President Joe Biden Seeks New Scrutiny On Mergers, Increased Antitrust Enforcement: What You Need To Know

U.S. President Joe Biden is signing an executive order on Friday designed to reshape the federal response to corporate mergers and acquisitions, with a particular emphasis on the technology and financial services industries.

Why It Is Happening: According to a White House statement titled "Fact Sheet: Executive Order on Promoting Competition in the American Economy," corporate consolidation is responsible for higher consumer prices — particularly on internet service, prescription drugs and hearing aids — while domination in certain industries is held by a handful of companies.

"In over 75% of U.S. industries, a smaller number of large companies now control more of the business than they did twenty years ago," the statement said. "This is true across healthcare, financial services, agriculture and more."

With this executive order, the Biden administration claims it will be able to "promote competition in the American economy, which will lower prices for families, increase wages for workers, and promote innovation and even faster economic growth."

What It Entails: The executive order covers 72 actions and recommendations, including a call for the U.S. Department of Justice and the Federal Trade Commission (FTC) "to enforce the antitrust laws vigorously and recognizes that the law allows them to challenge prior bad mergers that past Administrations did not previously challenge."

The administration took special aim at big tech with a new policy of "greater scrutiny of mergers, especially by dominant internet platforms, with particular attention to the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by ‘free' products, and the effect on user privacy."

It also recommended that the FTC establish rules on surveillance and the accumulation of data and establish rules "barring unfair methods of competition on internet marketplaces."

With the financial services industry, the White House called on the banking regulators — the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency — to update their guidelines on banking mergers "to provide more robust scrutiny of mergers" while asking the Consumer Financial Protection Bureau to allow customers to "download their banking data and take it with them" — although where they are taking the data was not specified.

The executive order also directs the U.S. Food and Drug Administration to work with states and American Indian tribal nations to "safely import prescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003," while directing the U.S. Department of Health and Human Services Administration to "increase support for generic and biosimilar drugs."

Furthermore, the executive order "encourages" the Federal Communications Commission to restore the net neutrality rules "undone by the previous administration" and directs the U.S. Department of Transportation to "consider issuing clear rules requiring the refund of fees when baggage is delayed or when service isn't actually provided — like when the plane's WiFi or in-flight entertainment system is broken."

What Could Happen: "Once implemented, these initiatives will result in concrete improvements to people's lives," the White House statement said.

However, a presidential executive order is not a law and can easily be undone with a change of administration, as witnessed in the first days of the Biden administration when many of the Trump administration executive orders were voided.

Any permanent policy change would require an act of the U.S. Congress, which at the moment seems unlikely given the 50-50 divide in the Senate and the razor-thin Democratic majority in the House of Representatives.

Also, the language of the executive order uses words like "encourages," which offers an affirmation that the White House lacks the authority to force a regulatory agency to switch policies at the president's directive. Thus, while the White House statement "encourages the FTC to ban or limit non-compete agreements," there is no guarantee the FTC will follow this advice — or that the FTC under a successor administration of a different political ideology will reverse the policy if the commission follows Biden's directive.

(Photo: Gage Skidmore / Flickr Creative Commons.)

Posted In: bankingbig techcompetitionExecutive OrderFTCMergerspolicy changesPresident Joe BidenGovernmentM&ANewsRegulationsFederal Reserve

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