There have been recent nominations of key staffers, and an executive order (EO) focused on “promoting competition in the American economy” by President Joe Biden. The recent T. Rowe Price Article, “Biden Signals Government-Wide Push to Promote Competition,” by Investment Analyst Katie Deal, determined just what kind of effect this EO would have on businesses and conditions.
“In our view, this EO signals a shift in the government’s approach to industry consolidation, a development that could lead to tougher reviews of proposed business combinations, longer time frames for deals to close, and more terms and conditions that must be met for a transaction to gain approval,” as stated in the article.
The EO does address two high-profile areas of concern: the power of dominant platforms and the problem of rising health care costs. However, the EO also encouraged regulatory actions to address a variety of concerns. For T. Rowe Price, it’s believed that investors should monitor the rulemaking process closely while noting that legislative and regulatory reform would take bipartisanship and years of rulemaking to play out.
Antitrust Scrutiny
“Many signs point toward the mega-cap technology platforms facing increased regulatory scrutiny,” states the article. Additionally, keep in mind the Biden administration’s appointments to key posts in the White House and regulatory agencies. They have all been on the record with legal and regulatory criticisms of the tech giants’ business practices.
“Much will be made of these appointees’ strategies for addressing the perceived harm caused by the influence of the biggest technology companies.” However, Biden’s nominations would install skilled regulatory technicians determined to increase antitrust scrutiny across industries.
Executive Order Coverage
“President Biden’s EO suggests 72 different initiatives through which more than a dozen federal agencies could pursue rulemaking to curb practices deemed to harm consumers and impede competition.”
Looking at some highlights, there’s encouragement for the FTC to establish data collection rules and crack down on unfair practices that cause disadvantages to smaller businesses. In the health care sector, the EO urges the Department of Health and Human Services to put a plan in place to lower drug prices within 45 days, address surprise billing in hospitals as detailed in previous legislation, and take other steps to keep affordability in health care in mind.
Other recommendations from the EO include making it easier for consumers to switch telecommunication service providers, improve airline and shipping fee transparency, and adding ease for farmers to sue large agricultural processors for underpayment and other abusive practices.
A Slow But Steady Change
Something else to note, the EO does not contain any enforcement mechanisms but does encourage federal agencies to adopt more progressive policies. With that said, it will take time to develop those regulations, as the rulemaking process can stretch from several months to several years. That’s all thanks to the challenge of coordinating among different agencies.
As noted by the article, “The EO strikes us as an incremental step toward more progressive competition policies and should add momentum to political, regulatory, and legislative efforts to reform U.S. antitrust law. Ultimately, fundamental changes in the federal government’s approach to regulating competition would require legislation redefining the “consumer welfare” standard, which places the burden on regulators to prove consumer harm stemming from allegedly anticompetitive practices.”
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