggressive antitrust agenda — with or without Congress.