Biden Urges Extra Scrutiny of Large Companies, Akin to Tech Giants

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WASHINGTON – President Biden signed a comprehensive executive order on Friday designed to increase competition within the country’s economy and limit corporate dominance.

The government encouraged federal agencies to take a wide range of measures, such as: Examples include scrutinizing the tech industry, tackling high shipping fees, and over-the-counter sales of hearing aids.

“What we have seen in the last few decades is less competition and more concentration, which slows our economy,” said Biden on Friday in the White House, citing the agricultural, technology and pharmaceutical industries. “Instead of competing for consumers, they consume their competitors. Instead of competing for labor, they find ways to gain the upper hand over the labor. “

The order reflects the government’s growing acceptance of accepting warnings from some economists that declining competition is hampering the vitality of the economy. Progressive groups celebrated it while some business groups harshly criticized it.

However, Mr Biden could find it difficult to cope with the decline in competition in various parts of the economy – including Silicon Valley, Wall Street, restaurant chains, and large hospital networks – through executive action alone. Experts warn that the president will have to work with Congress in many areas to change federal laws if he is to be more successful than former President Donald J. Trump, who also issued competitive executive orders and achieved limited results.

Many of the agencies mentioned in Friday’s order, such as the Federal Trade Commission and the Federal Communications Commission, are independent, which means the White House can only encourage them, not instruct them to take certain steps. But in statements made on Friday, these agencies largely accepted the proposals and promised to take action.

In interviews this week, senior government officials recognized the limits of executive power but said the order focused on actions such as instructing federal regulators to take steps to encourage competition that have the best chance of succeeding in promoting change in the country of the entire economy.

The mandate includes 72 provisions spanning different economic sectors. Part of the order tells federal agencies that approve mergers that they should update their business review guidelines to better capture the business models of tech companies. Another calls on the Federal Communications Commission to reintroduce the so-called net neutrality rules for broadband providers. Another is calling on the Federal Trade Commission to discourage manufacturers from preventing farmers from repairing their tractors themselves.

Other parts target health care at multiple levels. The order supports states and tribal governments that allow inexpensive prescription drugs to be imported from Canada, urges over-the-counter sales of hearing aids, and calls on the FTC and the Department of Justice to scrutinize hospital mergers to ensure that patients are not harmed by them.

Another focus is on the companies that move people and goods around the world. The regulation suggests, for example, new rules for airline fees. The aviation industry consolidated significantly in the 2000s and early 2010s. A series of mergers and acquisitions created four major airlines that now serve nearly two-thirds of all US passengers. The ordinance also calls on the Federal Maritime Commission, an independent agency, to aggressively enforce laws against companies who charge exporters high prices for shipping their products by sea.

The arrangement has numerous parts that the White House says will benefit workers. She encourages the FTC to prohibit or restrict non-compete obligations, which employers have increasingly tried in recent years to prevent their workers from quitting for better jobs. It encourages the Commission to ban “unnecessary” restrictions on work permits, which can limit the ability of workers to find new work, especially across national borders. And he encourages both the Commission and the Ministry of Justice to further restrict employers ‘ability to exchange information on workers’ pay in a manner that could amount to collusion.

In a broader sense, the executive order encourages antitrust authorities to look at how mergers could contribute to monopsony – industries where workers have few choices about where to work and therefore have no way of negotiating higher wages or better benefits.

The White House Economic Advisory Council cited several examples of such industries in an accompanying research letter on Friday, including beef packaging and airlines, each dominated by four large companies.

The order will set up a White House competition council, headed by Brian Deese, director of the National Economic Council, who will “coordinate the federal government’s response to the growing power of big business in the economy,” officials said in a statement.

Updated

July 9, 2021, 6:36 p.m. ET

Lina Khan, chairman of the FTC, and Richard A. Powers, assistant attorney general for antitrust law, said their agencies would review the current guidelines “with the aim of updating them to reflect a rigorous approach to mergers “.

“We need to ensure that the merger guidelines reflect current economic realities and empirical evidence and that they guide enforcement agencies to review mergers with the skepticism required by law,” the two said in a statement.

In a separate statement, Attorney General Merrick Garland said the Justice Department would work closely with officials from other government agencies on competition issues. This could include a trade-off of mergers that will be reviewed by other agencies who may consider doing business with standards unrelated to whether a deal reduces competition.

The order is a victory for progressive lawmakers and academics who say state regulators have neglected for decades to scrutinize American corporations, but instead have been guided by a conservative view that sets a high standard for when government blocks mergers or should dissolve monopolies. You have also criticized the Obama administration for failing to properly oversee industry consolidation, particularly in Silicon Valley.

They say that politicians must aggressively enforce and possibly rewrite antitrust laws. Without drastic action, they argue, consumers will have less choice, bigger business suppliers will come under pressure, and giant corporations will only get bigger.

David Segal, executive director of Demand Progress, said in a statement that the order “represents a wish list that Progressives and other proponents of competition have been promoting for years, and in some cases for decades”.

But Washington’s largest business lobby group, the US Chamber of Commerce, has changed its mandate. Neil Bradley, the group’s chief policy officer, said the mandate was “built on the false belief that our economy is over-focused, stagnant, and not generating the private investment necessary to drive innovation. Such broad assertions are unrealistic because our economy has proven resilient and the world envies it. “

Mr. Biden has brought some vocal critics of corporate power into leadership positions. At the White House, he appointed Tim Wu, a law professor at Columbia University and an outspoken proponent of the liquidation of companies like Facebook, as special advisor on competition issues. To head the Federal Trade Commission, he hired Ms. Khan, who was working on a House of Representatives antitrust investigation against Amazon, Apple, Facebook and Google and who wrote early in her career about the concentration in other industries such as confectionery and agriculture.

But Mr. Biden has also not nominated a person to lead the Justice Department’s antitrust division, a key role in determining the government’s position on competition issues.

In the last few decades, federal courts have also taken a conservative stance in antitrust law in order to underline how difficult it can be for the order to have a lasting effect. Last month, a judge dismissed a Federal Trade Commission lawsuit that argued that Facebook violated antitrust laws in buying smaller competitors, Instagram and WhatsApp. The judge gave the agency 30 days to resubmit the case.

William J. Baer, ​​who headed the Justice Department’s antitrust division during the Obama administration, said courts often “carefully consider” the merger guidance it wanted to update. He noted, however, that courts generally became more conservative on antitrust issues and were more likely to reject business challenges.

“There is a headwind there that may or may not be overcome,” he said.

House lawmakers have come up with a handful of proposals to strengthen the agencies’ hands on big tech, but these bills are likely to meet stiff opposition. Many of the measures in the executive order do not necessarily require a congress to expand the agencies’ capabilities. In many cases, regulators have been reluctant to enforce existing laws and create new rules, said people familiar with the White House mindset.

One target of the executive order is mergers in which large tech companies buy small businesses that have the potential to become tough competitors and wipe out rivals before they get off the ground. The guidelines ask the agencies to revise the guidelines to evaluate proposed deals, even if a company buys a young competitor or a large set of data that could help it dominate.

The ordinance calls on the Federal Communications Commission to put new restrictions on the practices of broadband Internet service providers like Comcast, AT&T, and Verizon. Activists have long said that consumers have too little choice and pay too much money for Internet services.

The order also encourages the agency to reintroduce the so-called net neutrality rules, which prohibited Internet service providers from blocking certain content, slowing down its delivery or making customers pay more so that their content could be delivered faster. The agency took over the rules during the Obama administration and then took them back under Mr. Trump.

Mr. Baer, ​​the former Justice Department official, said that while the Obama administration has begun to focus on competition policy in its dwindling days, Mr. Biden has taken the catwalk to make it a high priority.

“He has the time to pull this off,” said Mr. Bear.

Cecilia Kang and Niraj Chokshi contributed to the coverage.