Joe Biden’s vow to take on the U.S. economy’s most dominant companies faces a monumental task: combating years of consolidation that have left industry after industry controlled by a handful of firms.
The executive order the president signed Friday puts the weight of the federal government behind a sweeping effort that will target everything from airline baggage fees to soaring prescription drug prices.
In some cases, it will result in incremental changes, but in others, the measure raises the possibility of a slew of new regulations for corporate America and a tougher approach to overseeing how companies do business, from mergers to the ways they treat their workers.
At a White House ceremony Friday, Biden invoked the 20th century’s best-known trust-buster, Theodore Roosevelt, who took on John D. Rockefeller’s Standard Oil, and Franklin Delano Roosevelt, whose Justice Department is credited with reinvigorating antitrust enforcement in the late 1930s.
“Between them, the two Roosevelts established an American tradition, an antitrust tradition,” Biden said. “It’s how we ensure that our economy isn’t about people working for capitalism, it’s about capitalism working for people. But over time, we lost the fundamental American idea that true capitalism depends on fair and open competition.”
Economists have documented how industries across the economy saw rising concentration levels starting in the late 1990s. According to the White House, higher prices and lower wages caused by lack of competition are estimated to cost the median American household $5,000 per year.
Even with a steady rise in consolidation across markets, Biden’s order puts the authority of the federal government behind the effort to counter it, said Michael Kades, the director of markets and competition policy at the Washington Center for Equitable Growth.
“The president is saying this is a problem the government will attack,” said Kades, who was an antitrust lawyer at the Federal Trade Commission, which shares a mandate to enforce antitrust statues with the Justice Department. “The highest levels of the government is making competition policy a priority, and that’s a commitment there that we haven’t seen from any president in my lifetime.”
The order targets three sectors where the administration believes consolidation has led to higher prices — agriculture, technology and drugs. It directs more than a dozen federal agencies to begin 72 initiatives to strengthen competition, including new regulations.
It calls on the FTC and the Justice Department to toughen merger enforcement and to review past deals that were approved.
The measure also aims to empower workers by calling for restrictions on noncompete agreements that make it harder for people to switch jobs. Roughly half of private-sector businesses require at least some employees to enter noncompete agreements, affecting as many as 60 million workers, according to the White House.
The administration’s challenge cuts across industries. In airlines, four major carriers control nearly 64% of domestic passenger traffic, according to the U.S. Bureau of Transportation Statistics, after a series of bankruptcies rolled through the industry from the 1990s to 2011 and triggered a series of mergers.
As part of that consolidation, the number of U.S. carriers with full-service cabins and international networks shrank to three in 2013 from seven in 2000, with American Airlines Group Inc., Delta Air Lines Inc. and United Airlines Holdings Inc. as the survivors. Southwest Airlines Co., with a mostly domestic network, rounds out the four biggest.
Five U.S. tech companies — Apple Inc., Microsoft Corp., Amazon.com Inc., Alphabet Inc., and Facebook Inc. — make up half of the top 10 most valuable companies in the world by market capitalization.
10,000 Fewer Banks
Just four lenders possess nearly half of the assets in the country’s banking system: JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. American banks have announced $47 billion worth of deals this year alone, more than the $45 billion announced in all of 2020.
In a fact sheet released Friday before the signing, the White House pointed out that the U.S. has 10,000 fewer banks than it did two decades ago, with many of those closures tied to mergers and acquisitions.
The administration’s campaign is certain to face blowback from companies and their trade groups in Washington. The U.S. Chamber of Commerce, the biggest business lobbying group, called the idea that the economy has become too concentrated a “flawed belief,” and warned the administration against neglecting the importance of large firms for economic growth.
“In many industries, size and scale are important not only to compete, but also to justify massive levels of investment,” the group said in a statement Friday. “Larger businesses are also strong partners that rely on and facilitate the growth of smaller businesses.”
The broadband industry was quick to criticize Biden’s proposals aimed at internet service. The president called for restoring so-called net neutrality rules passed by Democrats during the Obama administration, which bar internet service providers from interfering with subscribers’ web traffic. They were gutted by the Federal Communications Commission during the Trump administration.