FACT SHEET: Executive Order on Promoting Competition in the American Economy | The White House (2024)

The economy is booming under President Biden’s leadership. The economy has gained more than three million jobs since the President took office—the most jobs created in the first five months of any presidency in modern history. Today, the President is building on this economic momentum by signing an Executive Order 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.

For decades, corporate consolidation has been accelerating. Inover 75%of U.S. industries, a smaller number of large companies now control more of the business than they did twenty years ago. This is true across healthcare, financial services, agriculture and more.

That lack of competition drives up prices for consumers. As fewer large players have controlled more of the market, mark-ups (charges over cost)have tripled. Families are paying higher prices for necessities—things like prescription drugs, hearing aids, and internet service.

Barriers to competition are also driving down wages for workers. When there are only a few employers in town, workers have less opportunity to bargain for a higher wage and to demand dignity and respect in the workplace. In fact, research shows that industry consolidation is decreasing advertised wages byas much as 17%.Tens of millionsof Americans—including those working in construction and retail—are required to sign non-compete agreements as a condition of getting a job, which makes it harder for them to switch to better-paying options.

In total, higher prices and lower wages caused by lack of competition are now estimated to cost the median American household$5,000 per year.

Inadequate competition holds back economic growth and innovation. The rate ofnew business formationhas fallen by almost 50% since the 1970s as large businesses make it harder for Americans with good ideas to break into markets. There arefewer opportunitiesfor existing small and independent businesses to access markets and earn a fair return. Economists find that as competition declines,productivity growthslows,business investment and innovation decline, andincome,wealth, andracial inequalitywiden.

When past presidents faced similar threats from growing corporate power, they took bold action. In the early 1900s, Teddy Roosevelt’s Administration broke up the trusts controlling the economy—Standard Oil, J.P. Morgan’s railroads, and others—giving the little guy a fighting chance. In the late 1930s, FDR’s Administration supercharged antitrust enforcement, increasing more than eightfold the number of cases brought in just two years—enforcement actions that saved consumersbillionsin today’s dollars and helped unleash decades of sustained, inclusive economic growth.

Today President Biden is taking decisive action to reduce the trend of corporate consolidation, increase competition, and deliver concrete benefits to America’s consumers, workers, farmers, and small businesses.Today’s historic Executive Order established a whole-of-government effort to promote competition in the American economy.The Orderincludes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy.Once implemented, these initiatives will result in concrete improvements to people’s lives.

Among other things, they will:

  • Make it easier to change jobs and help raise wages by banning or limiting non-compete agreements and unnecessary, cumbersome occupational licensing requirements that impede economic mobility.
  • Lower prescription drug prices by supporting state and tribal programs that will import safe and cheaper drugs from Canada.
  • Save Americans with hearing loss thousands of dollars by allowing hearing aids to be sold over the counter at drug stores.
  • Save Americans money on their internet bills by banning excessive early termination fees, requiring clear disclosure of plan costs to facilitate comparison shopping, and ending landlord exclusivity arrangements that stick tenants with only a single internet option.
  • Make it easier for people to get refunds from airlines and to comparison shop for flights by requiring clear upfront disclosure of add-on fees.
  • Make it easier and cheaper to repair items you own by limiting manufacturers from barring self-repairs or third-party repairs of their products.
  • Make it easier and cheaper to switch banks by requiring banks to allow customers to take their financial transaction data with them to a competitor.
  • Empower family farmers and increase their incomes by strengthening the Department of Agriculture’s tools to stop the abusive practices of some meat processors.
  • Increase opportunities for small businesses by directing all federal agencies to promote greater competition through their procurement and spending decisions.

The Order also encourages the leading antitrust agencies to focus enforcement efforts on problems in key markets and coordinates other agencies’ ongoing response to corporate consolidation.The Order:

  • Calls on the leading antitrust agencies, the Department of Justice (DOJ) and Federal Trade Commission (FTC), toenforce the antitrust laws vigorouslyand recognizes that the law allows them tochallenge prior bad mergersthat past Administrations did not previously challenge.
  • Announces a policy that enforcement should focus in particular onlabor markets, agricultural markets, healthcare markets (which includes prescription drugs, hospital consolidation, and insurance),and the tech sector.
  • Establishes aWhite House Competition Council, led by the Director of the National Economic Council,to monitor progress on finalizing the initiatives in the Order and to coordinate the federal government’s response to the rising power of large corporations in the economy.

A more detailed summary of the key actions in the Order is provided below:

Labor Markets

Competition in labor markets can empower workers to demand higher wages and greater dignity and respect in the workplace. One way companies stifle competition is with non-compete clauses. Roughlyhalfof private-sector businesses require at least some employees to enter non-compete agreements, affecting some36 to 60 millionworkers.

Overly burdensome occupational licensing requirements also restrict competition. In certain occupations, such as skilled construction trades, licensing is critical to protecting public health and safety and increasing wages for workers who acquire in-demand skills and knowledge. In other occupations, however, it can impede worker mobility without countervailing benefits.Today, almost30% of jobs in the United States require a license, up from less than 5% in the 1950s.Fewer than 5%of occupations that require licensing in at least one state are treated consistently across all 50 states. That locks some people out of jobs, and it makes it harder for people to move between states—particularly burdening military spouses,34%of whom work in a field requiring a license and are subject to military-directed moves every few years.

Workers may also be harmed by existingguidanceprovided by the Department of Justice and Federal Trade Commission to Human Resource personnel thatallowsthird parties to make wage data available to employers—and not to workers—in certain circumstances without triggering antitrust scrutiny. This may be used to collaborate to suppress wages and benefits.

In the Order, the President:

  • Encourages the FTC toban or limit non-compete agreements.
  • Encourages the FTC toban unnecessary occupational licensing restrictions that impede economic mobility.
  • Encourages the FTC and DOJ to strengthen antitrust guidance toprevent employers from collaborating to suppress wagesor reduce benefitsby sharing wage and benefit information with one another.

These actions complement the President’s call for Congress to pass the Protecting the Right to Organize (PRO) Act to ensure workers have a free and fair choice to join a union and to collectively bargain. Unions are critical to empowering workers to bargain with their employers for better jobs and to creating an economy that works for everyone.

Healthcare

The proposed Order tacklesfourareas where lack of competition in healthcare increases prices and reduces access to quality care.

Prescription Drugs:Americans paymore than2.5 timesas much for the same prescription drugs as peer countries, andsometimes much more.Price increases continue tofar surpass inflation. As a result, nearly one in four Americansreport difficultiespaying for medication, and nearly one in three Americansreportnot taking their medications as prescribed.

These high prices are in part the result of lack of competition among drug manufacturers. The largest pharmaceutical companies are able to wield their market power to reap average annual profits of15-20%,as compared to average annual profits of 4-9% for the largest non-drug companies.

One strategy that drug manufacturers have used to avoid competing is “pay for delay” agreements, in which brand-name drug manufacturers pay generic manufacturers to stay out of the market. That has raised drug pricesby $3.5 billion per year, andresearch also showsthat “pay for delay” and similar deals between generic and brand name manufacturers reduce innovation—reducing new drug trials and R&D expenditures.

In the Order, the President:

  • Directs the Food and Drug Administration towork with states and tribes to safely importprescription drugs from Canada, pursuant to the Medicare Modernization Act of 2003.
  • Directs the Health and Human Services Administration (HHS) to increasesupport for generic and biosimilar drugs, which provide low-cost options for patients.
  • Directs HHS to issuea comprehensive plan within 45 days to combat high prescription drug prices and price gouging.
  • Encourages the FTC toban “pay for delay” and similar agreements by rule.

Hearing Aids:Hearing aids are so expensive that only14%ofthe approximately48 million Americanswith hearing loss use them. Onaverage, they cost more than$5,000per pair, and those costs are often not covered by health insurance.A major driver of the expense is that consumers must getthem from a doctor or a specialist, even thoughexperts agreethat medical evaluation is not necessary.Rather, this requirement serves only as red tapeand a barrier to more companies selling hearing aids.The four largest hearing aid manufacturers now control84%of the market.
In 2017, Congress passed a bipartisan proposal to allow hearing aids to be sold over the counter. However, the Trump Administration Food and Drug Administration failed to issue the necessary rules that would actually allow hearing aids to be sold over the counter, leaving millions of Americans without low-cost options.

In the Order, the President:

  • DirectsHHSto consider issuingproposed rules within 120 days forallowing hearing aids to be sold over the counter.

Hospitals:Hospital consolidation has leftmany areas,especially rural communities,without good options for convenient and affordable healthcare service. Thanks to unchecked mergers,the ten largest healthcare systemsnowcontrol aquarterof the market.Since 2010,138rural hospitalshave shuttered, including a high of 19 last year, in the middle of a healthcare crisis.Research shows that hospitals in consolidated markets chargefar higher pricesthan hospitals in markets with several competitors.

In the Order, the President:

  • Underscores that hospital mergers can be harmfulto patients and encourages the Justice Department and FTC to review and revise their merger guidelines to ensure patients are not harmed by such mergers.
  • Directs HHS tosupport existing hospital price transparency rules and to finish implementing bipartisan federal legislation to address surprise hospital billing.

Health Insurance:Consolidation in the health insurance industry has meant that many consumers havelittle choicewhen it comes to selecting insurers. And even when there is some choice, comparison shopping is hard because plans offered on the exchanges are complicated—with different services covered or different deductibles.

In the Order, the President:

  • Directs HHS tostandardize plan options in the National Health Insurance Marketplace so people can comparison shopmore easily.

Transportation

In the transportation sector, multiple industries are now dominated by large corporations—air travel, rail, and shipping.

Airlines:The top four commercial airlines control nearlytwo-thirdsof the domestic market. Reduced competition contributes to increasing fees like baggage and cancellation fees. These fees are oftenraised in lockstep, demonstrating a lack of meaningful competitive pressure, and areoften hiddenfrom consumers at the point of purchase. The top ten airlines collected$35.2 billionin ancillary fees in 2018, up from just $1.2 billion in 2007. Inadequate competition also reduces incentives to provide good service. For example, the Department of Transportation (DOT) estimates that airlines were late deliveringat least2.3 million checked bags in 2019.

In the Order, the President:

  • Directs the DOT to consider issuingclear 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.
  • Directs the DOT to consider issuingrules that require baggage, change, and cancellation fees to be clearly disclosedto the customer.

Rail:In 1980, there were33 “Class I” freight railroads, compared to just seven today, and four major rail companies now dominate their respective geographic regions. Freight railroads that own the tracks can privilege their own freight traffic—making it harder for passenger trains to have on-time service—and can overcharge other companies’ freight cars.

In the Order, the President:

  • Encourages the Surface Transportation Board torequire railroad track owners to provide rights of way to passenger railand to strengthen their obligations totreat other freight companies fairly.

Shipping:In maritime shipping, the global marketplace has rapidly consolidated. In 2000, the largest 10 shipping companies controlled51%of the market. Today, it is more than 80%, leaving domestic manufacturers who need to export goods at these large foreign companies’ mercy. This has let powerful container shippers charge exporters exorbitant fees for time their freight was sitting waiting to be loaded or unloaded. These fees, called “detention and demurrage charges,” can add up tohundreds of thousandsof dollars.

In the Order, the President:

  • Encourages the Federal Maritime Commission toensure vigorous enforcement against shippers charging American exporters exorbitant charges.

Agriculture

Over the past few decades, key agricultural markets have become more concentrated and less competitive. The markets for seeds, equipment, feed, and fertilizer are now dominated by just a few large companies, meaning family farmers and ranchers now have to pay more for theseinputs.For example, justfour companiescontrol most of the world’s seeds, and corn seed prices have gone up as much as30% annually.

Consolidation also limits farmers’ and ranchers’ options for selling their products. That means they getlesswhen they sell their produce and meat—even asprices riseat the grocery store. For example,four large meat-packing companies dominate over80% of the beef market and, over the last five years, farmers’ share of the price of beef has dropped by more than aquarter—from 51.5% to 37.3%—while the price of beef has risen.

Overall, farmers’ and ranchers’ share of each dollar spent on food has beendeclining for decades. In short, family farmers and ranchers are getting less, consumers are paying more, and the big conglomerates in the middle are taking the difference.

Meanwhile, the law designed to combat these abuses—the Packers and Stockyards Act—was systematically weakened by the Trump Administration Department of Agriculture (USDA).

American farmers and ranchers are also getting squeezed by foreign corporations importing meat from overseas with labels that mislead customers about its origin. Under current labeling rules, meat can be labeled “Product of USA” if it is only processed here—including when meat is raised overseas and then merely processed into cuts of meat here. For example,most grass-fed beef labeled “Product of USA”is actually imported. That makes it hard or impossible for consumers to know where their food comes from and to choose to support American farmers and ranchers.

Corporate consolidation even affects farmers’ ability to repair their own equipment or to use independent repair shops. Powerful equipment manufacturers—such as tractor manufacturers—use proprietary repair tools, software, and diagnostics to prevent third-parties from performing repairs. For example, when certain tractors detect a failure, they cease to operate until a dealer unlocks them. That forcers farmers to pay dealer rates for repairs that they could have made themselves, or that an independent repair shop could have done more cheaply.

In the Order, the President:

  • Directs USDA to consider issuingnew rules under the Packers and Stockyards Act making it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protectionsfor farmers who speak out about bad practices.
  • Directs USDA to consider issuingnew rules defining when meat can bear “Product of USA” labels, so that consumers have accurate, transparent labels that enable them to choose products made here.
  • Directs USDA to develop a plan toincrease opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmers markets and developing standards and labelsso that consumers can choose to buy products that treat farmers fairly.
  • Encourages the FTC tolimit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs—such as when tractor companies block farmers from repairing their own tractors.

Internet Service

The Order tackles four issues that limit competition, raise prices, and reduce choices for internet service.

Lack of competition among broadband providers:More than200 millionU.S. residents live in an area with only one or two reliable high-speed internet providers, leading to prices as much asfive times higherin these markets than in markets with more options. A related problem is landlords and internet service providers enteringexclusivity deals or collusive arrangementsthat leave tenants with only one option. This impacts low-income and marginalized neighborhoods, because landlord-ISP arrangements can effectively block out broadband infrastructure expansion by new providers.

In the Order, the President encourages the FCC to:

  • Prevent ISPs from making deals with landlords that limit tenants’ choices.

Lack of price transparency:Even where consumers have options, comparison shopping is hard. According to the Federal Communications Commission (FCC), actual prices paid for broadband services can be40% higher than advertised. During the Obama-Biden Administration, the FCC begandevelopinga “Broadband Nutrition Label”—a simple label that provides basic information about the internet service offered so people can compare options. The Trump Administration FCC abandoned those plans.

In the Order, the President encourages the FCC to:

High termination fees:If a consumer does find a better internet service deal, they may be unable to actually switch because of high early termination fees—on average nearly$200—charged by internet providers.
In the Order, the President encourages the FCC to:

  • Limit excessive early termination fees.

Companies discriminatorily slowing down internet access:Big providers can use their power to discriminatorily block or slow down online services. The Obama-Biden Administration’s FCC adopted “Net Neutrality” rules that required these companies to treat all internet services equally, but this wasundonein 2017.

In the Order, the President encourages the FCC to:

  • Restore Net Neutrality rulesundone by the prior administration.

Technology

The Order tackles three areas in which dominant tech firms are undermining competition and reducing innovation:

Big Tech platforms purchasing would-be competitors:Over the past ten years, the largest tech platforms have acquired hundreds of companies—including alleged “killer acquisitions” meant to shut down a potential competitive threat. Too often, federal agencies have not blocked, conditioned, or, in some cases, meaningfully examined these acquisitions.

In the Order, the President:

  • Announces an Administration policy ofgreater 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.

Big Tech platforms gathering too much personal information:Many of the large platforms’ business models have depended on the accumulation of extraordinary amounts of sensitive personal information and related data.
In the Order, the President:

  • Encourages the FTC to establishrules on surveillance and the accumulation of data.

Big Tech platforms unfairly competing with small businesses:The large platforms’ power gives them unfair opportunities to get a leg up on the small businesses that rely on them to reach customers. For example, companies that rundominant online retail marketplacescan see how small businesses’ products sell and then use the data to launch their own competing products. Because they run the platform, they can also display their own copycat products more prominently than the small businesses’ products.
In the Order, the President:

  • Encourages the FTC to establishrules barring unfair methods of competition on internet marketplaces.

Cell phone manufacturers and others blocking out independent repair shops:Tech and other companies impose restrictions on self and third-party repairs, making repairsmore costly and time-consuming, such as byrestrictingthe distribution of parts, diagnostics, and repair tools.

In the Order, the President:

  • Encourages the FTC to issuerules against anticompetitive restrictions on using independent repair shops or doing DIY repairsof your own devices and equipment.

Banking and Consumer Finance

Over the past four decades, the United States has lost 70% of the banks it once had, with around10,000bank closures. Communities of color are disproportionately affected, with25%of all rural closures in majority-minority census tracts. Many of these closures are theproductof mergers and acquisitions. Though subject to federal review, federal agencies have not formally denied a bank merger application in more than15 years.

Excessive consolidation raises costs for consumers, restricts credit for small businesses, and harms low-income communities. Branch closures can reduce the amount of small business lending by about10%and leads tohigher interest rates. Even where a customer has multiple options, it is hard to switch banks partly because customers cannot easily take their financial transaction history data to a new bank. That increases thecostof the new bank extending you credit.

In the Order, the President:

  • Encourages DOJ and the agencies responsible for banking (the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency) toupdate guidelines on banking mergers to provide more robust scrutinyof mergers.
  • Encourages the Consumer Financial Protection Bureau (CFPB) to issuerules allowing customers to download their banking dataand take it with them.

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FACT SHEET: Executive Order on Promoting Competition in the American Economy | The White House (2024)

FAQs

What is the president's executive order on competition? ›

Signed on July 9, 2021, the order serves to establish a "whole-of-government effort to promote competition in the American economy" by encouraging stronger enforcement of antitrust law. Authorizes an all-of-government approach to promoting competition and creates a White House Competition Council.

How does the government promote competition? ›

By enforcing antitrust laws, the Federal Trade Commission helps to ensure that our markets are open and free.

What is March Biden executive order? ›

Executive Order 14067, officially titled Ensuring Responsible Development of Digital Assets, was signed on March 9, 2022, and is the 83rd executive order signed by U.S. President Joe Biden. The ultimate aim of the order is to develop digital assets in a responsible manner.

Does the president control the economy? ›

My broader point is that presidents can do very little to improve an economy over the long term – other than staying out of the way. They can, however, stimulate in the short-term with spending and/or excessively low rates – but that ALWAYS comes at a huge cost down the road.

How to promote competition in an economy? ›

Examples of competition policy in action
  1. De-regulation - laws to reduce monopoly power. Preventing mergers/acquisitions that create a monopoly. ...
  2. Privatisation - transferring ownership. Stock market floatation of the Royal Mail. ...
  3. Tough laws on anti-competitive behaviour. ...
  4. Reductions in import controls.
Mar 22, 2021

Why would the government want to be involved in the economy to ensure competition? ›

They may do so in order to promote fair competition or prevent monopolies. They may also intervene when economic conditions or poverty are worsening, by taking steps to curb inflation or raise or lower interest rates.

Which explains the US government's role in promoting competition? ›

The correct answer is (A) The government plays an active role in promoting competition at all levels. The U.S. government ensures competition in the market through various antitrust laws like the Sherman Antitrust Act and the Federal Trade Commission Act.

What type of laws does Congress use to encourage competition? ›

The Clayton Act

This law aims to promote fair competition and prevent unfair business practices that could harm consumers. It prohibits certain actions that might restrict competition, like tying agreements, predatory pricing, and mergers that could lessen competition.

What is one way the US government promotes marketplace competition? ›

One way we do this is by enforcing the antitrust laws. Competition is the fuel that drives America's free-market system. But competition can only thrive if firms respect the antitrust laws, which are the rules of the free market.

What is the White House executive order 14114? ›

E.O. 14114 amends E.O. 14024 to authorize the imposition of sanctions on foreign financial institutions (FFIs) that have engaged in certain transactions involving Russia's military-industrial base, including all persons whose property and interests in property are blocked pursuant to E.O.

What is executive order 14066? ›

14066, “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts To Undermine the Sovereignty and Territorial Integrity of Ukraine", E.O.

What does executive order 14024 mean? ›

E.O. 14024 establishes a new national emergency under which sanctions may be imposed against individuals and entities furthering specified harmful foreign activities of the Russian Federation.

Which US president had the best economy? ›

Which President Has the Highest GDP Growth Rate in U.S. History? President Franklin D. Roosevelt had the highest average annual GDP growth rate so far, at 10.1%.

Does the economy do better under Republicans or Democrats? ›

The data show that, since World War II, the economy has performed substantially better under Democratic presidents. On average, real (inflation-adjusted) GDP has grown about 1.6 times faster under Democrats than under Republicans.

Is inflation higher under Democrats or Republicans? ›

American Economic Association researchers concluded that from 1945 to 2016, the average inflation rate was lower under Democratic presidents than under Republicans, but inflation often falls under Republicans and rises under Democrats.

What is the executive order for noncompetes? ›

In the Order, the President:

Encourages the FTC to ban or limit non-compete agreements. Encourages the FTC to ban unnecessary occupational licensing restrictions that impede economic mobility.

What does the president's executive order mean? ›

“Executive Orders (EOs) are official documents … through which the President of the United States manages the operations of the Federal Government.” The directives cite the President's authority under the Constitution and statute (sometimes specified).

Who can challenge a presidential executive order? ›

Congress has the power to overturn an executive order by passing legislation that invalidates it, and can also refuse to provide funding necessary to carry out certain policy measures contained with the order or legitimize policy mechanisms.

Which action represents a way that the US government promotes business competition? ›

What are three ways that the government encourages competition in the marketplace? enforcing antitrust laws, encouraging global trade, and supporting new businesses.

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