Biden’s ‘Promoting Competition’ Order
The President announced a whopping 72 initiatives to rein in corporate power and lower prices.
Reuters (“Biden signs order to tackle corporate abuses across U.S. economy“):
President Joe Biden signed a sweeping executive order on Friday to promote more competition in the U.S. economy, urging agencies to crack down on anti-competitive practices in sectors from agriculture to drugs and labor.
If fully implemented, the effort will help lower Americans’ internet costs, allow for airline baggage fee refunds for delayed luggage, among other steps.
The order instructs antitrust agencies to focus on labor, healthcare, technology and agriculture as they address a laundry list of issues that have irritated consumers, and in the case of drug prices, has bankrupted some.
“No more tolerance of abusive actions by monopolies. No more bad mergers that lead to massive layoffs, higher prices and fewer options for workers and consumers alike,” Biden said at a White House signing ceremony.
The president noted areas where advocates feel that prices are too high, wages are tamped down or new businesses excluded from competition. “Let me be very clear, capitalism without competition isn’t capitalism, it’s exploitation,” he said.
The White House says the rate of new business formation has fallen by almost 50% since the 1970s as large businesses make it harder for Americans with good ideas to break into markets.
Biden’s action goes after corporate monopolies across a broad swath of industries, and includes 72 initiatives he wants more than a dozen federal agencies to act on.
Among the administration’s plans to open up the U.S. economy are new rules to mandate ending excessive internet contract termination fees, allow hearing aids to be sold over the counter and end non-compete clauses for millions of workers and many occupational licensing requirements.
Biden’s order pushes the Agriculture Department to act to stop what the White House called “abusive practices of some meat processors,” reacting to farmers and ranchers who sometimes say they face too few buyers for their animals.
The administration also seeks to make it easier for customers to switch banks and take their transaction data with them, and restore net neutrality rules that require companies to treat all internet services equally.
The executive order will direct the Department of Justice and Federal Trade Commission (FTC) to carefully review mergers, and to challenge prior deals that have closed. It directs the FTC to issue rules to address competition concerns from Big Tech companies, Facebook, Apple, Alphabet’s Google and Amazon, and limit “killer acquisitions” where large internet platforms acquire potential competitors.
On prescription drugs, it aims to lower prices for consumers by allowing importation of drugs from Canada, where they are cheaper. It also urges the Department of Health and Human Services to draw up a plan to fight high drug prices, and gouging.
WaPo (“Biden’s bid to take on big business sets off battle over who holds power in U.S. economy“) adds:
President Biden signed an executive order on Friday taking aim at industries where certain companies dominate the market, kicking off a major new battle between the administration and corporate titans that could reshape aspects of the U.S. economy.
The executive order — which contains 72 initiatives — is striking in its scope and ambition, challenging the business practices of America’s enormous technology, health-care, agricultural and manufacturing firms while also aiming to shake up smaller sectors dominated by only a handful of companies, such as the hearing aid industry.
The effort reflects a major change in Democratic policymaking circles, where a new generation of economists has produced research and advocacy arguing that corporate consolidation has harmed workers and consumers. It also tees up a major challenge for the administration, which is likely to face sharp resistance from businesses that may seek relief through courts that have shown skepticism about competition arguments in the past.
NYT (“Biden’s order includes 72 initiatives that take aim at very specific practices the White House wants changed.“) adds:
In seeking to protect workers and consumers from what his administration views as the harmful consequences of corporate consolidation, President Biden is enlisting support from regulators across the executive branch in what the White House has described as an overarching, “whole-of-government” effort.
As part of the executive order Mr. Biden signed on Friday, the White House is asking more than a dozen federal agencies for input and action on 72 initiatives designed to increase competition and limit the power of large corporations across a wide range of industries. The order takes aim at a number of highly specific practices the White House has identified as problematic in sectors as diverse as agriculture, health care, transportation and technology.
A Vox explainer, “Biden’s plan to make stuff cheaper,” dives into even more detail. The full “Executive Order on Promoting Competition in the American Economy” is available on the White House website.
My initial reaction to the news, perhaps primed by a questionable firing of the head of the ostensibly independent Social Security Administration, was that this was a massive overreach beyond Biden’s Constitutional authority. But there’s actually much less to it than meets the eye. Most notably, as the above-linked WaPo report ultimately notes,
The order does not itself put these policies into effect, and none will be enacted overnight. Instead, it directs federal agencies to begin work on their own rules, a process that probably would lead to a comment period, which experts say can take three or four months. The administration also is issuing only recommendations to independent agencies crucial to much of the antitrust push, such as the FTC, that are not subject to directives from the White House.
The FTC probably can limit noncompetes only “on the margins,” diminishing its effectiveness, but Biden’s support bolsters bipartisan legislation on the matter currently moving through Congress, said John Lettieri, president of the Economic Innovation Group, a bipartisan public policy organization. “This is just a first step,” Lettieri said.
Biden is mostly signaling his preferences on issues that either vex a large swath of the population or are seen as obstacles to fairness by the progressive intelligentsia, not taking over huge sectors of the economy with a stroke of a pen. He almost certainly lacks the authority to do most of the things he’s proposing by simple fiat. Rather, he’s instructing agencies to reassess policies within their regulatory ambit to see how much they can move in his preferred direction. In many cases, I suspect, the answer will be Not far absent further authority and funding from Congress.
With a handful of exceptions, the country has been moving in the direction of deregulation for the entirety of my political awareness, going back to the latter stages of the Carter Administration. For the most part, given the global nature of the economy, that was the right policy, as American firms were at a serious competitive disadvantage against global firms that were not similarly constrained.
But we’ve come to the point where a handful of multinational corporations are more powerful than most countries and need to be reined in, if not broken up. And, indeed, to the point where neither Biden nor the US government as a whole (presuming it can actually act) likely has the ability to do it.
Going back to the immediate aftermath of World War II, the focus of global trade agreements has been more openness and the reduction of barriers. Now, as in the recent steps toward ending tax havens, the need is to create global rules that prevent a race to the bottom on wages, safety, environmental impact, and the like.