Biden's Competitiveness EO Risks US Innovation 'Leadership': Shapiro

The FTC and DOJ will work to update guidelines on mergers and acquisitions and begin the interagency collaboration directed in President Joe Biden’s executive order (see 2107090010), FTC Chair Lina Khan and Attorney General Merrick Garland responded to the EO Friday. Democratic senators and consumer groups welcomed Biden’s call for more vigorous and modernized antitrust.

But industry and business groups disagreed. U.S. tech companies are "the crown jewels of the American economy and the envy of the world," said CTA President Gary Shapiro. "Elements" of Biden's EO "threaten our global leadership and hard-won success," he said. Increased federal M&A "scrutiny" is the EO's "most concerning aspect," he said. "Countless startups launch with the goal of being acquired by a large company, a process that allows big ideas to become marketplace realities."

Shapiro was silent on the EO's calls for expanded FTC oversight to safeguard consumers against tech companies' right-to-repair restrictions -- limitations CTA as an association has long defended. The FTC plans an open meeting at noon July 21, when commissioners will vote on issuing a new policy statement on right-to-repair restrictions, announced Khan Monday. The FTC's "Nixing the Fix" report, released May 6 with unanimous commissioner support, found manufacturer repair restrictions have “diluted the effectiveness” of consumer protections in the 1975 Magnuson-Moss Warranty Act (see 2105060066). The report said the agency will consider “reinvigorated regulatory and law enforcement options” to address the problem.

The CTA president praised the EO's call for the launch of a Food and Drug Administration rulemaking within 120 days to create a category of affordable over-the-counter hearing aids. CTA is a staunch defender of the statutory OTC rules that are nearly a year overdue, after the FDA missed the August 2020 deadline in the FDA Reauthorization Act of 2017 (see 2008200024).

Agencies must ensure guidelines “reflect current economic realities and empirical learning and that they guide enforcers to review mergers with the skepticism the law demands,” said the FTC's Khan with DOJ acting Antitrust Division Chief Richard Powers. “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.”

DOJ will immediately implement interagency collaboration described in the EO, said Garland: “We look forward to helping our agency partners use their regulatory authorities to bring greater competition to the U.S. economy.” DOJ will “closely examine its antitrust guidelines and policy statements to better educate the public on its enforcement priorities,” he said: It will strengthen efforts to “prevent mergers that would result in excessive consolidations of purchasing power.”

“Competition policy needs new energy and approaches so that we can address America’s monopoly problem,” said Senate Antitrust Subcommittee Chair Amy Klobuchar, D-Minn. “That means legislation to update our antitrust laws, but it also means reimagining what the federal government can do to promote competition under our current laws.” The EO “takes critical steps to protect consumers and workers, strengthen antitrust enforcement, and tackle consolidation and anticompetitive practices across sectors,” said Sen. Elizabeth Warren, D-Mass.

Sen. Richard Blumenthal, D-Conn., credited the administration for addressing increasing consolidation and rising monopoly power: “I’ve long called on the FTC and DOJ to not only thoroughly scrutinize new acquisitions and mega mergers, but to also set clear competition rules and conduct a retrospective review to clean up the existing mess.”

After Biden’s appointment of Tim Wu as special assistant on tech policy, the EO is a sign the White House is “attempting to meddle into the work of federal antitrust agencies,” said Aurelien Portuese, Information Technology and Innovation Foundation antitrust and innovation policy director. “Instead of changing antitrust rules, the White House should ensure that agencies properly enforce existing antitrust laws.”

The Computer and Communications Industry Association agrees “consumers should be the main beneficiaries of competition policy and changes in policy shouldn’t impact goods and services that consumers enjoy,” said Vice President Arthur Sidney. “Consumer interest and welfare should be paramount in competition policy."

The mandate “smacks of a ‘government knows best’ approach to managing the economy,” said U.S. Chamber of Commerce Executive Vice President-Chief Policy Officer Neil Bradley. It’s built on the "flawed belief that our economy is over concentrated, stagnant, and fails to generate private investment needed to spur innovation,” he said. Public Citizen and Public Knowledge welcomed the EO. For digital platforms, it will “improve antitrust enforcement and push enforcers to take the power of Big Tech seriously,” said PK CEO Chris Lewis.

The order focuses on areas where dominant internet platforms are using their power to “exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage.” Too “many small businesses across the economy depend on those platforms and a few online marketplaces for their survival,” the EO said. It directs DOJ and the FTC to “enforce the antitrust laws fairly and vigorously.”

The EO says the FTC should use its rulemaking authority to address “unfair occupational licensing restrictions” and “unfair data collection and surveillance practices that may damage competition.” It’s the administration’s policy to enforce antitrust laws to meet the challenges of new industries, including the “rise of the dominant Internet platforms, especially as they stem from serial mergers, the acquisition of nascent competitors, the aggregation of data, unfair competition in attention markets, the surveillance of users, and the presence of network effects,” the EO said.