New presidential order will push for net neutrality, limit large mergers, restrict non-compete clauses

In an effort to promote more business and labor competition, President Biden today will issue a sweeping executive order to limit the concentration of money and power in many American businesses, particularly technology and healthcare.

The order, to be announced Friday, would promote increased scrutiny of large corporate mergers particularly by “dominant internet platforms,” limit the use of non-compete clauses that restrict employee pay and mobility, and seek to re-establish net neutrality standards rolled back by the Trump administration.

But it doesn’t stop with broad initiatives. It also specifically mandates more competition among drugmakers by pushing state and tribal programs that import cheaper prescription drugs from Canada while also allow hearing aids to be sold over the counter at drug stores. And it will pressure airlines to offer refunds when inflight Wi-Fi doesn’t work.

Let me be clear: capitalism without competition isn’t capitalism. It’s exploitation.

— President Biden (@POTUS) July 9, 2021

Taken as a whole, the executive order is the president’s response to both the bipartisan concerns about the reach and scope of giant tech companies such as Facebook, Apple, and Amazon as it is a nod to labor analysts who have said that the overuse of restrictive non-compete clauses has damped the labor market mobility and pay.

“Having healthy competition is vital to an effective capitalist system,” said Brian Deese, Biden’s top economic adviser, in the New York Times. “It is a driver of higher wages, lower prices, more innovation, and more business creation.”

The order, in part, dovetails with a phalanx of bills in Congress that also seek to limit the largest tech companies in the country.

Currently, five federal bills would create a framework to dismantle large tech companies into smaller ones; to make mergers more expensive and difficult; to break up businesses that use their dominance in one area to get a stronghold in another; and to stop companies that create purportedly open marketplaces and only to game them to favor their own products — an antitrust accusation both Apple and Google face in their proprietary app stores.

While the bills face steep roads in Congress, executive orders or proclamations by a president bypass Congress entirely but vary somewhat on reach and legal weight. Generally, they are directives for federal agencies — not citizen — and often target levels of enforcement or regulation of existing law.

For example, today’s executive order requires the Federal Trade Commission to limit or ban certain non-compete agreements — which has been a growing source of contention particularly among lower-paid workers and tech contractors.

In a joint statement issued by FTC Chair Lina Khan and Acting Assistant Attorney General of the Justice Department Antitrust Division Richard A. Powers, the agencies that oversee large corporate mergers vowed both scrutiny and skepticism to protect consumers.

“We must ensure that the merger guidelines reflect current economic realities and empirical learning and that they guide enforcers to review mergers with the skepticism the law demands,” the statement said.

“The current guidelines deserve a hard look to determine whether they are overly permissive. We plan soon to jointly launch a review of our merger guidelines with the goal of updating them to reflect a rigorous analytical approach consistent with applicable law.”

Two years ago, Washington state overhauled its laws regulating non-compete clauses to end non-competes for employees who earned less than $100,000 per year and independent contractors who made under $250,000 a year in 2020.

Additionally, the order also tasks the FTC with scrutinizing large corporate mergers and acquisitions such as Amazon’s bid to buy MGM Studios.