On July 9, 2021, President Biden signed a sweeping new Executive Order (“the Order”) with the stated goal of increasing competition in American markets. Like the recently issued Executive Order on Improving the Nation’s Cybersecurity, the Executive Order on Promoting Competition in the American Economy is meant to establish “a whole-of-government” approach to tackle an issue that is typically handled by numerous federal agencies. As such, the Order includes 72 initiatives touching more than a dozen federal agencies and numerous industries, including healthcare, transportation, agriculture, internet service providers, technology, beer and wine manufacturing, and banking and consumer finance.
Notably, the Order calls on the Department of Justice (DOJ) and Federal Trade Commission (FTC) to “vigorously” enforce antitrust laws and “reaffirms” the government’s authority to challenge past transactions that may have been in violation of antitrust laws and regulations (even if they were not challenged by previous Administrations).
The remainder of this blog will broadly outline the contents of the Order and conclude with a brief summary on possible ramifications for organizations undergoing merger and acquisition activity (as well as the law firms that counsel them) and how to prepare for them.
What is in the Executive Order on Promoting Competition in the American Economy
Section 1: Policy
This section broadly outlines the benefits of “robust competition” to America’s economy and asserts the U.S policy of promoting “competition and innovation” as an answer to the rise of foreign monopolies and cartels. This section also announces the Administration’s policy of supporting “aggressive legislative reforms” to lower prescription drug prices and supports the enactment of a public health insurance option.
Sec. 2: The Statutory Basis of a Whole-of-Government Competition Policy
This section outlines the antitrust laws which form the Administration’s whole-of-government anti-competition policy, including the Sherman Act, the Clayton Act, and the Federal Trade Commission Act, as well as fair competition and anti-monopolization laws, including Packers and Stockyards Act, Federal Alcohol Administration Act, the Bank Merger Act, and others.
Sect 3: Agency Cooperation in Oversight, Investigation, and Remedies
This section outlines the Administration’s policy of cooperation between agencies on anti-competition issues, stating that when there is overlapping jurisdiction over anticompetitive conduct and mergers, the involved agencies should “endeavor to cooperate fully in the exercise of their oversight authority” to benefit from the respective expertise of the agencies and to improve Government efficiency.
Section 4: The White House Competition Council
This section establishes a White House Competition Council to “coordinate, promote, and advance” government efforts to address monopolies and unfair competition. The section also mandates that the Council should work across agencies to provide a coordinated response to monopolization and unfair competition and outlines the Council make up and meeting cadence.
Section 5: Further Agency Responsibilities
This section mandates that the heads of all agencies must “consider using their authorities” to further the anti-competition policies outlined within the Order, and “encourages” relevant positions and heads of agencies (including the Attorney General, Chair of the Federal Trade Commission (FTC), Secretary of Commerce, and others) to enforce existing antitrust laws “vigorously,” as well as review and consider revisions to other laws and powers, including encouragement to:
- Enforce the Clayton Act and other antitrust laws “fairly and vigorously.”
- Review merger guidelines to consider whether they should be revised.
- Revise positions on the intersection of intellectual property and antitrust laws.
- Review current practices and adopt a plan for the revitalization of merger oversight under the Bank Merger Act and the Bank Holding Company Act of 1956.
- Consider whether to revise the Antitrust Guidance for Human Resource Professionals of October 2016.
- Consider curtailing the unfair use of non-compete clauses that may unfairly limit worker mobility.
- Consider rulemaking in other areas such as:
- Unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy;
- Unfair anticompetitive restrictions on third-party repair or self-repair of items (aimed at restrictions that prevent farmers from repairing their own equipment);
- Unfair anticompetitive conduct or agreements in the prescription drug industries;
- Unfair competition in major Internet marketplaces;
- Unfair occupational licensing restrictions;
- Unfair exclusionary practices in the brokerage or listing of real estate; and
- Any other unfair industry-specific practices that substantially inhibit competition.
The section also calls upon the Secretary of Agriculture to address the unfair treatment of farmers and improve competition in the markets for farm products, and for the Secretary of the Treasury to assess the conditions of competition around the American markets for beer, wine, and spirits (including improving the market for smaller, independent operations).
Notably, this section also calls for the Chair of the Federal Communications Commission to consider adopting “Net Neutrality” rules and other avenues to promote competition and lower prices across the telecommunications ecosystem.
Finally, the section also calls for the Secretary of Transportation to protect consumers and improve competition in the aviation industry, including enhancing consumer access to airline flight information, providing consumers with more flight options at better prices, promoting rulemaking around requiring airlines to refund baggage fees, and address the failure of airlines to provide timely refunds for flight cancellations resulting from the COVID-10 pandemic.
As a whole, the result of this Order will be that organizations undergoing mergers and acquisition activity can expect to face more scrutiny from the government – and that law firms that provide counsel for those types of transactions can expect that government investigations of those activities (like HSR Second Requests) will be more in-depth and meticulous. Accordingly, any law firms and organizations preparing for those types of investigations would do well to evaluate their ediscovery technology now, in order to ensure that they are using the best and most up-to-date legal technology and workflows to help locate the data requested by the government more accurately and efficiently.