On Friday, the President signed an Executive Order designed to promote competition in the American economy. Here is the Fact Sheet.  The Order, which, in addition to corporate consolidation, relates to barriers to competition and the impact on the workforce and consumers of the lack of competition, includes “72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy.”  The Order addresses several industries specifically, such as tech, financial services, telecom, agriculture, transportation and shipping, and pharma and healthcare.  The Order could also broadly impact a number of other industries, for example, through efforts to curtail the use of “non-compete and other clauses or agreements that may unfairly limit worker mobility” or efforts to limit “manufacturers from barring self-repairs or third-party repairs of their products.” For the most part, the Order does not change the law or even any regulations at this point, and some of the agencies identified, such as the FTC, are independent and not subject to Presidential directives. Congress and the courts are likely to have a say as well. Nevertheless, companies may want to assess whether the initiatives and shift in regulatory emphasis may have some impact on their businesses that could warrant disclosure.

The Order establishes a White House Competition Council to implement the actions and coordinate across numerous federal agencies and directs the heads of all agencies to “consider using their authorities to further the policies” set forth in the Order. The Order also identifies a number of laws, in addition to the traditional antitrust laws, that provide for industry-specific fair competition and anti-monopolization laws.  The SEC, another independent agency, is identified as one of the agencies that administers these or similar authorities, but precisely how the SEC will be involved in furthering the Order remains to be seen. 

As stated in the Fact Sheet, with regard to pharma companies, in the Order, the President:

  • “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.”

(“Pay-for-delay” agreements are described as transactions in which “brand-name drug manufacturers pay generic manufacturers to stay out of the market.”)  The Order also encourages the Attorney General and the Secretary of Commerce “to consider whether to revise their position on the intersection of the intellectual property and antitrust laws,” to “avoid the potential for anticompetitive extension of market power beyond the scope of granted patents, and to protect standard-setting processes from abuse.”

In the tech arena, according to the Fact Sheet, among other things, the Order

  • “Announces an Administration policy of greater 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.”
  • “Encourages the FTC to establish rules on surveillance and the accumulation of data.”
  • “Encourages the FTC to establish rules barring unfair methods of competition on internet marketplaces.”
  • “Encourages the FTC to issue rules against anticompetitive restrictions on using independent repair shops or doing DIY repairs of your own devices and equipment.”

Posted by Cydney Posner