In the two years since the Executive Order was published, the Biden administration has continued to advocate for increased competition across various economic sectors.  In a June 2023 speech, President Biden cited “promoting competition to lower costs to help small businesses” as one of three fundamental principles inherent to “Bidenomics,” the moniker adopted by the administration to describe its efforts to build the economy “from the middle out and the bottom up, not the top down.”  To mark the second anniversary of the Executive Order, on July 20, 2023 President Biden convened the White House Competition Council for its fifth session.  The council is comprised of numerous cabinet secretaries, agency leaders, and political advisors, and is tasked with “delivering on the 72 initiatives identified in the Executive Order, collaborating on addressing pressing competition problems across the economy, and finding new ways of delivering concrete benefits to America’s consumers, workers, farmers, and small businesses.” 

Unlike judicial precedent or legislative action, President Biden’s Executive Order on Competition cannot change the antitrust laws that the administration is entrusted to enforce.  However, it has led to increased consideration of competition factors by federal agencies across the government as they carry out their regulatory activities.  The Executive Order directed a broad range of regulators to emphasize the issues of competition and concentration in the U.S. economy.  While prior administrations have also sought to call attention to competition issues among federal regulators, the Biden Executive Order is unique in its breadth and scope. 

When all of the main federal agencies convene and exchange perspectives on competition, there is the potential for new directions across a wide range of regulatory activity.  To understand these potential new directions and assess the impact across industries, it is important to stay abreast of the various reports and other initiatives that have resulted from the Executive Order. Below we provide an overview of actions and initiatives taken by U.S. federal agencies over the past two years response to the various mandates outlined in the Executive Order related to increasing competition in the economy.2

Published reports

The Executive Order directed a number of agencies to submit reports to the White House Competition Council on a range of topics related to the state of competition across various sectors in the economy.  To date, the following reports have been published:

A summary of the takeaways provided in these reports is provided below.

More and better choices for farmers: Promoting fair competition and innovation in seeds and other agricultural inputs

In March 2023, the USDA Agricultural Marketing Service (AMS), in consultation with relevant offices, agencies, and teams at USDA, as well as the Director of the United States Patent and Trademark Office and other Federal partners filed a report “to grapple with certain longstanding challenges associated with promoting competition and protecting intellectual property in relation to agriculture.”  The report was prepared in response to the request in President Biden’s Executive Order that the USPTO and USDA submit a report on concerns and strategies for ensuring “ that the intellectual property (IP) system, while incentivizing innovation, does not also unnecessarily reduce competition in seed and other input markets beyond that reasonably contemplated by the Patent Act.”

The report is intended to employ the “whole of government” approach outlined in the Executive Order to “ensure robust and reliable IP rights that enhance innovation and promote competition, ensure that IP owners exercise their rights within the scope of fair competition provided by law, and rebuild critical national infrastructure for variety development and the provision of seed and other planting stock to create resilient seed supply chains.”  As part of this approach, the USDA and USPTO are establishing a new Working Group on Competition and Intellectual Property to explore joint USPTO-USDA opportunities for collecting broader stakeholder input in the seed and agricultural input markets; enhance the quality of the patent examination process for innovations related to agricultural products and processes; enhance the transparency of IP information for agricultural-related innovations; and consider and evaluate new proposals for incentivizing and protecting innovation in the seed and agricultural-related spaces. 

In addition, AMS is establishing a Farmer Seed Liaison to facilitate communication between farmers, plant breeders, and relevant agencies that touch on the IP system to coordinate implementation of the recommendations in the report, and promote fair competition in the seed industry.  The Farmer Seed Liaison initiative is intended to help “foster more choices and increased innovation across crops and regions,” and promote “transparency, fair competition, and innovation” in order to help the American food system increase its resilience. 

The report includes the following recommendations:

• Enforce label requirements and false advertising provisions under the Federal Seed Act (FSA), and enhance accessible filing of complaints and tips on potentially unlawful seed practices.

• Facilitate interagency coordination with the DOJ and FTC to promote fair competition by expanding farmerfairness.gov to include seeds and other inputs; assess the impact of seed business consolidation and IP on pricing, choice, and availability of adapted varieties and the impact of reduced competition on food security, genetic diversity, and regional production capacity; and coordinate and consult on actions related to practices in the seed industry that may harm competition.

• Invest in innovative and resilient local and regional food systems.

Competition in the Mobile Application Ecosystem

In February 2023 the Department of Commerce issued a report titled “Competition in the Mobile App Ecosystem” in response to a directive in the Executive Order that the agency “conduct a study, including by conducting an open and transparent stakeholder consultation process, of the mobile application ecosystem, and submit a report to the Chair of the White House Competition Council, regarding findings and recommendations for improving competition, reducing barriers to entry, and maximizing user benefit with respect to the ecosystem.”  According to a Department of Commerce press release, the report was prepared following an “extensive investigation” undertaken by the National Telecommunications and Information Administration (NTIA) of the competitive conditions in the mobile app ecosystem,” and consulting with multiple stakeholders including private industry, civil society, and academia. 

The report finds that while the mobile app store model has provided benefits to both app developers and users, it has created “conditions of competition that are suboptimal,” with the two leading mobile operating systems “dictat[ing] how the vast majority of the world’s apps exist and function” and “creat[ing] unnecessary barriers and costs for app developers, ranging from fees for access to functional restrictions that favor some apps over others.”  The report also suggests that these barriers have imposed costs on firms and organizations offering new technology, including higher development and roll-out costs and apps failing to reach a large number of users.  In addition, the reports argues that the incentive structures of a mobile app ecosystem “leave any alternative distribution models with significant disadvantages and limited functionality,” and make it “challenging for other firms to compete in the mobile ecosystem for both distribution mechanisms (e.g. mobile app stores and web browsers) and amongst apps.”  The report states that alternative mobile app stores are “not afforded the opportunity to compete on a fair playing field,” which leads to losses for consumers including inflated prices, hampered innovation, and loss of choice of apps. 

The report includes the following recommendations:

• Promoting alternative means of app distribution, by, for example, considering measures to limit pre-installation or reducing restrictions on sideloading, competing app stores, and competing browsers that would allow fully-featured web apps; and

• Considering measures to remove technical limitations on developers, by, for example, improving the fairness of mobile app store review processes, permitting broader in-app purchasing options, supporting stronger antitrust enforcement and encouraging interoperability.

Assessing the impact of new entrant non-bank firms on competition in consumer finance markets

In November 2022, the Treasury Department published a report to the White House Competition Council titled Assessing the Impact of New Entrant Non-bank Firms on Competition in Consumer Finance Markets.  The report—which was prepared by the Treasury Department in consultation with the White House Competition Council—finds that “while concentration among federally insured banks is growing, new entrant non-bank firms, in particular ‘fintech’ firms, are adding significantly to the number of firms and business models competing in core consumer finance markets and appear to be contributing to competitive pressure.”  The report cautions that these fintech firms are creating “new risks to consumer protection and market integrity, such as risks related to data privacy and regulatory arbitrage,” and recommends enhanced oversight of the consumer financial activities of non-bank firms.  In addition, the report supports the review of bank merger policies by federal banking regulators and the DOJ, and increased antitrust scrutiny of the tech and financial services sectors by the competition authorities.

The report also provides the following recommendations:

• To address market integrity and safety and soundness concerns, regulators should provide a clear and consistently applied supervisory framework for bank-fintech relationships. A bank-fintech relationship that delivers consumer financial services provided by an insured depository institution (IDI) must operate in compliance with the laws, regulations, and risk management standards applicable to the IDI.
• To protect consumers, regulators should robustly supervise bank-fintech lending relationships for compliance with consumer protection laws and their impact on consumers’ financial well-being.
• To encourage consumer-beneficial innovation, regulators should support innovations in consumer credit underwriting designed to increase credit visibility, reduce bias, and prudently expand credit to underserved consumers.

Agricultural competition: A plan in support of fair and competitive markets

In May 2022, the USDA issued a report titled “Agricultural Competition: A Plan in Support of Fair and Competitive Markets.”  The report “lays out USDA’s approach to promoting competition in agricultural markets,” and is part of the USDA’s “broader initiative to enhance supply chain resiliency by supporting more and better markets across multiple components of the food system.”

The agriculture report contends that the “longstanding challenges of market concentration and unbalanced market power” in the agricultural sector have worsened in recent years, resulting in high levels of concentration in the U.S. poultry grower, pork packing, and cattle slaughter industries that “makes our food supply system . . . more vulnerable.”  The report outlines the agency’s “robust and aggressive plan” to decrease concentration and increase competition in the agriculture sector, with a focus on the following strategies:

• Investing in promoting competition in meat and poultry processing.  The report cites the Biden Administration’s efforts to expand meat and poultry processing capacity by improving access to capital through the Meat and Poultry Processing Expansion Program and the Meat and Poultry Intermediary Lending Program.  The programs invest in food safety capacity, workforce training, and other measures to ensure success for independent processors, as well as in local and regional food infrastructure options for producers and consumers. 

• Restoring confidence, fairness, and integrity to the regulation of livestock and poultry markets.  In partnership with DOJ and the FTC, the USDA is committed to robust antitrust enforcement to enhance food and agricultural supply chain resiliency.  The report cites DOJ’s efforts to prosecute price fixing in the poultry markets² as an example of the agency’s “determined and persistent approach to combatting . . . blatant violations.”  In addition, the FTC and DOJ established FarmerFairness.gov, billed as a “one-stop shop” portal for ranchers and farmers to provide complaints and tips related to unfair and anticompetitive practices.  The USDA is also developing new ways to use its authority under the Packers and Stockyards Act and Livestock Mandatory Reporting Act to address poultry contracting and tournaments, unfair practices, undue preferences, unjustly discriminatory practices, and deceptive practices as well as enhance transparency in cattle markets, respectively.

• Enabling farmers and ranchers to fairly access value-added markets.  The report commits USDA support to programs funding local and regional market development, building producer capacity to access those markets, and supporting regional coordination and collaboration to increase economic opportunities for local and regional farmers and ranchers, food businesses, and communities.4

The state of labor market competition

In March 2022 the Treasury Department issued a report on “The State of Labor Market Competition” to “summarize the prevalence and impact of uncompetitive firm behavior in labor markets . . . [and] the ways in which insufficient labor market competition hurts workers.”  The report posits that market power “may be inherent in the firm-worker relationship” and puts workers at an informational disadvantage relative to firms, limits worker ability to switch locations and occupations, and leads to decreased wages and weakened union power.  It also estimates—based on a “review of credible academic studies”—that the increase in market power for employers has led to a roughly 20 percent decrease in wages relative to the level in a fully competitive market.   

The report argues that there exists various types of “tacit collusion” in the labor market that may contribute to this power imbalance, such as wage-fixing, no-poach agreements, non-compete agreements, broad non-disclosure agreements, mandatory arbitration agreements, lack of pay transparency, and excessive occupational licensing requirements.  In addition, the report describes how “fissured” workplaces with high percentages of outsourced employees can have a detrimental impact on workers and reduce labor’s share of surplus by weakening employees’ bargaining power, and argues that this can lead to reduced wages for outsourced workers.  Relatedly, the report cites the “misclassification of workers” as a way that employers can offload the burdens of labor costs and continue to benefit from the productivity of workers who have little recourse.  The report also includes a section highlighting the effects of consolidation on the labor markets in select industries including healthcare, agriculture, and minor league baseball.   

The report outlines initiatives and policy proposals that it argues will bolster labor market competition and increase workers’ bargaining power.  These recommendations include the following:

• Proposed Legislation.  Passing legislation that would expand labor rights to more workers, raise the federal minimum wage, restrict the use of mandatory arbitration and class action waivers, and protect whistleblowers who report criminal antitrust violations from retaliation.

• Criminal antitrust enforcement.  Continuing DOJ prosecution of criminal collusion in labor markets as part of its overall mission to deter, detect, and prosecute cartels.

• Civil antitrust enforcement.  Updating guidance on protecting competition in the labor markets “particularly in areas where changes in the economy may have led some people to incorrectly interpret the agencies’ past guidance in ways that are insufficiently protective of workers’ access to robust, competitive labor markets.”  The report states that the agencies are working to revise their 2016 joint Antitrust Guidance for Human Resources Professionals to reflect “recent case experience and research that have shown that information-sharing, particularly in concentrated markets, may have potentially significant anticompetitive effects even when purportedly anonymized.”  In addition, the report states that the upcoming revised federal merger guidelines will “reflect lessons learned from multiple recent merger cases brought by the agencies that implicated the rights of workers.”

• Research and rulemaking.  Using the FTC’s rulemaking authority to address the overuse of non-compete clauses and other clauses that may limit worker mobility unfairly.

• Occupational licensing reform.  Funding studies designed to understand and to reduce the impacts of inefficient licensing requirements. 

• Administrative actions.  The report cites recent steps the Biden Administration has taken to decrease the level of concentration in labor markets, including issuing Executive Orders setting the minimum wage at $15 per hour for workers participating on or in connection with federal contracts and creating the Task Force on Worker Organizing and Empowerment to find ways that the executive branch agencies can use their existing authority to facilitate worker organizing and collective bargaining, and issuing a Department of Labor final rule placing reasonable limits on when an employer can take credit against its minimum wage obligations such as when a tipped employee performs non-tipped work.

State of competition within the Defense Industrial Base

In February 2022, the Office of the Under Secretary of Defense for Acquisition and Sustainment at the DOD issued a report on the State of Competition within the Defense Industrial Base.  The report reviews “the state of competition within the [DIB], including areas where a lack of competition may be of concern and any recommendations for improving the solicitation process.”

The DOD asserts that competition is critical to national and economic security because “having only single source or small number of sources for a defense need can pose mission risk and, particularly in cases where the existent dominant supplier or suppliers are influenced by an adversary nation, pose significant national security risks.”  With respect to the DIB, the report outlines a number of factors impacting competition, highlights what the DOB considers to be the potential effects of diminished competition, and makes the following recommendations to increase competition:

• Strengthening merger oversight.  The report analyzes what it describes as a the trend towards consolidation in the DIB due to vertical and horizontal integrations and the entry of private equity firms performing roll ups.  According to the report, consolidation “can reduce the availability of key supplies and equipment, diminish vendors’ incentives for innovation and performance in government contracts, and lead to supply chain vulnerabilities.”  The DOD intends to assess its approach to evaluating horizontal and vertical mergers with a focus on risk to national security.  It is also working with DOJ and FTC to examine the impact of consolidation on the functioning of the defense sector and to identify as well as to address potential impacts caused by anticompetitive risks that could result from a proposed transaction.

• Addressing intellectual property limitations.  The report discusses what it describes as “tension” the intellectual property (IP) statutory and regulatory framework creates between driving competition to create innovative technology and establishing a form of limited monopoly to commercialize that new technology.  Suggestions to alleviate this tension include ensuring that IP exclusive rights are considered in awarding contracts, and utilizing approaches that allow the government to limit the impact of restrictions on privately developed components.  

• Increasing new entrants and increasing opportunities for small businesses.  The report describes how efforts to push the DOD toward procuring commercial items has resulted in benefits to competition because commercial products and services are acquired on a competitive basis.  The reports advocates for the DOD to work to remove barriers to entry for new entrants to the DIB by increasing outreach and engagement with the defense industry, simplifying information on opportunities to do business with the DOD, and providing support to small businesses that seek to enter the defense marketplace.  The DOD is prioritizing improving award timelines for Phase 1 Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) programs to bring new entrants into the national security and technology industrial base as well as to enable awardees to mature more rapidly technologies that support mission requirements. 

• Implementing sector-specific supply chain resiliency plans.  The report outlines what DOD views as vulnerabilities in five critical focus areas: castings and forgings, missiles and munitions, energy storage and batteries, strategic and critical materials, and microelectronics, and discusses how workforce constraints and shortfalls in each of these sectors is a global manufacturing concern.

Competition in the markets for beer, wine, and spirits

In February 2022, the U.S. Department of the Treasury issued a report on Competition in the Market for Beer, Wine, and Spirits in response to a directive in the Executive Order that the Secretary of the Treasury, in consultation with the Attorney General and Chair of the FTC, probe threats to competition in this market.  According to the report, it is intended to be an assessment of “the current market structure and conditions of competition, including an assessment of any threats to competition and barriers to new entrants, including: (i) unlawful trade practices . . . such as certain exclusionary, discriminatory, or anticompetitive distribution practices, that hinder smaller and independent businesses or new entrants from distributing their products; (ii) patterns of consolidation in production, distribution, or retail beer, wine and spirits markets; and (iii)  any unnecessary trade practice regulations of matters such as bottle sizes, permitting, or labeling that may unnecessarily inhibit competition by increasing costs without serving any public health, informational, or tax purpose.”

The report identifies two major industry trends in the beer, wine, and spirits industries: the significant growth of small and “craft” producers, and increased consolidation at the distribution/retail levels.  The report alleges that this combination has led to exclusionary behavior by large producers, distributors, and retailers that includes paying “slotting fees” to gain access to preferential display space, engaging in tying arrangements that require a retailer to purchase a manufacturer’s undesired brands as a condition of buying its desired brands, and “category management,” whereby wholesalers or producers purportedly seek to influence retailers’ decisions with respect to purchasing, stocking, and display decisions. 

The report also contends that the enforcement of the Federal Alcohol Administration (FAA) Act’s competition provisions5— originally intended to address overconsumption of alcohol and problems with organized crime—do not fully address the exclusionary impact of some business practices and may impose unnecessary burdens on small firms and new market entrants.  The report argues that labeling preapproval requirements, bottle size restrictions, mandatory classification of beverages, and complex production permitting requirements “may impose a disproportionate burden on small and medium-sized producers without corresponding justifications based in public health or the prevention of anticompetitive behavior.”

The report recommends that DOJ and FTC undertake the following:

• Consider the effects on distribution stemming from major brewers acquiring craft brewers, and apply skepticism to claims of efficiencies in assessing mergers and in considering revisions to the merger guidelines;

• Look closely at vertical mergers that may lead to monopolization or exclusion of small firms or new entrants;

• In revising the merger guidelines, consider including guidance as to markets that are already highly concentrated;

• Engage with state actors on state laws impacting competition in the alcohol markets; and

• Consider conducting retrospectives on pricing, innovation, and distribution impacts from major brewers acquiring their craft counterparts.

In response to the report, in November 2022, the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued an advance notice of proposed rulemaking (NPRM) inviting comments on how to update trade practice regulations to:

• Clarify and/or modernize the categories of conduct that may result in exclusion or threaten retailer independence;

• Authorize more practices that would not result in exclusion or threaten retailer independence, including limits on those practices; and

• Take into account current marketplace realities, especially in light of the rise of digital marketing strategies. 

The NPRM also provides a list of other “topics of interest”⁵ on which the TTB is soliciting comment, including many topics enumerated in the February 2022 as areas of consideration for the agencies.  The comment period closed on March 9, 2023.

Comprehensive plan for addressing high drug prices: A report in response to the Executive Order on Competition in the American Economy

In September 2021, the U.S. Department of Health and Human Services (HHS) published a report intended to “present[] the principles for equitable drug pricing reform through competition, innovation, and transparency; describe[] promising legislative approaches; and summarize[] actions already underway or under consideration across HHS.”  The report posits that drug prices have increased significantly in the U.S. because of a number of factors stifling competition, including lack of new market entrants; incentives for list price inflation to increase rebates and fees; price hikes on single-source generics; research and development spending not focused on new treatments and cures; legal abuses including pay-for-delay, patent thickets, product hopping, and exploitation of Risk Evaluation and Mitigation Strategy (REMs) provisions, and “other monopolistic or oligopolistic behavior.” 

The report lays out three “guiding principles” for drug pricing reform:

• Supporting drug price negotiation with manufacturers and stopping unreasonable price increases to ensure access to drugs that can improve health for all Americans;

• Supporting market changes that strengthen supply chains, promote biosimilars and generics, and increase transparency; and

• Fostering scientific innovation by supporting public and private research and making sure that market incentives promote discovery of valuable and accessible new treatments, not market gaming.

The report supports “bold legislative action” to reform the American pharmaceutical market and reduce drug prices.  This includes legislation that would accomplish the following:

• Cap out-of-pocket costs and other reductions in cost-sharing for Medicare Part D beneficiaries and incentivize Part D plans to promote drugs that offer the most value at the lowest cost;

• Authorize HHS to negotiate Medicaid supplemental rebates on behalf of states that voluntarily choose to participate in such a program;

• Ban spread pricing (under which pharmacy benefit managers (PBMs) receive more for drugs than they pay the pharmacies that dispense them in Medicaid contracts);

• Allow states to apply the Medicaid Drug Rebate Program requirements to bundled drugs provided as part of outpatient hospital and physician services;

• Promote the development and availability of lower cost biosimilar and generic drugs;

• Promote the prompt approval of generic drugs and provide federal support for development of nonprofit generic drug manufacturers to increase availability of generic drugs;

• Encourage utilization of biosimilars and generics;

• Prohibit reverse patent settlements; and

• Increase the speed and flexibility of the review process for biosimilars and generics.

The report also describes administrative actions across HHS and other agencies to lower drug process and promote competition.  The report says that the Centers for Medicare & Medicaid Services (CMS) will continue to prioritize payment and service delivery models that test ways to reduce program and beneficiary spending on prescription drugs, support increased utilization of biosimilars and generic drugs, and lower overall spending while improving quality and beneficiary health.  CMS will also use information from two data collections to improve prescription drug price transparency. 

The report stresses that competitive markets for biological products, including biosimilars and interchangeable biosimilars, are essential for improving patient access to medicines and facilitating the reduction of health care costs.  HHS is exploring ways to provide greater flexibility regarding the data and information needed to support licensure of a proposed biosimilar or interchangeable biosimilar to expedite the development and approval process. 

The Food and Drug Administration (FDA) is executing the Drug Competition Action Plan whereby it will continue to clarify and improve the approval framework for generic drugs to make approval more transparent, efficient, and predictable.  The FDA intends to bring greater transparency to the generic drug review and approval process, and remove barriers to generic drug development and market entry.  The report also expresses support for the 340B Drug Pricing Program, which requires drug manufacturers participating in the Medicaid drug rebate program to provide outpatient drugs to eligible safety net providers at reduced prices. 

With respect to pharmaceutical patent settlements,  the report states that HHS will continue to support FTC “in its mission to ensure that any settlements do not infringe on competition and will remain vigilant to combat all forms of anticompetitive behavior by working with federal and state partners on enforcement.” 

FTC and DOJ responses to Executive Order mandates

DOJ and FTC publish revised merger guidelines

The Executive Order directed the DOJ and FTC to “review the horizontal and vertical merger guidelines and consider whether to revise those guidelines.”  On July 19, 2023, the FTC and DOJ released their 2023 Draft Merger Guidelines (the “2023 draft guidelines” or the “revised draft guidelines”).7  The publication of the 2023 draft guidelines marked the end of an 18-month process to memorialize the agencies’ strong preference for structural presumptions and the promotion of expansive and novel theories of merger enforcement that have recently faced significant pushback in court.  The revised guidelines make clear that the agencies see their mandate for merger review as moving away from “predict[ing] the future or the precise effects of a merger with certainty” and instead towards “assess[ing] the risk that the merger may lessen competition substantially or tend to create a monopoly based on the totality of the evidence available at the time of the investigation.”

The 2023 draft guidelines do not distinguish between horizontal and vertical mergers—a break from past practice when the agencies published separate guidance addressing horizontal and vertical mergers individually.  The agencies also note that the concerns raised in the guidelines can arise in mergers that are neither strictly horizontal or vertical. 

The White House released a statement following the publication of the revised draft guidelines, noting that they were “revised to reflect shifts in economic understanding and economic conditions” and “provide clarity around how the agencies are considering the competitive effects of mergers.” The statement highlights the revised guidelines’ focus on:

• Addressing mergers in concentrated industries.  The revised draft guidelines adopt a structural presumption that mergers resulting in a market Herfindahl-Hirschmann Index (HHI) of greater than 1,800 and a change in HHI greater than 100 points will cause undue concentration and may substantially lessen competition or tend to create a monopoly;

• Considering series of acquisitions by dominant firms.  The revised draft guidelines advise that “a firm that engages in an anticompetitive pattern of strategy of multiple small acquisitions in the same or related business lines” may be illegal, even if “no single acquisition on its own would risk substantially lessening competition or tending to create a monopoly.”  The revised draft guidelines outline how agencies consider acquisitions by a dominant firm of potential future competitors, and state that a firm will be considered to have a dominant position if it possesses at least 30 percent market share.

• Examining platform competition.  The revised draft guidelines address multi-sided platforms that do not fall into “horizontal” or “vertical” merger categories, and include specific metrics for evaluating mergers involving multi-sided platforms that considers competition between platforms, competition on a platform, and competition to displace a platform.

• Accounting for monopsony power, especially in labor markets.  The revised draft guidelines state that the agencies will consider whether a merger substantially lessens the competition for workers so that the reduction in labor market competition may lower wages or slow wage growth, or worsen benefits or working conditions.

The revised draft guidelines should be considered in conjunction with the proposed changes to the Hart-Scott-Rodino (HSR) notification requirements issued by the FTC and DOJ in June 2023. These changes could provide the agencies with additional information about proposed mergers that they may use to support the theories enumerated in the 2023 draft guidelines, but would also significantly raise the burden, cost and time for entities making HSR filings.  

FTC tests its “reinvigorated” mandate under Section 5 of the FTC Act

In November 2022, the FTC issued a Policy Statement outlining a significant expansion of its mandate to target “unfair methods of competition” under Section 5 of the FTC Act (Section 5).  In a concurrently published statement, FTC Chair Lina Khan explained that the agency intends to redefine its interpretation of its authority under Section 5 “to challenge a host of unlawful business practices,” authority that Chair Khan says the FTC has allowed to “lay dormant” in recent decades.  The Section 5 policy statement follows a provision in the Executive Order directing the FTC to “consider working with the rest of the Commission to exercise [its] statutory rulemaking authority, as appropriate and consistent with applicable law” to “address persistent and recurrent practices that inhibit competition[.]”  The Executive Order provides a list of areas for which such rulemaking could be applicable, including data collection, right-to-repair restrictions, generic drug agreements, occupational licensing, real estate listing practices, and “any other unfair industry-specific practices that substantially inhibit competition.” 

The policy statement explicitly states that “Section 5 reaches beyond the Sherman and Clayton Acts  to encompass various types of unfair conduct that tend to negatively affect competitive conditions,” and provides guidance as to how the agency intends to pursue such “standalone” unfair methods of competition claims under Section 5.  The statement reflects a dramatic expansion of the FTC’s understanding of its enforcement authority and discretion, with broad swaths of conduct previously not subject to scrutiny now in the FTC’s sights. Importantly, companies that do not have monopoly power or even market power are now within the scope of Section 5 investigations and enforcement actions.  The policy statement is incredibly expansive and potentially covers a broad array of industries and conduct. 

In a July 2023 article in the Oxford Journal of Antitrust Enforcement, Chair Khan called the Section 5 policy statement one of her “highest priorities,”8 and pushed back against criticism faulting the policy statement “for not neatly setting out a bounded list of prohibited practices.”  Chair Khan also outlined how the agency has committed to “faithfully administering” Section 5 of the FTC Act in the months since the statement was published, citing the FTC’s settling of two cases involving the use of noncompete clauses – one involving a security guard company and the other manufacturers in the glass container industry – as examples of the agency’s pursuit of “unfair methods of competition” under its expanded interpretation of Section 5.  In addition, Khan referenced the agency’s January 2023 Notice of Proposed Rulemaking to issue a rule generally prohibiting the use of noncompetes, which she said is “based on an extensive review of empirical research and a voluminous record of public comments . . .”

Other Executive Order Initiatives and Agency Responses

The Executive Order has spawned additional focused, industry-specific initiatives undertaken by various federal agencies to promote competition.  These initiatives are summarized below:

Agriculture

• In July 2023 the USDA launched a partnership with bipartisan attorneys general in 31 states and the District of Columbia “to enhance competition and protect consumers in food and agricultural markets, including in grocery, meat, and poultry processing, and other markets.”  The partnership is intended to assist the attorneys generals with tackling allegedly anticompetitive market structures in agriculture and related industries.  The partnership will focus on lack of choices for consumers and producers and conflicts of interest, misuse of intellectual property, and anticompetitive barriers across the food and agricultural supply chains.

• In June 2023 the USDA announced that it was making investments to increase independent meat and poultry processing capacity to “expand market opportunities for farmers and support a growing workforce in rural areas.”  The investments include 15 awards totaling $115 million in 17 states. 

• In March 2023 the USDA announced $89 million in grants under the Meat and Poultry Intermediary Lending Program to “increase available financing for independent processor, alleviate bottlenecks, and create opportunities for small businesses and entrepreneurs in rural communities.”

• In February 2023 DOJ filed a statement of interest in support of plaintiffs in an antitrust lawsuit being filed by a class of farmers against a leading farm-equipment maker alleging that the defendant’s policies on the repairing of its equipment violates the Sherman Act.

• In January 2023 the USDA Economic Research Service published A Disaggregated View of Market Concentration in the Food Retail Industry.  The report analyzed the extent to which market shares in the food retail sector are concentrated between firms of the retail food sector at the national, State, Metropolitan Statistical Area (MSA) and county levels in the U.S. from 1990-2019.  The report found (1) significant increases in food retailing market concentration measured by the Herfindahl-Hirschman index (HHI) in the U.S. over the last three decades; and (2) food retailing market concentration at the county level is considerably higher than at the national, State and MSA levels. 

• In November 2022 the USDA announced an investment of $73 million in 21 grant projects through the first round of the Meat and Poultry Processing Expansion Program. The investment is intended to expand meat and poultry processing capacity, increase competition, support producer income, and strengthen the food supply chain to lower costs for consumers and create jobs in rural areas. Secretary Vilsack touted the investment as an effort to “deliver on President Biden’s call to increase competition across the economy to help lower costs for American families.”

• In September 2022 President Biden announced two USDA initiatives to support fair and competitive meat and poultry markets: (1) publishing the proposed Inclusive Competition and Market Integrity Rules Under the Packers and Stockyards Act to protect farmers and ranchers from abuse, and (2) a new $15 million Agricultural Competition Challenge to ramp up collaboration with the State Attorneys General (AG) on enforcement of the competition laws, such as the laws against price-fixing.

• In June 2022 the USDA issued a notice of proposed rulemaking seeking comments to inform policy developments regarding the use of poultry grower ranking systems (tournaments) in contract poultry production.  Comments are due on 6 September 2022. 

• In May 2022 the USDA announced (1) a proposed rule under the Packers and Stockyards Act that would require poultry processors to provide key information to poultry growers at several critical steps—increasing transparency and accountability in the poultry growing system; (2) that it is making available $200 million under the new Meat and Poultry Intermediary Lending Program; and (3) that it will provide $25 million⁸ in investments for workforce training programs for meat and poultry processing workers targeted through new and existing National Institute of Food Agriculture (NIFA) programs designed to create and expand upon good paying jobs that can strengthen the meatpacking industry by attracting and retaining employees. 

• In March 2022 the USDA issued a request for comment and information on the effect of retail concentration and retailers’ practices on the conditions of competition in the food industries.

• In February 2022 DOJ and USDA launched farmerfairness.gov, an online tool allowing farmers and ranchers to report anonymously potentially unfair and anticompetitive practices in the livestock and poultry sectors.

• In January 2022 the White House announced an Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain. The plan pledged to dedicate $1 billion in America Rescue Plan funds for the expansion of independent meat processing capacity in order to: (1) expand independent processing capacity; (2) support workers and the independent processor industry; (3) increase transparency in cattle markets so that ranchers can get a fair price for their work; and (4) strengthen the rules that protect farmers, ranchers, and consumers.

• In January 2022 DOJ and USDA released a statement of principles and commitments to “protect against unfair and anticompetitive practices” in the agriculture sector.

Communications

• In January 2023 an FCC final rule went into effect requiring broadband internet service providers to display, at the point of sale, a broadband consumer label containing “critical information about the provider’s service offerings, including information about pricing, introductory rates, data allowances, performance metrics, and whether the provider participates in the Affordable Connectivity Program (ACP).”  

• In July 2022 the FCC voted to create a new Enhanced Competition Incentive Program (ECIP) to establish incentives for wireless licensees “to make underutilized spectrum available to small carriers, Tribal Nations, and entities serving rural areas.” 

• In April 2022 the National Telecommunications and Information Administration (NTIA) issued a request for comment on competition in the mobile application ecosystem. 

• In February 2022 the FCC announced that, to “crack down on practices that prevent competition and effectively block a consumer’s ability to get lower prices or higher quality services,” it had adopted rules to prohibit broadband providers from entering into certain revenue sharing agreements with a building owner that keep competitive providers out of buildings.

• In August 2021 the Federal Communications Commission (FCC) announced two new Innovation Zones for Program Experimental Licenses in designated areas in Raleigh North Carolina and Boston, Massachusetts to “advance ongoing work to develop Open RAN . . .” in order to increase “competition and security in network equipment for 5G service and beyond . . . [and] turn up the innovation and supercharge competition and vendor diversity in the 5G supply chain.”

Consumer finance

• In a June 2023 speech at the Brookings Institute, AAG Kanter said that the Division is reassessing whether the factual and economic assumptions underlying the 1995 Bank Merger Guidelines are “adequate to measure and assess the many different dimensions of competition that exist today.”  Kanter explained that the Division is modernizing its approach to investigating and reporting on the full range of competitive factors involved in a bank merger, including consideration of concentration levels across a wide range of appropriate metrics and not just local deposits and branch overlaps.  The Division will also consider other competitive factors including fees, interest rates, branch locations, product variety, network effects, interoperability and customer service.  Two areas of particular interest to the Division in its analysis of bank mergers are coordinated effects and multi-market contacts (the extent to which a transaction threatens to entrench power of the most dominant banks by excluding existing or potential disruptive threats or rivals) as well as how a proposed merger may affect competition for different customer segments. 

• In April 2023 the CFPB published a Policy Statement on Abusive Acts and Practices to summarize the actions taken by government enforcers and supervisory agencies to condemn “abusive acts or practices” prohibited under Section 1031 of the Dodd-Frank Act.  The Executive Order on Competition directed the CFPB to “enforce prohibition on unfair, deceptive, or abusive acts or practices in consumer financial products or services pursuant to section 1031 of the Dodd-Frank Act to prevent actors from distorting the proper functioning of the competitive process or obtaining an unfair advantage over competitors.”

• In April 2023 the CFPB issued a Final Report of the Small Business Review Panel on the CFPB’s Proposals and Alternatives Under Consideration for the Required Rulemaking on Personal Financial Data Rights.  The report says that providing data access rights to consumers has the potential to intensify competition in consumer finance by “enabling improvements to existing products and services, by fostering competition for existing products and services, and by enabling the development of new types of products and services.”  The Executive Order on Competition directed the CFPB to undertake rulemaking under section 1033 of the Dodd Frank Act to facilitate portability of consumer financial transaction data to allow consumers to more easily switch financial institutions and use innovative financial products. 

• In February 2023 the CFPB published a summary of key findings from the responses to its May 2022 voluntary information request sent to the nation’s biggest credit card companies, asking them to explain their practices around suppressing actual payment information from the nationwide consumer reporting system.  The summary states that “responses suggested companies withheld information in an attempt to make it harder for competitors to offer their more profitable and less risky customers better rates, products, or services.” 

• In February 2023 the CFBP proposed a rule to curb excessive credit card late fees to prevent companies from “exploit[ing] a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee.”  CFPB Director Rohit Chopra said the proposed rule “seeks to save families billions of dollars and ensure the credit card market is fair and competitive.”

• In October 2022 the CFPB announced that it is in the process of writing regulations to implement section 1033 of the Dodd-Frank Act, and released an Outline of Proposals and Alternatives Under Consideration with respect to its rulemaking on personal financial data rights. 

• In October 2022 the CFPB issued guidance on two “unanticipated overdraft fee assessment practices” that it considers to be likely unfair and unlawful under existing law: surprise overdraft fees and the practice of indiscriminately charging depositor fees to every person who deposits a check that bounces.  The guidance states that “economic research suggests that shifting the cost of products from front-end prices to back-end fees risks harming competition by making it more difficult to compete on transparent front-end fees and reduces the portion of the overall cost that is subject to competitive price shopping.”

• In May 2022 the Consumer Financial Protection Bureau (CFPB) announced the establishment of an Office of Competition and Innovation to "support a broader initiative by the CFPB to analyze obstacles to open markets, better understand how big players are squeezing out smaller players, host incubation events, and, in general, make it easier for people to switch financial providers."

• In a May 2022 speech at the Brookings Institute, the acting head of OCC announced that he had asked his staff to work with DOJ and other federal banking agencies to review the agency's frameworks to analyze bank mergers.  In the meantime OCC will review merger applications on a case-by-case basis and will only approve applications that promote competition and financial stability and cater to communities who rely on banking. 

• In March 2022 the FDIC published a Request for Information in the Federal Register seeking information and comments regarding the laws, practices, rules, regulations, guidance, and statements of policy that apply to merger transactions involving one or more insured depository institutions, including the merger between an insured depository institution and a noninsured institution. 

• In December 2021 DOJ (in consultation with the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC)) announced that it was seeking additional10 public comments on whether and how the Division should revise the 1995 Bank Merger Competitive Review Guidelines, “focuse[d] on whether bank merger review is currently sufficient to prevent harmful mergers and whether it accounts for the full range of competitive factors appropriate under the laws.” The comment period closed on 15 February 2022 and comments are published on the DOJ website.

Health care

• In February 2023 DOJ announced that it is withdrawing from certain policy statements related to antitrust enforcement in health care.  Specifically, DOJ is withdrawing “safe harbors” for health care provider mergers, joint ventures, and joint purchasing agreements, as well as guidance regarding health care information exchanges and accountable care organizations.  With respect to DOJ’s guidance on information exchanges, while the policy statement at issue is focused on the health care industry, the decision to withdraw from this policy has impacts beyond health care, since antitrust practitioners have relied upon the guidance in other industries as well.

• In January 2023 the USPTO and Department of Commerce held a joint listening session to see public comments on “proposed initiatives for collaboration between the agencies to advance President Bident’s Executive Order on Promoting Competition in the American Economy and to promote greater access to medicines for American families.”  The agencies stated their commitment to “encouraging meaningful innovation in drug development while supporting a competitive marketplace that can promote greater access to medicines for American families.”  The comment period following the listening session closed on February 6, 2023.

• In December 2022 DOJ and the Inspector General of HHS announced that the agencies had signed a memorandum of understanding (MOU) “to strengthen the Agencies’ partnership through greater coordination in information sharing, investigations and enforcement activities, trainings, education, and outreach” in order to “enable both [agencies] to better protect health care consumers and workers from collusion, ensure compliance with laws enforced by OIG and the Antitrust Division, and promote competitive health care markets.” 

• In August 2022 the FDA issued a final rule to improve access to hearing aids, establishing a new category of over-the-counter (OTC) hearing aids and allowing consumers to purchase hearing aids directly from stores or online retailers without the need for a medical exam.  The rule is designed to “assure the safety and effectiveness of OTC hearing aids, while fostering innovation and competition in the hearing aid technology marketplace.”

• In July 2022 the Director of the USPTO, Katherine Vidal, published a Notice in the Federal Register citing the Executive Order and stating that the “duty of candor and good faith in dealing with the [USPTO] includes the duty to disclose to the USPTO information material to the patentability of a claimed invention . . . including . . . statements made to the USPTO that are inconsistent with statement submitted to the FDA and other governmental agencies.” 

• In July 2022 letter to the FDA, the USPTO outlined a series of joint initiatives to ensure that the patent system promotes research and development and protects key innovation in the manufacture and development of pharmaceuticals.  According to a July 6, 2022 joint blog post, the letter highlights initiatives that the agencies believe will “protect against the patenting of incremental, obvious changes to existing drugs that do not qualify for patents . . .  and [can] lead to lower drug prices because drug companies will not be able to unjustifiably delay generic competition on trivial changes to a drug product.” 

• In April 2022 the Centers for Medicare & Medicaid Services (CMS) released public data and an analysis of mergers, acquisitions, consolidations, and changes of ownership from 2016-2022 for hospitals and nursing homes enrolled in Medicare to inform policymaking to bolster competition in health care.

• In September 2021 the FDA sent a letter to the USPTO “in the hope of further developing the [FDA]’s engagement with the [USPTO].  The letter advocates for prioritizing “[b]ringing more drug competition to the market and addressing the high cost of medicines by improving access to affordable medicine,” and commits to “incentivizing innovation and fostering competition by approving high-quality, affordable, safe, and effective therapies including generic drugs and biosimilar and interchangeable biological products.”

Labor

• In February 2023 the US Department of Labor announced the publication of an interim final rule for handling criminal antitrust anti-retaliation complaints under the Criminal Antitrust Anti-Retaliation Act.  The rule would protect whistleblowers from retaliation for reporting potentially criminal antitrust violations, including “providing information to an employer or the federal government relating to price fixing, bid rigging or market allocation schemes between competitors, or information relating to violations of other criminal laws committed in conjunction with potential violations of the criminal antitrust laws or in conjunction with a Justice Department investigation of potential violations of those laws.”

• In January 2023 the FTC released a Notice of Proposed Rulemaking (NPRM) for the Non-Compete Clause Rule. The proposed rule, if adopted, would effectively ban the use of non-competes with employees by making the use of such non-competes a violation of FTC Act Section 5. The proposed rule would also invalidate existing employee non-competes and require employers to inform employees that those non-competes are void.  The non-compete NPRM follows a directive in the Executive Order that the FTC exercise its “statutory rulemaking authority under the Federal Trade Commission Act to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” The comment period closed on April 19, 2023. 

• In July 2022 the DOJ and the NLRB signed a MOU “to strengthen the partnership between the two agencies to better protect competitive labor markets and ensure that workers are able to freely exercise their rights under the labor laws.” 

• In July 2022 the FTC announced that it had signed an MOU with the National Labor Relations Board (NLRB) outlining “ways in which the Commission and the Board will work together moving forward on key issues such as labor market concentration, one-sided contract terms, and labor developments in the ‘gig economy.’ ”

• In July 2022 Secretary of Labor Marty Walsh published a blog outlining the steps the DOL has taken in the last year to eliminate anti-competitive employer practices, and committed to continuing to “working to empower and protect workers under President Biden’s Executive Order.”

• In March 2022 DOJ and U.S. Department of Labor (DOL) signed an MOU “to strengthen the partnership between the two agencies to protect workers from employer collusion, ensure compliance with the labor laws and promote competitive labor markets and worker mobility.”

Right to repair

• In July 2021 the FTC issued a Policy Statement on Repair Restrictions Imposed by Manufacturers and Sellers aimed at “manufacturers’ practices that make it extremely difficult for purchasers to repair their products or shop around for other service providers to do it for them.”  The policy statement is an effort to restore the right to repair “[b]y enforcing against restrictions that violate antitrust or consumer protection laws.”

Shipping

• On 28 February 2022 the FMC and DOJ announced a joint initiative to promote competition in the ocean freight transportation system. 

• In July 2021 the Federal Maritime Commission (FMC) and DOJ signed a Memorandum of Understanding to “foster cooperation and communication between the agencies to enhance competition in the maritime industry.” 

Standard-essential patents

• In June 2022 the USPTO, NIST and DOJ announced the withdrawal of the 2019 Policy Statement on Remedies for SEPs Subject to Voluntary F/RAND Commitments. 

• In December 2021 USPTO and National Institute of Standards and Technology (NIST) issued a Request for Public Comment on a new draft policy statement concerning licensing negotiations and remedies for standards-essential patents (SEPs).  The public comments are available on regulations.gov.

Transportation

• In January 2023 the Department of Transportation announced that it had hired Jen Howard as the agency’s Chief Competition Officer. Howard previously served as FTC Chair Lina Khan’s Chief of Staff. 

• In October 2022 the Department of Transportation issued an NPRM that would require U.S. air carriers, foreign air carriers, and ticket agents to clearly disclose passenger-specific or itinerary-specific baggage fees, change fees, and cancellation fees to consumers whenever fare and schedule information is provided to consumers for flights to, within, and from the United States.  The comment period for this NPRM closed on January 23, 2023. 

• In July 2022 U.S. Department of Transportation’s Federal Aviation Administration (FAA) announced that it will award $1 billion from President Biden’s Bipartisan Infrastructure Law funding to 85 airports across the country to “expand capacity at our nation’s airport terminals, increase energy efficiency, promote competition and provide greater accessibility for individuals with disabilities.” 

• In March 2022 the Surface Transportation Board (STB) held a public hearing concerning proposed reciprocal switching regulations, which it contends “can give rail customers captive to a single carrier the opportunity to seek service from a competing carrier.” 

Outstanding Executive Order Directives

A handful of agencies have not yet taken public action to address the competition-related mandates in the Executive Order directed at their organizations.  Outstanding mandates include, but are not limited to the following:

Department of Defense

• Submit a report to the Chair of the White House Competition Council on a plan for avoiding contract terms in procurement agreements that make it challenging or impossible for the Department of Defense or service members to repair their own equipment, particularly in the field.

Department of Transportation

• Department of Transportation (DOT) to consult with the Attorney General regarding means of enhancing effective coordination between the DOJ and the DOT to ensure competition in air transportation and the ability of new entrants to gain access.

Surface Transportation Board

Consider rulemakings pertaining to matters of competitive access, including bottle neck rates, interchange commitments, or other matters.

Authored by Logan Breed, Chuck Loughlin, Edith Ramirez, Eric Sega, and Jill Ottenberg.

References

1. White House, “FACT SHEET: Executive Order on Promoting Competition in the American Economy” (July 9, 2021) available here. 

2 While the Executive Order contains directives related to both consumer protection and competition/antitrust concerns, this article will focus primarily on the latter.   

3 In July 2022 DOJ suffered a protracted, high-profile loss in its prosecution of multiple former and current executives from Pilgrim’s Pride Corp. and Claxton Poultry Farm for allegedly engaging in a scheme to rig bids for chicken sold to restaurant chains and grocery stores.  Following two mistrials, a Denver federal jury found the five chicken industry executives not guilty of price-fixing charges.  In the fall of 2022 DOJ dismissed it antitrust case against four remaining Pilgrim’s Pride executives.  In addition, in September 2022 DOJ voluntarily dropped charges it had brought against Koch Foods and Claxton Poultry Farms for alleged price-fixing in the poultry business.    

4 These programs include the Local Agricultural Marketing Program, Dairy Business Innovation Initiatives, and Specialty Crop Block Grant Program.

5 27 U.S.C. § 205(a)-(d).

6 Topics include, but are not limited to: category management, shelf plans, slotting allowances (slotting fee) arrangements), tied house regulations, point of sale advertising, consignment sales payment terms safe harbor, private label arrangements, activities which result in exclusion or place retailer independence at risk, third party contracts, and sales competitions.

7 For additional analysis of the 2023 Draft Merger Guidelines, see Hogan Lovells, “FTC and DOJ publish long-awaited draft of proposed merger guidelines,” (July 24, 2023) available here.

8 Khan, Lina, “Section 5 in action: reinvigorating the FTC Act and the rule of law,” Journal of Antitrust Enforcement, Oxford University Press (July 3, 2023) available here.

9 Taken from American Rescue Plan Act Section 1001 funds.

10  DOJ first announced that it was seeking public comments on the Bank Merger Guidelines on 1 September 2020.  The original request for public comment included the following questions: (1) whether any new guidance should be bank-specific; (2) whether any new bank merger guidance should be jointly issued; (3) whether the 1800/200 Herfindahl-Hirschman Index (HHI) screen should be updated, and (4) whether there should be a de minimis exception. Building on the responses, the updated call for comment.