Earlier this morning, President Obama announced the issuance of an executive order that broadly requires all executive agencies and departments to take steps to address competition concerns. The executive order comes on the heels of a report issued by the White House’s Council of Economic Advisors that details the increasing concentration of markets in the U.S. economy.
Update: Jay was interviewed for a report on the President’s Executive Order by Martha C. White for NBCNews.com – check out the story here.
What does the executive order require?
The executive order requires executive agencies to act in three main ways. First, agencies are to develop systems to detect anticompetitive practices, such as price fixing, and refer potential violations to the Department of Justice and Federal Trade Commission for further investigation, the agencies whose specific mission it is to protect competition in the U.S. Second, agencies “with authorities that could be used to enhance competition” are directed to exercise such authority to promote competition. Third, agencies are to create rules and regulations promoting competition, and must also eliminate regulations that restrict competition.
Note that the executive order requires action by the executive agencies, but “strongly encourages” compliance by independent agencies such as the Federal Communications Commission, General Services Administration, Securities and Exchange Commission, Consumer Financial Protection Bureau , Environmental Protection Agency and others.
The executive order will be implemented under the following the timeline.
By May 15, 2016: Executive agencies are to submit a report to the Director of the National Economic Council that includes list of actions each can “potentially take.” The report will also include any specific anticompetitive practices the executive agency has observed and the authorities it has available to take further action.
By June 14, 2016: Executive agencies are to submit a second report to the Director of the National Economic Council providing a specific action plan that identifies priority items. Executive agencies are also required to provide a timeline for completing the actions.
In announcing the executive order, the White House and Council of Economic Advisors both pointed to cable set-top boxes as an example of a consumer good whose prices have risen over the years, though its cost of manufacture has declined greatly. The action today begs the question as to which industries are really on the administration’s target list. FCC? Certainly, the example given falls in its backyard, but in our information economy, the FCC regulates many aspects of data/information and processing that arguably affect the competitiveness of our markets. It is probably a good bet that its rules and procedures are going to be scrutinized. Healthcare? Will the FDA come under the microscope for the length it takes to approve medical devices and pharmaceuticals that provide competition to incumbent products? FAA? Treasury? The coming months should provide at least some answers to these questions.
Additionally, the executive order appears to contain broad edicts that will have to be interpreted by the federal agencies. For example, what is meant by the requirement to “eliminate regulations that restrict competition without corresponding benefits to the American public?” Interestingly, the executive order specifically states that agencies must consult with interested parties in creating their action plan.
In light of these sweeping mandates, businesses are well-served to stay involved in the process and track the reports that will be issued in the next few months.