In the latest sign that Americans will no longer tolerate the outsized power of Big Business, on July 9th, President Biden signed a sweeping Executive Order aimed at undoing concentrated corporate control and ending decades of consolidation throughout our economy. The order includes 72 initiatives that direct cabinet-level departments in the Executive Branch and encourage independent agencies such as the Federal Trade Commission to identify and root out “overconcentration, monopolization and unfair competition” in the industries they oversee.
In a speech announcing the order, Biden repudiated 40 years of antitrust policy that favored bigness and overlooked the harm monopoly power can inflict on workers, small businesses, and the competitive process. “We’re now 40 years into the experiment of letting giant corporations accumulate more and more power. And what have we gotten from it? Less growth, weakened investment, fewer small businesses. Too many Americans who feel left behind. Too many people who are poorer than their parents,” he said.
Because the Executive Branch oversees a multitude of U.S. industries including health care, transportation, agriculture, and telecommunications, the order and the directives it contains represents one of the most significant shifts in U.S. competition policy in the past half-century.
The order includes many provisions that reflect ILSR’s long-standing work and priorities.Here are a few highlights:
- Big Tech — The order takes aim at the massive tech platforms like Amazon that act as gatekeepers for so much of the U.S. economy. It asks the FTC to consider new rules to address unfair competition and anti-competitive data collection practices by these dominant online platforms. Should the FTC pursue rulemaking in this area, it would help third-party sellers that rely on Amazon’s monopoly marketplace to reach customers. The FTC could, for example, ban Amazon from stealing data from third-party sellers to make copycat products or impose limits on Amazon’s ability to extract large and growing fees from sellers.
- Mergers — The order recommends that the FTC and the Justice Department consider updating their merger guidelines. The current merger guidelines — there’s one set for horizontal mergers, which involve direct competitors, and one for vertical mergers, which involve two companies at different levels in the supply chain — are very permissive and have led the agencies to challenge only a tiny fraction of mergers. The FTC and Justice Department jointly announced they would begin reviewing the guidelines soon.
- Procurement — The order urges all federal agencies to review their procurement practices and other spending to help support the competitiveness of small businesses and businesses with strong labor practices. ILSR has long developed and promoted procurement policies that prioritize independent small businesses. We have also detailed how the federal government has allowed Amazon to bully its way into the federal procurement system, cutting out small and local businesses that had traditionally served government agencies.
- Buyer Power — The order calls on the Department of Agriculture (USDA) to work with the FTC to conduct a study on how the concentrated market power of big food retailers has hurt the industry. As we’ve detailed, Walmart today controls half or more of grocery sales in 43 big cities and 180 smaller communities. Walmart’s dominance gives it the power to dictate prices and terms to suppliers. To meet Walmart demands for bigger discounts, suppliers often raise prices to independent grocery stores, weakening these small businesses and shifting even more market share to Walmart. The 1936 Robinson-Patman Act was intended to stop powerful retailers from forcing their suppliers, including farmers and growers, into onerous terms that discriminated against their smaller retail rivals. But the Act has been more or less a dead letter in U.S. antitrust law enforcement for decades. The USDA’s study could open the way for the FTC to resurrect the law and once again take buyer power seriously, to the benefit of small retailers.
- Big Ag — The order also calls on the Secretary of Agriculture to create rules to strengthen the department’s antitrust and unfair practices authority under the Packers and Stockyards Act. As we’ve documented, the beef, pork and poultry industries are each dominated by just a few, powerful meatpackers that underpay and otherwise harm small farmers, while raising prices to smaller grocers and other independent retailers.These new rules will be aimed at “practices in the livestock, meat, and poultry industries that are unfair, unjustly discriminatory, or deceptive,” the order says, responding to practices that have allowed powerful meat companies to cut pay to small family farmers and put their businesses at grave risk.
- Local Food Systems —The order directs the USDA to “support value-added agriculture and alternative food distribution systems.” The agency followed up by announcing $500 million in investment in local and regional slaughterhouses and related facilities.
- Big Beer — Corporate concentration in the beer industry will also come under the microscope of the Treasury Department and the antitrust agencies under Biden’s order. It calls on those agencies to examine and report on the structure of the beer market — where, as we’ve reported, two dominant brewers exert control over how and where beer is distributed nationally. This is good news for smaller, independent brewers who have seen their products struggle to reach a broader market under the dominance of Anheuser-Busch and Molson Coors.
- And More — Additional provisions in the order reflect other long-standing priorities of ILSR’s, including tackling broadband monopolies, halting bank consolidation, eradicating anti-competitive abuses in the pharmacy sector, and instituting right-to-repair measures.
While the order is a significant step toward breaking the decades-long rise of concentrated corporate power, the hard work is just beginning. The Executive Branch departments and independent agencies need to move swiftly and decisively to fully realize the potential of this order to combat concentration and spur vibrant industries and communities. Here at ILSR, we will be watching closely and reporting on their progress.
Photo Credit: Platformer
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