President Biden today signed an expansive
Executive Order to promote competition that includes 72 initiatives targeting the labor, healthcare, agriculture, transportation, internet service, technology, and banking and consumer finance sectors. In the Order, President Biden calls on the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) to vigorously enforce the antitrust laws, including those laws that provide an avenue for the agencies to challenge prior mergers that the agencies may deem as problematic. Specifically, the Administration’s policy stresses enforcement in the labor, agricultural, healthcare, and tech sectors. The Order encourages DOJ and FTC to review the horizontal and vertical merger guidelines and consider whether to revise those guidelines.
The Order directs or requests action by more than a dozen federal agencies. While the Biden Administration continues its political appointee nomination and confirmation efforts, the Order forms a new White House Competition Council, led by the Director of the National Economic Council, in order to monitor progress on implementing the initiatives in the Order. Further, the DOJ announced today that its Antitrust Division will form an internal task force to assist in developing an action plan for implementation of the Order. While the task force is still in an early phase of formation, its efforts could include developing interagency programs supporting competition considerations or filing comments to mergers and transactions under review by other agencies.
Key Elements of the Order
A summary of the Order’s key conclusions and actions in each of the relevant sectors are discussed below. If you would like to discuss further specific directives or impact on individuals sectors, please contact the members of our Antitrust/Competition practice identified at the end of the alert.
Labor
The Administration’s labor market directives aim to reduce potential anticompetitive effects of employee non-compete agreements and occupational licensing requirements. The Order calls upon the FTC to ban or limit non-compete agreements. It further asks the FTC to ban occupational licensing requirements that act as barriers to worker mobility between states.
Moreover, the FTC and DOJ are encouraged to revise existing antitrust guidance to prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information with one another. With these actions, in conjunction with the President’s call for Congress to pass the Protecting the Right to Organize Act, the Administration aims to ensure workers have the opportunity to join a union and to collectively bargain.
Healthcare
The healthcare-related directives are intended to address increased healthcare prices and reduced access to high-quality care. Specific healthcare topics outlined include: (1) prescription drugs; (2) hearing aids; (3) hospitals; and (4) health insurance. The Order sets forth the following notable directives:
- Aims to lower prescription drug prices by directing the Food and Drug Administration to work with states that propose to develop Section 804 Importation Programs to import drugs from Canada pursuant to the Medicare Modernization Act of 2003;
- Directs Health and Human Services (“HHS”) to increase its support for generic and biosimilar drugs, and further directs HHS to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging;
- Directs HHS to consider rulemaking within 120 days to allow hearing aids to be sold over the counter;
- Encourages the FTC to issue a rule to ban “pay for delay” and similar agreements;
- Requests DOJ and FTC to review and revise merger guidelines in the context of hospital 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 to facilitate an easier consumer shopping experience.
Transportation
The Order’s transportation directives focus primarily on the airline, rail, and shipping industries in response to the Administration’s view that these industries are characterized by a handful of large corporations.
The airline industry initiatives aim to address ancillary fees that the Administration views as a product of a reduction of competition among commercial airlines. The Order directs the Department of Transportation (“DOT”) to consider rulemaking requiring airlines to refund such fees when there is an issue with the service (e.g., when baggage is delivered late, or if in-flight Wi-fi or entertainment is not available). It further directs DOT to consider issuing rules requiring airlines to clearly disclose baggage, change, and cancellation fees to consumers.
Notable directives applicable to the railroad industry include encouraging the Surface Transportation Board to require railroad track owners to provide rights of way to passenger rail. This comes in response to the Administration’s concern that freight railroads that own tracks can favor their own freight traffic leading to delays for passenger trains and overcharging for other companies’ freight shipments.
Regarding the shipping industry, in response to foreign container shippers charging U.S. exporters large fees for detention and demurrage charges, the Order asks the Federal Maritime Commission to vigorous enforce the prohibition of unreasonable or unjust practices of shippers charging U.S. exporters these significant fees.
Agriculture
The Order’s agricultural initiatives seek to address the Administration’s findings that ownership of key agricultural markets are now concentrated in a few large companies and that the concentration is leading to increased costs for farmers and ranchers and reduced options for sale of their products.
Directives to the United States Department of Agriculture (“USDA”) include:
- Consider rulemaking under the Packers and Stockyards Act to provide an easier path for farmers to bring and win claims, prevent chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers.
- Consider rulemaking to re-define qualifications to label meat as “Product of USA” to protect consumers’ choice.
- Develop a plan to increase opportunities for farmers’ access to markets and to receive a fair return, which includes USDA’s support of alternative grocery store food distribution systems such as farmers markets.
The Order also encourages the FTC to limit equipment manufacturers from restricting customers’ ability to use independent repair shops or do “DIY” repairs.
Internet Service
The Order’s directives to the Federal Communications Commission (“FCC”) seek to address what it views as lack of competition among broadband service providers that leads to increased prices and a reduction in consumer choice for internet service. Notably, the Order encourages the FCC to restore the Net Neutrality rules adopted by the Obama Administration but repealed by the FCC in 2018. The Order further encourages the FCC to adopt consumer protection initiatives such as preventing internet service providers from entering into agreements with landlords to limit tenants’ choice of ISPs; limiting excessive early termination fees should a consumer switch to a different ISP; and reviving the “Broadband Nutrition Label” initiated under the Obama Administration.
Technology
The technology-related directives address the Administration’s concern that large tech firms (1) seek to acquire firms in order to shut down competitive threats; (2) gather an excessive amount of personal data; and (3) have an unfair competitive advantage over small businesses.
To address these concerns, the Administration announces a policy of enhanced scrutiny of mergers of tech firms. The policy notes that particular attention will be paid to large internet services, with particular emphasis on acquisitions of nascent competitors, serial mergers, the accumulation of data, competition by “free” products, and the effect on user privacy.
The directives request the FTC to issue rules barring unfair methods of competition on internet marketplaces in addition to issuing rules surrounding the accumulation of personal information and related data.
Banking and Consumer Finance
The Order provides directives to the DOJ and Consumer Financial Protection Bureau (“CFPB”) to address the Administration’s concerns regarding higher costs, restrictions on credit for small businesses, and higher interest rates stemming from prior bank mergers.
The DOJ, along with the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, are encouraged to update guidelines on banking mergers to provide for enhanced scrutiny of proposed mergers. In addition, the Order asks the CFPB to issue rules providing consumers the ability to download their banking data such that consumers can more easily and cheaply take their financial data with them in switching to a new bank.
If you have any questions concerning the material discussed in this client alert, please contact the following members of our Antitrust/Competition practice.
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