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What is the Promoting Competition in the American Economy Executive Order?

In announcing the Promoting Competition in the American Economy Executive Order, the White House declared that decades of corporate consolidation has led to a small number of large corporations controlling more of the business than they did twenty years ago in more than 75% of U.S. industries. This includes health care, financial services, and more. As a result, the White House asserts that the burden generated by lack of competition has fallen squarely on the shoulders of consumers as prices are driven up. Fewer large players in a market have led to the tripling of mark-ups and, as a result, families are paying higher prices for necessities such as prescription drugs.

Furthermore, the White House has asserted that the barriers to fostering competition have driven down worker wages. When there are only a few employers in a particular location, the workers do not have much-negotiating power to ask for higher wages, among other employment benefits. In fact, the White House estimates that higher prices and lower wages that result from lack of competition can cost the median American household $5,000 per year. In the hopes of fostering competition and, thus, promoting innovation and economic growth, the Promoting Competition in the American Economy Executive Order was issued.

What is the Promoting Competition in the American Economy Executive Order?

President Joe Biden issued Executive Order 14036, titled “Promoting Competition in the American Economy” on July 9, 2021. The Order outlines 72 initiatives intended to tackle the most pressing competition issues President Biden believes that the U.S. economy is facing. Of the 72 initiatives, one is to make it easier for workers to switch jobs and help raise wages by limiting and, in some cases, banning, the use of non-compete agreements. Another initiative is intended to increase small business opportunities by directing all federal agencies to promote more competition through their procurement and spending decisions.

Since the EO was signed, there does not appear to be any actual enforcement of the ban or limit on non-compete clauses or non-solicitation agreements by the FTC. The FTC and the DOJ Antitrust Division did announce back in October that they would be holding virtual workshops on promoting competition in the labor markets. In fact, these virtual workshops were held back in December via webcast on the FTC website. The workshop was titled “Making Competition Work: Promoting Competition in Labor Markets.

Beyond this, it remains unclear as to what specific enforcement measures will be taken to help achieve the goals of the Executive Order. The order itself encourages anti-trust agencies to focus their enforcement efforts to include key markets that have been identified. Furthermore, the order specifically encourages anti-trust agencies to coordinate with other agencies responding to the competition problems by getting in touch with the DOJ and the FTC in order for these agencies to enforce anti-trust laws more vigorously.

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