President Biden will sign an executive order on Friday afternoon aimed at addressing what the White House views as the rising problem of corporate consolidation in the United States, as well as the higher prices, lower salaries, and fewer choice that this causes for employees and consumers. The move is the latest salvo in an escalating battle between the federal and state governments and big business over monopoly power and anticompetitive practices, and one that the Biden administration hopes will boost Americans’ economic prospects without adding to the federal budget deficit, which is already large.
The following are the seven markets that his strategy will focus on: Labor The executive order would target rules and laws that make it difficult for qualified people to start a new career or move positions within the same industry in quest of better pay, benefits, and working conditions. According to the bipartisan Economic Innovation Group, around 20% of all workers in the United States are bound by non-compete agreements, which prevent them from finding higher-paying jobs with competitors of their current employer. These agreements typically apply to wealthier workers, but EIG’s analysis found that between 12% and 25% of workers earning less than $80,000 a year are covered by them, with government investigations revealing that some fast food chains have even prohibited their employees from working for competitors. Non-compete agreements will be banned or restricted by Biden’s directive to the Federal Trade Commission. Healthcare Biden will “direct the Food and Drug Administration to work with states and tribes to safely import prescription drugs from Canada,” according to the White House, though it fails to mention that the Trump Administration began pushing for this last year through rulemaking at the Department of Health and Human Services. The Biden administration said in a court filing in May that the FDA was not in a hurry to deal with states on this matter, adding that “no timeframe exists” for the agency to approve state plans to import pharmaceuticals. Meanwhile, critics argue that importing pharmaceuticals from Canada will do little to reduce drug prices in the United States, and that more strong measures, such as price regulation, will be the only successful method. Biden will also request that the Federal Trade Commission draft a rule prohibiting large pharmaceutical corporations from paying generic producers to delay the development of generic versions of their products. It’s worth noting that the FTC has stated that this practice peaked in 2014, and that FTC court actions and state laws, such as one recently implemented in California, have been working to reduce it in recent years. Transportation The order focuses mostly on the airline industry, with the White House claiming that only four commercial airlines control over two-thirds of the market in the United States. In a fact sheet outlining the executive order, it connects the industry’s recent consolidation with its ability to impose ever-higher costs for things like ticket cancellation and baggage. President Biden has directed the Department of Transportation to “consider” laws mandating airlines to refund luggage fees when delivery is delayed, as well as making these prices apparent to passengers. Agriculture The Federal Trade Commission (FTC) issued a report to Congress in May describing the need for action to combat so-called “right to repair” policies used by American manufacturers — particularly farming equipment manufacturers like Deere & Co. DE, +1.91 percent and Caterpillar Inc. CAT, +2.66 percent — that prevent users from repairing their products at third-party entities. The Biden directive directs the FTC to “consider reinvigorated regulatory and law enforcement options” to counteract this behavior, which is also prevalent in the market for cellphones and other high-tech items, as recommended in the study. Internet Access Internet service providers such as Comcast CMCSA, -0.23 percent and Verizon VZ, +0.73 percent are able to increase revenue by negotiating “special deals with landlords of apartment complexes and other multiple tenant environments that ensure only one ISP can serve the building’s tenants—even if multiple ISPs are equipped to serve the building,” according to a report. Despite prior attempts by the Federal Communications Commission to prohibit such agreements, they have resurfaced in the form of revenue-sharing agreements, bulk billing arrangements, and exclusive wiring agreements, according to New America. The FCC will be directed by Biden’s order to investigate the matter and prohibit these new arrangements, as well as limit termination costs, which prevent many internet consumers from transferring providers. Technology Both Democrats and Republicans in Washington are angry about dominant digital platforms, and multiple bipartisan antitrust proposals have been introduced in Congress to increase money for antitrust enforcers and change antitrust legislation. Though there is still dispute over what should be done, both parties want greater oversight of internet companies like Facebook FB, +1.24 percent and Google GOOG, +0.38 percent when it comes to the acquisition of budding competitors and the collection of user data. The Biden order will direct the Justice Department and the Federal Trade Commission to look into “mergers, particularly by dominant internet platforms, with particular attention to the acquisition of nascent competitors, serial mergers, data accumulation, competition by ‘free’ products, and the effect on user privacy.” Finally, the Biden administration raised alarm over banking industry consolidation, noting that 10,000 banks have closed in the last two decades as the number of America’s top banks has grown. In a fact sheet explaining the executive order, the White House stated, “Despite being subject to federal review, federal authorities have not formally declined a bank merger proposal in the than 15 years.” President Biden will ask authorities to conduct “more rigorous merger review.” Critics, on the other hand, claim that banking consolidation in the last decade has been mostly driven by new laws such as the Dodd-Frank financial reform, which have favored larger institutions that can better manage regulatory expenses than smaller ones. Meanwhile, the Federal Deposit Insurance Commission has stated that the absence of new banking charters issued by state and federal authorities is likely just as important as mergers in reducing bank competition. The overall picture While the executive order may serve as a rallying point for government agencies to rally around Biden’s pro-competition message, many of the order’s directives are already being implemented by the agencies, and the more important moves to watch in this sphere are Biden’s yet-to-be named nominees for the DOJ’s antitrust division and a soon-to-be open seat on the FTC. “In our opinion, the order’s timing can be justified in part as a message tool for the White House to convey a preference for action in the near term, despite Biden’s delayed regulatory appointments,” analysts from Beacon Policy Advisors wrote in a Friday research note. “Most importantly,” they wrote, “the order will provide the political cover required for executive branch agencies to not only comply with Biden’s directive, but also to explore hitherto underutilized capabilities to pursue antitrust enforcement.”/n
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