On March 9, 2022, President Biden signed an executive order (EO) aimed at strengthening competition in the American economy and addressing various issues related to market concentration, anti-competitive practices, and consumer protection. The EO, titled "Promoting Competition in the American Economy," covers a wide range of sectors and industries, including technology, healthcare, agriculture, transportation, and more. While the executive order is a significant step towards promoting fair competition and consumer welfare, its impact on businesses will vary across different industries and market positions.
Executive Order Overview
The executive order consists of seven far-reaching sections, each addressing a different aspect of competition policy and consumer protection. These sections include:
Section 1: Promoting Competition in the American Economy
This section outlines the purpose of the executive order, emphasizing the need to promote competition, protect consumers, and support small businesses. It acknowledges the importance of fair and open markets for the American economy’s long-term prosperity.
Section 2: Prescription Drug Prices
Section 2 aims to address the high cost of prescription drugs, a significant concern for American consumers. It directs the Department of Health and Human Services (HHS) to explore ways to lower drug prices, including by allowing the importation of certain drugs from Canada and facilitating the negotiation of drug prices by Medicare.
Section 3: Worker Power
Recognizing the importance of worker power in a competitive economy, Section 3 focuses on promoting fair wages, safe working conditions, and the right to organize. It directs federal agencies to take steps to strengthen workers’ rights and ensure that businesses comply with labor laws.
Section 4: Agriculture and Food Supply Chains
This section aims to enhance competition and fairness in the agriculture and food supply chains. It directs the Department of Agriculture (USDA) to address anti-competitive practices, such as price manipulation and market consolidation, and to support independent farmers and ranchers.
Section 5: Technology Markets
Section 5 focuses on the technology sector, which has seen significant market concentration in recent years. It directs the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to enforce antitrust laws and promote competition in the tech industry, particularly in areas like social media, online advertising, and digital platforms.
Section 6: Transportation
The transportation sector is a critical component of the American economy, and Section 6 aims to promote competition and reduce barriers to entry in this industry. It directs the Department of Transportation (DOT) to address anti-competitive practices, such as price fixing and market allocation, and to support small businesses in the transportation sector.
Section 7: Miscellaneous Provisions
This section includes various provisions related to competition policy and consumer protection. It directs federal agencies to review and update regulations to promote competition, strengthen consumer protection laws, and enhance data privacy and security.
Impact on Businesses
The executive order’s impact on businesses will depend on several factors, including the industry they operate in, their market position, and their compliance with existing regulations. Here are some potential implications for different types of businesses:
Small and Medium-Sized Businesses (SMBs)
Small and medium-sized businesses stand to benefit from the executive order’s focus on promoting competition and supporting independent enterprises. The EO aims to level the playing field by addressing anti-competitive practices and market concentration, which can often disadvantage smaller businesses. Additionally, the emphasis on worker power and fair wages may create a more favorable environment for SMBs to attract and retain talent.
Large Corporations
Large corporations, especially those in highly concentrated industries like technology and pharmaceuticals, may face increased scrutiny and regulatory action under the executive order. The order’s emphasis on enforcing antitrust laws and promoting competition could lead to investigations and potential legal action against companies accused of anti-competitive behavior. Additionally, the EO’s focus on lowering prescription drug prices and regulating technology markets may impact the revenue and market share of large corporations in these sectors.
Healthcare Providers
The healthcare industry is a key focus of the executive order, particularly in relation to prescription drug prices. Healthcare providers, including hospitals, pharmacies, and insurance companies, may face pressure to negotiate lower drug prices and improve transparency in their pricing structures. Additionally, the EO’s emphasis on consumer protection and data privacy could impact the way healthcare providers handle patient data and interact with consumers.
Agriculture and Food Producers
The agriculture and food supply chain sectors are addressed directly in the executive order. Farmers, ranchers, and food producers may benefit from increased competition and the enforcement of anti-trust laws, which could lead to fairer prices and reduced market power for large agribusinesses. However, the EO’s focus on supporting independent producers may also lead to increased regulatory oversight and compliance requirements for these businesses.
Technology Companies
Technology companies, particularly those operating in social media, online advertising, and digital platforms, are likely to face significant scrutiny under the executive order. The EO’s focus on promoting competition in these sectors could result in investigations, regulatory action, and potentially the break-up of large tech companies. Additionally, the emphasis on data privacy and security may lead to increased compliance costs and stricter data handling practices for technology firms.
Transportation and Logistics
The transportation sector is another area of focus for the executive order. Transportation and logistics companies, including airlines, shipping lines, and freight carriers, may face increased competition and regulatory oversight. The EO’s aim to reduce barriers to entry and address anti-competitive practices could impact the pricing and market share of established players in this industry.
Implementing the Executive Order
The executive order is a significant step towards promoting competition and addressing market concentration, but its implementation will be crucial to its success. Federal agencies, including the FTC, DOJ, HHS, and USDA, will play a key role in enforcing the provisions of the EO and ensuring compliance with competition laws. The order’s impact will also depend on the level of cooperation and coordination between these agencies and the willingness of businesses to adapt to the changing regulatory environment.
Conclusion
President Biden’s executive order on promoting competition in the American economy has the potential to significantly impact businesses across various sectors. While small and medium-sized businesses may benefit from increased competition and support, large corporations and those in highly concentrated industries may face increased regulatory scrutiny and potential legal action. The executive order’s implementation and the responses of federal agencies and businesses will shape the competitive landscape of the American economy in the coming years.
What are the key provisions of the executive order related to competition policy?
+The executive order includes provisions to address market concentration, anti-competitive practices, and consumer protection in various sectors, including technology, healthcare, agriculture, and transportation.
How will the executive order impact small businesses?
+The executive order aims to promote competition and support small businesses by addressing anti-competitive practices and market concentration, which can often disadvantage smaller enterprises.
What industries are likely to face the most significant changes under the executive order?
+Industries with high market concentration, such as technology, pharmaceuticals, and agriculture, are likely to face the most significant changes under the executive order. These sectors will be subject to increased scrutiny and enforcement of competition laws.
