The President’s Competition Ordinance – One Week Later | Cadwalader, Wickersham & Taft LLP
On July 9, 2021, President Biden issued an “Executive Order on Promoting Competition in the United States Economy” (the “Executive Order”). The ordinance responds to what the president calls a “failed experiment” in lax enforcement of antitrust laws which he says has led to an undue concentration of businesses across the economy. It seems that the analytically fuzzy era of “big is bad” may return to Washington. In the first week after the order was issued, federal antitrust law enforcement agencies began to actively prepare for new enforcement initiatives and far-reaching changes in antitrust review standards. .
The College calls for a wide range of industry sectors that the president says deserve special consideration. These include:
- Airlines companies
- Alcoholic beverages
- Banking, consumer credit and financial services
- Health care, including
- Hearing aids
- Prescription drugs
- Insurance, including health insurance
- Internet services
- Sea shipping
- Rail transport
- Technological platforms – Big Tech
In addition to industrial sectors, the president calls for increased antitrust control of:
- Labor markets, including no-poaching and non-compete agreements as well as unnecessary licensing restrictions
- Tightening of Justice Department and Federal Trade Commission merger guidelines to block more proposed mergers
In this article, we attempt to place the ordinance in the context of recent actions by enforcement agencies and examine how the ordinance has already been implemented in its first week.
A political trend
The presidential decree promoting competition policy is part of a trend towards so-called “progressive” antitrust standards that began even before the last election but has accelerated considerably in recent weeks. For example, Rebecca Slaughter, then FTC’s Democratic Minority Commissioner, essentially called for a moratorium on drug mergers over a year ago: “[T]The Commission should examine more broadly whether any the pharmaceutical merger is likely to exacerbate the anti-competitive behavior of the merged company or to hamper innovation. Dissenting Statement by Commissioner Rebecca Kelly Slaughter In the Matter of Bristol-Myers Squibb and Celgene Commission File No. 191-0061, Federal Trade Commission (November 15, 2019) (emphasis added). More recently, in May 2021, Commissioner’s Slaughter (then Acting Chairman) and Chopra deprived the Board of the benefit of a staff-negotiated divestiture order due to endless requests for information from parties to a proposed merger although after the proposed order has been negotiated. See CWT Clients & Friends Memo, “7-Eleven / Speedway: Obstacles on the Road to Closure: Are Conventional Closure Conditions Sufficient to Protect Buyers’ Interests? (May 17, 2021). Congress also took over and, under the leadership of Senator Amy Klobuchar and Representative David Cicillin, introduced legislation in the Senate and House to revise the country’s antitrust laws and significantly increase FTC budgets. and the DOJ Antitrust Division. The House Representative Cicillin’s antitrust subcommittee, in particular, released a detailed and scathing report on the state of the alleged monopolization of technology platforms and proposed five separate bills targeting and cracking down on Big Tech. The staff architect of this report and the proposed legislation was Lina Khan, who was confirmed last month as FTC chairperson. After a quick start, the newly formed FTC majority under President Kahn’s leadership began to repeal decades of economics-based antitrust analyzes focused on protecting consumer price increases known as the “standard of”. consumer welfare ”in favor of a country still poorly defined populist standard aimed at avoiding increases in business concentration.
Against this background, the presidential decree coordinated the efforts of more than a dozen federal agencies to focus on enforcement.
Implementation has started
Although both houses of Congress are currently deliberating on proposals to revise the country’s antitrust laws, and even though cases are already pending against several large tech companies, the president has decided to implement significant changes proposed by executive order. Executing agencies are already gaining momentum.
For example, on the day the order was issued, Acting Antitrust Division Chief Richard Powers and FTC Chairman Khan issued a joint statement questioning whether the merger guidelines have turned out to be “too much. permissive ”and swearing to bring them into line with“ current economic realities ”. without explaining what these “realities” are. Statement by FTC President Lina Khan and Acting Deputy Antitrust Attorney General Richard A. Powers on Competition Executive Order’s Call to Consider Revisions to Merger Guidelines (July 9, 2021). Likewise, on July 12, 2021, the DOJ and the Federal Maritime Commission issued a Memorandum of Understanding (“MOU”) to enforce antitrust laws in the shipping container industry. Memorandum of Understanding Between the Federal Maritime Commission and the Antitrust Division of the Department of Justice Regarding Cooperation in Promoting Competitive Conditions in the US International Shipping Industry. At the FTC, the Commission has stated its intention to consider reinstating a dropped requirement (as too onerous) in merger cases that respondents to consent orders may be required to seek “pre-approval” from the Commission for possible future acquisitions within five years of the conclusion of a decree on consent. See “Policy Statement on Pre-Approval and Notice Provisions in Merger Cases”, Federal Trade Commission (July 12, 2021). While at the Department of Justice, the Antitrust Division plans to initiate more contracting cases next year at a time when the Division is already “historically busy” with criminal investigations and prosecutions. criminal agreements. (Notes from an antitrust conference.) According to some sources, 72 separate interagency competitiveness initiatives were already underway on the day the order was issued, and more appear to be emerging every day.
We expect that the Presidential Decree on Competitiveness will not be mere bluster. Rather, it takes place against a backdrop of a marked shift in antitrust law enforcement towards the current emphasis on progressive antitrust at the level of federal and state agencies, Congress, and antitrust enforcement regimes. foreigners, especially the European Union. For the industries identified specifically in the Decree, we expect increased activity of coordinated agency surveys in these sectors. So, for example, the Antitrust Division may partner with various financial services / consumer watchdogs to investigate banks and other financial services companies, just as it has entered into a Memorandum of Understanding with the Federal Maritime Commission. to facilitate investigations into the maritime industry.
Targeted industries should take into account their current state of preparedness for competition-related investigations. Preparation may include performing an antitrust stress test and reviewing or strengthening current antitrust compliance programs. Companies in many industries, especially industries that have not been the subject of repetitive law enforcement investigations, consider the risk of antitrust enforcement to be relatively low. For industries specifically targeted in the Decree, however, we recommend reconsidering the risk. Here we recall a quote from author Stephen King: “There is nothing wrong with hoping for the best as long as you are prepared for the worst. “