The order outlines several tasks delegated to US agencies in an attempt to curb anti-competitive practices, while also setting up a new council to address monopolisation.
The President of the United States of America Joe Biden signed an executive order (EO) that sought to promote competition by directly putting big technology (or Big Tech) in the US administration’s crosshairs; Biden said that big tech companies were excluding new market entrants to extract monopoly profits and gather exploitable, personal information.
The order called on several US agencies like the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) to implement 72 specific provisions on topics such as restoring net neutrality provisions that was repealed during the Trump administration; codifying “right to repair” rules, data collection/surveillance by big companies and increasing big tech scrutiny.
This order gains importance as the Indian government and independent bodies such as the Competition Commission of India have also been cracking down on alleged antitrust practices by big tech companies such as Amazon, Google, and so on. Recently, Union Industry and Commerce minister Piyush Goyal criticised e-commerce companies and said that these entities have repeatedly indulged in anti-competitive practices such as predatory pricing, thus putting the fate of over 60 million ‘mom-and-pop stores’ in the country, where over 100 million people work, at risk.
Background: This EO also comes weeks after US lawmakers debuted five bipartisan draft bills that are aimed at curbing the power of tech giants like Apple, Google, Facebook, and Amazon. These bills are the product of the 16-month long investigation by the House Judiciary Committee which found that big tech companies enjoy monopoly power. “The legislation represents the most comprehensive effort to reform century-old antitrust laws,” CNBC reported.
In the US, Google is facing three separate antitrust cases by the US Department of Justice, a group of 38 US states led by Colorado and Nebraska Attorney General, and another group of 15 states led by Texas. The case led by Texas alleges an advertising nexus with Facebook and a search engine monopoly arrangement with Apple. Meanwhile, Facebook has been separately sued by the US FTC and states for its alleged social networking monopoly and anticompetitive conduct, especially with its acquisitions of WhatsApp and Instagram.
What is the need for reforms?
However, before going into measures proposed in the executive order in detail, it is necessary to look into the need for it, as laid down in ‘Section 1’ of the Executive Order —
Consolidation in various industries hampering employability and income: The order said consolidation has increased the power of corporate employers, making it harder for workers to bargain for higher wages and better work conditions. In the agricultural industry, consolidation is allowing small family farms to survive. “Farmers are squeezed between concentrated market power in the agricultural input industries — seed, fertilizer, feed, and equipment suppliers — and concentrated market power in the channels for selling agricultural products,” the order read.
Platforms abusing the spirit of competition: Biden in his executive order noted that the American IT sector has been a catalyst towards growth but slammed “a small number of dominant Internet platforms” who use their power “to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage”. This gains importance because many small businesses across the economy depend on these platforms and a few online marketplaces for their survival.
Expensive healthcare in US due to hospital consolidation etc: The order noted that Americans pay a lot more for access to prescription drugs — far more than the prices paid in other countries. The EO attributed this to hospital consolidation and misuse of patent and other laws “to inhibit or delay to inhibit or delay — for years and even decades — competition from generic drugs and biosimilars, denying Americans access to lower-cost drugs”.
Americans pay too much for services in telecommunications, financial sectors: The EO said that Americans paid higher when compared to other countries, for broadband, cable television, and other communications services, because of lack of competition. In the financial services sector, consumers pay steep and hidden fees because of industry consolidation.
This order affirms that it is the policy of my Administration to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony — especially as these issues arise in labor markets, agricultural markets, Internet platform industries, healthcare markets (including insurance, hospital, and prescription drug markets), repair markets, and United States markets directly affected by foreign cartel activity — Executive Order on Promoting Competition in the American Economy
‘Whole-of-government approach necessary to address monopolisation in American economy’
Section 2 of the Executive Order lists out a few of the antitrust laws — the Sherman Act, the Clayton Act, and the Federal Trade Commission Act etc — that have been operational in the USA. The order informed that these orders empower various departments to protect fair competition conditions in multiple ways. However, in Section 3, the EO mentions that many times the US Congress has created overlapping agency jurisdiction in policing of anti-competitive conduct and in the oversight of mergers.
It is the policy of my administration that, when agencies have overlapping jurisdiction, they 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 — Executive Order on Promoting Competition in the American Economy
In this regard, Biden directed agencies to —
- Coordinate their efforts in cases of overlapping jurisdiction over particular cases, conduct, transactions, or industries
- The means of cooperation in cases of overlapping jurisdiction should include, as appropriate and consistent with applicable law.
White House Competition Council established
Biden in his Executive Order established the White House Competition Council, which he said will address over-concentration, monopolisation, etc. It will also —
- Implement the administrative actions identified in this order
- Develop procedures and best practices for agency cooperation
- Identify any potential legislative changes necessary to further antitrust policies
The order said that the council will be led by the Assistant to the President for Economic Policy and Director of the National Economic Council, who shall serve as Chair of the Council. These are the other members of the council —
- Secretary of the Treasury
- Secretary of Defense
- Attorney General
- Secretary of Agriculture
- Secretary of Commerce
- Secretary of Labor
- Secretary of Health and Human Services
- Secretary of Transportation
- Administrator of the Office of Information and Regulatory Affairs
- Heads of other agencies and offices as the Chair may from time to time invite to participate.
US agencies have their task set
Other than this, Biden in his EO entrusted heads of all agencies to address various issues that were highlighted at the beginning in context to antitrust violations, and anti-competitive behaviour of big companies and how it has been affecting Americans.
Address consolidation of industry and avoid anti-competitive expansion of market power — The order urged the Attorney General and Chair of the Federal Trade Commission to review and revise merger guidelines in order to address the issue of consolidation of the industry. With regard to avoiding anti-competitive expansion, the EO urged the Attorney General and Secretary of Commerce to consider whether to revise their position on the intersection of the intellectual property and antitrust laws.
Ensure Americans have choices among financial institutions: The EO urged the Attorney General to review current practices and adopt a plan, within 180 days after the date of this order, for the revitalisation of merger oversight under the Bank Merger Act and the Bank Holding Company Act of 1956 in accordance with US laws.
Protect workers: To better protect workers from wage collusion, the EO urged the Attorney General and the Chair of the FTC to consider whether to revise required guidelines and laws. The EO urged the chair of the FTC to address agreements that may unduly limit workers’ ability to change jobs.
Curb anti-competitive practices in regards to data collection, pharma, etc: The EO urged the Chair of the FTC to exercise FTC’s authority in areas such as —
- Unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy;
- Unfair anti-competitive restrictions on third-party repair or self-repair of items, such as the restrictions imposed by powerful manufacturers that prevent farmers from repairing their own equipment
- Unfair anti-competitive conduct or agreements in the prescription drug industries, such as agreements to delay the market entry of generic drugs or biosimilars
- Unfair competition in major Internet marketplaces
- Unfair occupational licensing restrictions
- Unfair tying practices or exclusionary practices in the brokerage or listing of real estate
Secretary of Agriculture to address unfair treatment of farmers
The Executive Order laid down a specific path for the Secretary of Agriculture for tackling deceptive practices, unreasonable preferences, and anti-competition norms that exist in the agricultural industry. These are the few directions given —
- Provide rules that identify recurrent practices in the livestock, meat, and poultry industries that are unfair.
- Prohibit unfair practices related to grower-ranking systems — systems in which the poultry companies, contractors, or dealers exercise extraordinary control over numerous inputs that determine the amount farmers are paid
- Ensure consumers have accurate, transparent labels that enable them to choose products made in the United States
- Ensure that farmers have greater opportunities to access markets and receive a fair return for their products, not later than 180 days after the date of this order
Chair of Federal Communications to promote competition in the telecommunications sector
The Order urged the Chair of the Federal Communication to adopt Net Neutrality rules, title II of the Communications Act of 1934 (Public Law 73-416, 48 Stat. 1064, 47 U.S.C. 151 et seq.), as amended by the Telecommunications Act of 1996, in “Protecting and Promoting the Open Internet”. These are the other directions given to the official in the order
- Conduct future spectrum auctions under rules that are designed to help avoid excessive concentration of spectrum license holdings in the United States, so as to prevent spectrum stockpiling, warehousing of spectrum by licensees, etc
- Provide support for the development and adoption of 5G Open Radio Access Network (O-RAN) protocols and software
Biden said that this order should be implemented consistent with applicable law, and independent agencies have been ‘encouraged’ to comply with the requirements of the order.