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

Policy

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.

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