Cutting Competition: Biden’s Executive Order Aimed at Tackling Big Corporate Dominance​

By Curtley Bale​
The Story

This week, President Biden signed an Executive Order aimed at increasing competition in a variety of sectors across America. Through these measures, he hopes to improve product quality and consumer choice for Americans, as well as potentially increase their wages. The move is part of the President’s broader strategy to empower smaller businesses and the lower/middle classes to compete with large multinational companies. Biden’s order contains 72 measures ranging across banking, technology, healthcare, and agriculture.

What It Means For Businesses And Law Firms

At present, competition rules can sometimes work to exclude independent businesses from markets dominated by a small number of players (oligopolies). This order is aimed at stamping out these roadblocks. As the President said, “Capitalism without competition isn’t capitalism. It’s exploitation.” (White House). Indeed, since the 1970s and the emergence of large multinationals, the rate of new business formation has decreased by 50% (Economic Innovation Group).

The measures include:
  • the removal of fees for transferring bank accounts or internet providers;
  • the ability to claim refunds for late flights or loss of baggage;
  • selling hearing aids over the counter; and
  • preventing firms from only giving guarantees on products if the parts/repairs are made by them, instead of cheaper alternatives.
The President has also called for a ban on the majority of non-compete clauses on employees when they move jobs. In his view, these clauses cap wages and prevent wage growth (Reuters).

Despite these measures being intended to help independent businesses, some business leaders in the telecoms and manufacturing industries see this state intervention as a prevention of a free market economy (Financial Times). It is yet to be seen if the creation of the White House Competition Council will be able to balance the interests of the smaller players with those of the larger companies and associations, who will naturally feel threatened by any potential changes to their way of operating.

President Biden has also directed the Federal Trade Commission and Department of Justice to undertake stricter reviews of mergers, and to apply existing competition laws more closely. This will impact law firms and their clients as there may now be higher barriers to completing deals, such as the proposed measure to prevent mergers leading to job losses. More uncertainty means more legal work as lawyers help companies comply with new regulations. This could lead to longer deal times and new contractual clauses to mitigate against the risk of a collapsed deal.

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