On July 9, 2021, President Biden signed a sweeping executive order (EO) creating a "whole-of-government competition policy" that directs more than a dozen federal agencies to work in concert with the Department of Justice (DOJ) and Federal Trade Commission (FTC) to "address overconcentration, monopolization, and unfair competition in the American economy."1 In a speech immediately prior to signing the EO, President Biden pointedly criticized the prevailing, bipartisan antitrust consensus of the past 40 years, the consumer welfare standard, and said the EO takes pains to place "the welfare of workers, farmers, small businesses, [and] startups" alongside "consumers." The EO signals an attempt by the Biden Administration to change both the substance and the approach of the federal government to U.S. competition policy, shifting from a longstanding case-by-case enforcement model to more of an administrative rules-based regulatory model.

According to the White House, the more than 72 initiative EO will "deliver concrete benefits to America's consumers, workers, farmers, and small businesses."2 To accomplish its regulatory goals, the EO targets industries representing broad swathes of the American economy-agriculture, banking, consumer finance, healthcare, internet service providers, technology platforms, transportation (air, rail, and ship), and the labor market writ large-and effectively deputizes the federal agencies responsible for each industry to use their regulatory authorities to promote competition "by, among other things, adopting pro-competitive regulations and approaches to procurement and spending, and by rescinding regulations that create unnecessary barriers to entry that stifle competition." The EO specifically notes that "Agencies can influence the conditions of competition through their regulatory authority or through the procurement process." 3 The EO also creates the new White House Competition Council, to be led by the director of the National Economic Council,4 to coordinate the federal government's regulation of competition.

The EO contains several overarching policy statements revealing areas of intended regulatory focus. For instance, the EO encourages agencies to revisit already consummated deals by "reaffirm[ing] that the United States retains the authority to challenge transactions whose previous consummation was in violation of [antitrust laws]." It also encourages the DOJ and FTC to revise their merger guidelines, including the longstanding and well-respected Horizontal Merger Guidelines. Also of particular note, it focuses on the increased scrutiny of monopsonies and highlights the Biden Administration's desire "to enforce the antitrust laws to meet the challenges posed by new industries and technologies, including the rise of the dominant Internet platforms, especially as they stem from serial mergers, the acquisition of nascent competitors, the aggregation of data, unfair competition in attention markets, the surveillance of users, and the presence of network effects."

The EO provides specific guidance to multiple federal agencies.5 Most notably, the EO encourages:

  • The Attorney General to adopt a plan within 180 days to revitalize merger oversight under the Bank Merger Act and the Bank Holding Company Act of 1956.
  • The Attorney General and chair of the FTC to consider:
    • revising the horizontal and vertical merger guidelines; and
    • reassessing, and possibly strengthening, FTC and DOJ guidance preventing employers from agreeing to suppress wages and to not poach each other's employees;
  • The Attorney General and Secretary of Commerce to consider revising the Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments;
  • The chair of the FTC to work with the other Commissioners to exercise the FTC's rulemaking authority to address:
    • the use of unfair non-compete clauses;
    • data collection and surveillance practices;
    • restrictions on third-party or self-repair of items;
    • conduct or agreements in the prescription drug industries;
    • competition in major internet marketplaces;
    • occupational licensing restrictions; and
    • tying or exclusionary practices in the brokerage or listing of real estate;
  • The chair of the Federal Communications Commission to
    • re-adopt "Net Neutrality" rules;
    • conduct future spectrum auctions under rules to help avoid excessive concentration or stockpiling of spectrum; and
    • prohibit early termination fees for end-user communications contracts so consumers can more easily switch providers;
  • The director of the Consumer Financial Protection Bureau to issue rules facilitating the portability of consumer financial transaction data between financial institutions.
  • The Secretary of Health and Human Services to:
    • publish a proposed rule that allows for the over-the-counter sale of hearing aids; and
    • lower the price of and improve access to generic drugs and biosimilars.

Despite its breadth, the immediate effect of the EO on law or regulation is less clear. The EO itself does not enact any new law or regulation. Rather, the EO often uses vague language in instructing or guiding the actions of agencies. This is likely purposeful in many instances, including when the EO refers to independent agencies, like the FTC, Federal Communications Commission, Maritime Commission, Consumer Financial Protection Bureau, and the Surface Transportation Board. Nonetheless, for almost every initiative, there is likely to be a significant gap between the action directed or encouraged by the EO and the time it will take for the relevant agency to investigate, evaluate, and potentially implement a new rule or policy. Even where the direction to an agency is explicit, issuing a new rule or regulation takes time. An agency must first draft a rule, allow for a notice-and-comment period, make any necessary revisions, and then issue and start to enforce a final rule. And this does not account for likely legal challenges. In some instances, the EO directs the agencies to submit a report on the issue first rather than make any immediate changes, pushing any resulting regulatory activity out at least until the period following completion of the report. 

However, although the effect of the EO may be delayed in some cases, the broader implications for the federal government's enforcement and regulatory activity are potentially significant. Most importantly, the EO makes clear that competition regulation and enforcement are high priorities for the administration, which in turn will embolden enforcers and policymakers alike. An enforcement agency that enjoys the explicit or implicit blessing of the administration is more likely to be aggressive. Companies can expect increased scrutiny of proposed and consummated mergers, and a greater willingness by the DOJ and FTC to consider novel theories of economic harm. 

The EO will also motivate enforcers to devise new ways to expand their antitrust authorities. As perhaps a foreshadowing of the EO, on July 1, 2021, FTC Chair Lina Khan secured a series of policy changes, with the support of her two fellow Democratic commissioners, to expand the FTC's enforcement authorities by, among other things, rescinding the agency's policy statement about how it would wield its unfair methods of competition authority and to empower a single FTC commissioner to authorize compulsory process in an investigation. (See our Client Alert on the implications of the FTC's July 1 meeting.)

Additionally, the EO also demonstrates the significance of White House personnel appointments and the unprecedented political salience of competition policy. In March 2021, President Biden appointed Timothy Wu to the National Economic Council, the White House entity now responsible for running the Competition Council and coordinating implementing of the EO. Mr. Wu, a prominent academic and leading neo-Brandeisian who has advocated for dramatic changes to antitrust law and policy, was undoubtedly a driving force behind the decision to issue the EO and one of its key architects. From his position, Mr. Wu will be able to coordinate implementation of the EO and engage as much as possible to move the initiatives forward with the authority and support of the White House. The longer the DOJ Antitrust Division goes without installed political leadership, the more influential Mr. Wu could become.

Finally, the EO also directs the newly established Competition Council to "identify any potential legislative changes necessary to further the[se] policies." Although the EO expresses support for "aggressive legislative reforms" only for lowering prescription drug prices, much of the EO is geared toward identifying areas of reform generally, and the administration's willingness to support legislative antirust reform in one area can easily expand to include other areas. In this way, the EO may be laying the groundwork for the Biden administration to support one or more of the legislative proposals currently being debated in the House and Senate or to come up with some of its own. 

At bottom, the EO is a first major step to significantly alter U.S. competition enforcement policy. The serious time and attention that the Biden administration is dedicating to these issues is a clear indication that this initiative is a key priority.

Jose L. Urteaga also contributed to this article.

Footnotes

1. EO Sec. 2.

2. Fact Sheet.

3. EO Sec. 2.

4. Currently Brian Deese.

5. EO Sec. 5.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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