Biden's Executive Order On Competition Has... Lots Of Really Good Ideas? Though, Potential Overreaches On Executive Power

from the nice-to-see dept

Given how many discussions on antitrust these days are mind bogglingly bad, I was nervous when it was announced that the Biden Administration would be releasing an executive order on competition. Now that it's out however, I have to admit that I'm very surprised. The executive order is actually full of mostly good ideas. I was... not expecting that. I do think, however, that in some areas it probably (unfortunately) over-stretches executive authority, which should be concerning. But on the whole, there are a bunch of ideas in here to actually deal with anti-competitive problems.

On labor markets, the executive order encourages the FTC to take some positive steps:

  • Encourages the FTC to ban or limit non-compete agreements.
  • Encourages the FTC to ban unnecessary occupational licensing restrictions that impede economic mobility.
  • Encourages the FTC and DOJ to strengthen antitrust guidance to prevent employers from collaborating to suppress wages or reduce benefits by sharing wage and benefit information with one another.
  • We've talked about all three of these issues extensively in the past, and just how damaging they are. Occupational licensing is massively damaging, in that it's used to exclude people from jobs, limit competition, and drive up costs to consumers, all based on often completely bogus claims about "safety and security." I've talked in great detail about how noncompete agreements suppress innovation, and that there is extremely compelling evidence that a key reason why Silicon Valley became Silicon Valley is because noncompetes are not enforceable in California (and, relatedly, that the downfall of Detroit was in Michigan making noncompetes enforceable in the early 1980s). Indeed, I've long advocated that every state should follow California's lead and ban noncompetes. And, for all the talk about how "evil" big tech companies are, one area where I have strong agreement is how they colluded to keep wages down a decade ago.

    So these three things all sound... really great? However, I'm not entirely sure that the President can actually do things this way. Yes, the executive order just says that he's "encouraging" the FTC to take these steps, but the FTC is supposed to be an independent agency, and we should all be at least somewhat hesitant to embrace the President pushing independent agencies. Also, it's not entirely clear to me that the FTC has the authority to follow these suggestions. They are all good suggestions and ideas, and I support the goals. I just worry that taking a shortcut by executive order via the FTC (under potentially dubious authority) could undermine the value of these moves.

    The moves regarding healthcare are also interesting and mostly good ideas:

  • Directs the Food and Drug Administration to work with states and tribes to safely import prescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003.
  • Directs the Health and Human Services Administration (HHS) to increase support for generic and biosimilar drugs, which provide low-cost options for patients.
  • Directs HHS to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging
  • Encourages the FTC to ban “pay for delay” and similar agreements by rule.
  • We've talked about much of this before as well, especially the ability to import drugs from Canada and the pure, unadulterated evil of the pay for delay scam. What's missing, though, is a recognition that the problem with every single one of the items listed above is really in the patent system beneath it. Every one of these issues wouldn't be an issue at all if we fixed our broken patent system and how it handled pharmaceutical patents. But, because doing that requires (1) Congress, and (2) an impossible fight that the Pharma lobbyists would kill immediately... we instead have to dance around the real problem with again, executive order-driven nudging.

    That's not to say patents are ignored in the executive order. There's a really nice bit in which it asks the DOJ and Commerce Department to "re-evaluate" its stance on allowing patents in standards:

    To avoid the potential for anticompetitive extension of market power beyond the scope of granted patents, and to protect standard-setting processes from abuse, the Attorney General and the Secretary of Commerce are encouraged to consider whether to revise their position on the intersection of the intellectual property and antitrust laws, including by considering whether to revise the Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments issued jointly by the Department of Justice, the United States Patent and Trademark Office, and the National Institute of Standards and Technology on December 19, 2019.

    There are some other items in the healthcare proposal that are beyond typical Techdirt scope, but certainly sound reasonable: such as more hospital transparency and limiting hospital mergers. Back in 2013, we wrote about how healthcare is a giant economic scam, mostly driven by the hospitals (everyone blames the insurance companies, who are complicit, but if you look at the details, it's often the hospitals themselves that are the real scams).

    More specific to tech, there are some new items regarding the FCC and the telco broadband space, which Karl will cover in a separate post. I will note that many of the ideas do seem reasonable -- but again, I worry about executive overreach regarding an independent agency, and a failure to address the actual issues.

    Regarding "big tech" the executive order pushes for greater scrutiny of mergers -- and, especially, acquisitions by the "big" companies. While many people in tech policy I know disagree with this take, I actually don't have a problem with it in concept. We should scrutinize carefully when very large companies buy smaller companies to see what the impact on competition and consumer welfare should be. What we should not do is automatically rule out all such mergers and acquisitions, because that would create a bunch of consequences that would actually be bad for innovation -- such as discouraging investment in startups or limiting acquisitions that actually are additive. But, conceptually, yes, we should scrutinize such mergers carefully. As expected, it also encourages the FTC to make rules barring restrictions on independent repair and DIY repair. Again, the FTC may be somewhat limited in what it can do, but this is a huge step forward for the important right to repair movement.

    There is also a part about rules on the collection of user data and how it's used. That's... potentially good and potentially bad depending on how it plays out. It asks the FTC to explore:

    unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy;

    In theory that's good. And there are many companies engaged in sketchy practices with data. But there are also lots of important, and useful uses of data. And I worry that an overly aggressive FTC could conflate the two. I'd much prefer working on proposals to unlock our data by providing more transparency and control to end users, so we don't have to trust companies that don't have our best interests in mind.

    There's also a bit about "unfair competition in major Internet marketplaces," which seems to be aimed specifically at Amazon selling its own branded products. To be honest, I've never really understood why this is a problem. A ton of retailers have done this going back basically forever. And, it's not clear that the supposed "data advantage" that Amazon has really exists or is meaningful.

    Overall, there really are a lot of good ideas in here. I just wish most of them were taken up by Congress, rather than being nudged through executive order.

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    Filed Under: antitrust, competition, doj, executive order, fcc, ftc, non-compete agreements, occupational licensing, patents


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    • identicon
      Anonymous Coward, 9 Jul 2021 @ 3:24pm

      I wonder how long before the telecoms/internet company lobbyists are out in force using the same shitty excuses as always to ensure the main players keep their control and extortionate pricing, the complaining about the 'dangers' of independent, communal broadband building and then how the equally extortionate cost of medical treatment and medications will destroy the country snd all those in it unless company bosses are able to get millions $ in personal salaries will fucking sll of the public over!

      reply to this | link to this | view in chronology ]

    • icon
      ECA (profile), 9 Jul 2021 @ 4:30pm

      Strange

      The reasoning of competition, and declaring it Should be based on a Known number. NOT 1.

      Iv wondered along time on How Mexico and Canada's Drug and medical systems, Make things cheaper. As above, Its not the Doctors.

      Long ago a person suggested, "lets look at how the other nations are doing things, First." Which is a good idea. Letting corps decide things means you Probably wont like it. But if thats all you got(?) where do you go and what do you do?

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 10 Jul 2021 @ 1:06am

        Re: the reasoning of competition

        ....your comment is indeed strange (and incomprehensible)

        Nevertheless, genuine "competition" is an ecomic concept and real human-interactive process that can only exist in voluntary markets.

        Coercive government interventions into markets always decreases competition.
        So competition advocates should always advocate less government intervention and regulation.
        Guess what should be done if you really want competition in the telecom/ISP sector ?

        Also for example, licensing laws and regulations massively reduce competition and radically increase consumer prices-- that's coercive government intervention into markets.
        (and even Biden and his progressive handlers are finally noticing that huge error in government regualtory zeal)

        reply to this | link to this | view in chronology ]

        • icon
          ECA (profile), 10 Jul 2021 @ 11:26am

          Re: Re: the reasoning of competition

          The real problem?
          Is thinking an economy HAS TO GO UP.
          The second problem is a tax system so complicated you need a 4-6 year degree to even understand most of it. and the biggest holes are the ones the corps have made themselves.

          reply to this | link to this | view in chronology ]

    • icon
      Wietze Brandsma (profile), 10 Jul 2021 @ 7:01am

      Amazon's unchecked market power poses a threat to competition

      From the panel series "Crafting Effective Rules for Internet Platforms:"

      Amazon poses the unique threat of both owning the market and participating within it. By wearing these two hats, Amazon can leverage the data it collects on both buyers and sellers in its marketplace to better inform and promote its own products, and it can also favor larger, preferred sellers.

      And:

      In a world where everything collapses into a single channel, [small businesses] have no way to introduce new products.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 10 Jul 2021 @ 9:17am

        Re: Amazon's unchecked market power

        Nonsense.

        Amazon has plenty of competitors selling the same merchandise as Amazon, consumers have many choices. Various competitors routinely charge lower or same prices as Amazon.

        Amazon does not and can not 'force' consumers to buy its products.

        Consumers flock to Amazon because of its convenience, extremely wide merchandise offerings, reasonable pricing, and good customer service -- it's no evil mystery as to why Amazon is so successful.
        Amazon is a good result of open competition, not a failure of it.

        If Amazon becomes greedy and lazy towards its customers, other eager competitors will attract Amazon's customers away from it.

        Sears & Roebuck was the Amazon of its day -- a giant retailer dominating its industry. But its management eventually became a fat lazy bureaucracy that was steadily outpaced by new competitors-- consumers rightfully stopped shopping at Sears vast retailing network.

        reply to this | link to this | view in chronology ]

        • icon
          Wietze Brandsma (profile), 10 Jul 2021 @ 10:32am

          Re: Re: Amazon's unchecked market power

          The consumer welfare standard has its shortcomings, an alternative would be: The Effective Competition Standard: A New Standard for Antitrust; the abstract says:

          Ambiguous and inadequate, the consumer welfare standard identifies threats to competition only by the potential consequences for consumers and ignores adverse effects on workers, suppliers, product quality, and innovation.

          The effective competition standard as an alternative would revive the original aims of antitrust law — to preserve competitive market structures.

          reply to this | link to this | view in chronology ]

      • icon
        R.H. (profile), 10 Jul 2021 @ 3:07pm

        Re: Amazon's unchecked market power poses a threat to competitio

        Walmart is also a huge retailer that sells its own brands in its stores and on its website. In fact, most (if not all) major retailers sell their own merchandise in their stores. What makes Amazon any different?

        reply to this | link to this | view in chronology ]

        • identicon
          Rocky, 10 Jul 2021 @ 6:19pm

          Re: Re: Amazon's unchecked market power poses a threat to compet

          The size of Walmart and Amazon can negatively affects smaller brands. In Walmart's case it depresses the local economy and makes it harder for smaller businesses to compete in the local space which also can lead to lower wages in the area.

          Amazon has a similar effect, although for different reasons. It's easier for people to just buy stuff from Amazon and it shows up on their doorstep instead of them having to go to the local store. It's also easier since Amazon can stock so much more than a local store which may not have what people are looking for. Then we have the instances where Amazon copied products from sellers and outcompeted them.

          In short, there is some differences but both companies affect local economies and small businesses negatively and they can leverage their size to produce/buy their own branded products cheaper than competing smaller brands can.

          reply to this | link to this | view in chronology ]

        • icon
          Thad (profile), 11 Jul 2021 @ 1:26pm

          Re: Re: Amazon's unchecked market power poses a threat to compet

          What makes Amazon any different?

          Shopping at a brick-and-mortar store is qualitatively different from shopping at an online store. You go to an aisle; you look at the products on it.

          If you go to an online store, you perform a search to find the item you're looking for. And an online store has more control over what results you see than a brick-and-mortar store does. Walmart could give its own brands more prominent shelf space than name brands (though it typically doesn't), but that's not the same thing as burying a competitor's product at the bottom of ten pages of search results.

          reply to this | link to this | view in chronology ]

      • icon
        ECA (profile), 11 Jul 2021 @ 9:44am

        Re: Amazon's unchecked market power poses a threat to competitio

        If you goto both internet locations.
        LOOK around, Look at WHO is selling.
        Both Amazon and Walmart FRONT for other companies. LOTS of other companies.
        Buy where is the overhead?
        Thats the fun part, as most sellers in the USA cant go direct, and buy from other USA companies which forces the prices up FARTHER.
        HOW many times do our products go from 1 company to another to get to a reseller?
        How many Original Manufactures and 1st Wholesalers, get into this to sell AT Consumer prices?

        There are so many levels to Wholesales, that unless you are willing to Buy 1000+ of something, you will NOT get a discount, as a seller. THAT is whats killing off the Smaller companies and Competitors.
        AND All of this is based on the SMALLER companies competing. WHY? If that were so, then we could WIPE out TONS of Major sellers.

        reply to this | link to this | view in chronology ]


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