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To Crack Open Monopolies, Biden Flexes Executive Authority

The president signed an executive order Friday that calls for regulatory investigations into a swath of industries from health care to technology where competition is slim.

WASHINGTON (CN) — Promising that more protections for American workers will benefit consumers as well, President Joe Biden signed a sweeping executive order Friday aimed at shaking up big tech, health care, transportation and more.

“If companies want to win your business, they have to go out and up their game… competition keeps the economy moving and growing,” Biden said during a signing ceremony at the White House this afternoon. “Competitive economy means companies must do everything they do to compete for workers.”

Biden framed the move as an economic imperative, making the “heart of American capitalism work for everyone,” as the country emerges from the Covid-19 pandemic. To achieve these aspirations, the president set his sights principally on he Federal Trade Commission and Department of Justice.

For one, the commission is now “encouraged” to ban or limit noncompete agreements — contracts that the White House said Friday stifle competition over wages generally and chip away at the “greater dignity and respect” of the American labor force.

According to the Economic Policy Institute, almost half — or 49.4% to be exact — of all businesses ask employees upon hiring to sign a noncompete contract that effectively prohibits where a person can work in the future or for whom. And while it may be more standard for chief executives or corporate higher-ups with access to sensitive trade secrets, noncompete clauses have increasingly become de rigeuer in the lower ranks of the workforce as well.

One assessment by employment attorneys at Ottinger Law points out that some 45.1% of all businesses in California subject employees to noncompete agreements, even though such agreements are legally unenforceable there. The reason? According to Ottinger: “They are relying on the fact that workers rarely challenge these agreements in court.”

Taking a more generous view of that motivation, employment lawyer Michael Stevens suggested that many employers “actually believe that reasonable post-employment restrictions can be helpful to workers."

This is "because curbing unfair competition from former employees provides some level of job security to the employees who remain at the company," Stevens, a partner at Arent Fox in Washington, pointed out in an email Friday.

Biden's executive order also directs the FTC to review “unnecessary occupational licensing restrictions that impede economic mobility.” Nearly a century ago, less than 5% of American workers needed an employee to hold a license to do the work. Today, nearly 30% of jobs require it, the FTC reported.

“That locks some people out of jobs, and it makes it harder for people to move between states,” the White House said in a summary of the executive order Friday.

Additional points of the order ask the Department of Justice and FTC to review their own antitrust guidance with an eye specifically trained on how companies or employers can be stopped from collaborating to stifle wages and benefits by sharing sensitive wage data with one another.

“We’ve seen less competition, more concentration. We see it in Big Agriculture, Big Tech, Big Pharma, the list goes on. Rather than competing for consumers, they are consuming their competitors,” Biden said from the State Room. “Rather than competing for workers, they are finding ways to gain the upper hand on labor and too often, the government has made it harder for new companies to break in and compete.”

Friday’s executive order tackles a trio of issues that Biden says major technology companies abuse or undermine to reduce competition. Specifically, it states there must be greater scrutiny of tech mergers, especially dominant internet platforms. A close eye must be paid when big companies, eager to squash nascent competitors before they even get off the ground, make “killer acquisitions.”

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Too may platforms have relied on raking in sensitive personal information, the White House argues. An investigation that the House Judiciary Committee conducted into Amazon, Apple, Facebook and Google last year highlighted how the tech giants unfairly compete with small businesses. They do this, in part, by watching smaller business sales data and then using those findings to launch their own sale of similar products.

This June the committee debated for over 24 hours on six antitrust bills targeting Big Tech, before finally advancing them out of committee. The bills update fees for merger filings, prevent technology companies from buying out competitors on the rise and more. Though narrowly launched out of committee, 21-20, the fight for passage on the House floor is expected to be bitter.

Representatives from Facebook and Google did not immediately respond to request for comment.

Cellphone manufacturers are also coming under scrutiny. Where manufacturers of mobile phones typically block independent or third party repairs — effectively holding consumers hostage to whatever cost the companies set — under Biden’s latest order, the FTC is asked to issue rules against such restrictions.

The prescription drug market was put on notice Friday as well. The Food and Drug Administration is now ordered to work with states and tribes to import prescription drugs from Canada, and the Department of Health and Human Services has been ordered to increase the number of generic drugs it throws support behind.

In 45 days, Health and Human Services must report back to the White House with point-by-point plan on how it will stop price gouging on prescription drugs and lower drug prices overall. Another provision of the executive order gives a boon to the hard of hearing: within 120 days, HHS must issue rules that allow hearing aids to be sold over the counter. According to Healthline, hearing aids vary in price wildly but can still cost anywhere from $1,000 to $5,000, a cost that is particularly inhibitive for seniors on a fixed income.

“Right now, you have to get one from a doctor or specialist, not only does that make getting hearing aids inconvenient but it makes them considerably more expensive and it makes it harder for companies to compete. ... That’s a big reason why just one in seven Americans with hearing loss actually use hearing aids,” Biden said.

The executive order additionally calls out “unchecked mergers” in the health care industry said to have left rural communities in the cold, calling on the Justice Department and FTC to scrutinize how hospitals are consolidating themselves.

Tackling the aviation industry as well, Biden directed the Department of Transportation to issue rules mandating airlines start refunding fees for late bags or when services are not provided as promised, like onboard WiFi.

Meanwhile for the Federal Communications Commission, Biden’s order says the agency must prevent internet service providers from striking deals with landlords that force tenants to have only one choice for service. Net neutrality rules that were unwound by former President Donald Trump will also be restored.

Also attending the signing ceremony Friday were Attorney General Merrick Garland, Secretary of Health and Human Services Xavier Becerra, Secretary of Commerce Giana Raimondo, Secretary of Transportation Pete Buttigieg, Federal Trade Commission Chair Lina Khan and Jessica Rosenworcel, acting chairwoman of the Federal Communications Commission.

The order is extensive with 72 items highlighted for competitiveness review and in the weeks and months ahead, the president said he believed it would help get the economy back on track by putting labor ahead of corporate control.

“Capitalism without competition isn’t capitalism, it’s exploitation,” he said. "Without healthy competition, big players can charge whatever they want and treat you however they want and for too many Americans that means accepting a bad deal for things that you can’t go without."


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