On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy (Order), a wide-ranging edict intended to promote competition in numerous sectors of the economy through 72 specific initiatives, including many in the food and agriculture industries.1 The Order instructs numerous federal agencies, including the primary antitrust enforcers, to undertake multiple actions to implement President Biden’s campaign goals of “fair competition” through “full and aggressive enforcement of [U.S.] antitrust laws,” and to address the effects of consolidation, “abusive actions by monopolies” and “bad mergers” in several areas of the economy.2
As part of a series of client alerts on the context and implications of the President’s Order, we examine how companies in food and agriculture should expect increased antitrust scrutiny in the years ahead because of the Order.
General Impacts of the Executive Order on Food and Agriculture Companies
The Order’s overarching initiatives regarding the enforcement of the competition laws across the U.S. economy will affect the food and agriculture industries, even when not explicitly targeting them. These broad initiatives include:
- Reviewing and revising the Horizontal and Vertical Merger Guidelines issued by the Department of Justice (DOJ) and the Federal Trade Commission (FTC). Shortly after the Order was signed, the FTC and DOJ announced that “current guidelines deserve a hard look to determine whether they are overly permissive” and that the antitrust enforcers planned “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.”3 It is thus likely that any revisions will lead to more stringent Merger Guidelines that would be consistent with the White House’s call for “greater scrutiny of mergers.”
- Establishing a White House Competition Council to implement the actions included in the Order and to coordinate federal agency operations to address competition issues. The Competition Council will include Cabinet Secretaries with subject matter jurisdiction for the Order’s targeted industries, including the Attorney General and Secretary of Agriculture, and will invite the participation of independent agencies with subject matter jurisdiction for the Order’s targeted industries, including the FTC Chair. The Council will monitor progress on completing the Order’s initiatives, including those regarding food and agriculture, through reviewing compliance with the Order’s deadlines, semi-annual meetings and the receipt of numerous reports.
- Establishing FTC rulemaking to end the use of non-compete clauses or other agreements that limit worker mobility, including food industry employees, and to address “any other unfair industry-specific practices that substantially inhibit competition.” (This broad rulemaking mandate followed the FTC’s votes in early July to streamline procedures for rulemaking, as well as authorizing investigations and issuing compulsory process through the approval of a single Commissioner.4)
Initiatives of the Executive Order Specifically Targeting Food and Agriculture Companies
In addition to general impacts, the Order specifically encourages vigorous enforcement of the antitrust laws in food and agricultural markets by DOJ, FTC and the Department of Agriculture (USDA). To respond to perceptions of reduced competition in various agricultural input and output markets — and address the contention that the USDA has systematically weakened the Packers and Stockyards Act (P&S Act)5 — the Order establishes the following initiatives:
- FTC rulemaking regarding manufacturer restrictions on third-party or self-repair of farming equipment.
- USDA rulemaking relating to the P&S Act, including, among other things, unfair and deceptive practices and that industry-wide harm is not required to show a P&S Act violation.
- A report within 180 days from USDA to the Competition Council with a plan to promote competition in agricultural industries, including “enhanced tools” to “monitor agricultural markets.” USDA simultaneously announced initial steps “to increase competition in agricultural markets,” including investing more than $650 million to support new entrants and smaller competitors in meat and poultry processing.6
- A report within 300 days from USDA and FTC to the Competition Council on the effect of retail concentration on competition in the food industry, including any practices that may violate the FTC Act, the Robinson-Patman Act or other laws.
- A USDA report to the Competition Council on the effect of intellectual property on competition in seed and other input markets, and strategies for addressing any concerns under antitrust and IP laws.
- A report within 120 days from DOJ, FTC and the Treasury Department on the market structure and competition in the markets for beer, wine and spirits, including assessments of any threats to competition, such as anticompetitive distribution practices, entry barriers and patterns of consolidation. (Generally, FTC has reviewed alcohol and wine mergers, while the Antitrust Division has reviewed beer, and they have jointly opined about state laws affecting alcohol competition.7)
Responses From Food and Agriculture Companies
The Order will lead to numerous opportunities for food and agriculture companies to be heard about changes to the rules for competition in their sectors. Any revisions to the FTC/DOJ Merger Guidelines will likely be open to public comment and may be subject to one or more workshops.
There will be multiple rulemaking proceedings at the USDA and FTC relating to competition in the food and agriculture industries. With each rulemaking proceeding, there will be notice, and there may be opportunity for companies and trade association representatives to submit comments and establish an evidentiary record about the effect of proposed rules under the Administrative Procedures Act.8 Similarly, agency reports on industry competition submitted to the Competition Council may be available for review and critique.
The Order’s competition-related developments in food and agriculture (in addition to those targeting the technology, financial, health care and transportation sectors) will be closely monitored. As with any broad federal competition policy mandate, the effectiveness of execution by implementing agencies will be in the details.
The antitrust laws are nuanced and complex, and their application to specific circumstances necessarily involves a fact-intensive inquiry. Businesses with questions or concerns regarding the effect of this Order on competition issues should seek advice from antitrust counsel.
- The White House, Executive Order on Promoting Competition in the American Economy (July 9, 2021), https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
- President Biden Delivers Remarks and Signs an Executive Order (July 9, 2021), https://www.youtube.com/watch?v=vYzIwwtKXvo. Although the written Order “encourages” agencies to undertake specific actions, the President stated he “expect[s]” the agencies to do them. https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/07/09/remarks-by-president-biden-at-signing-of-an-executive-order-promoting-competition-in-the-american-economy/.
- Statement of FTC Chair Lina Khan and Antitrust Division Acting Assistant Attorney General Richard A. Powers on Competition Executive Order’s Call to Consider Revisions to Merger Guidelines (July 9, 2021), https://www.ftc.gov/news-events/press-releases/2021/07/statement-ftc-chair-lina-khan-antitrust-division-acting-assistant.
- FTC press release, FTC Authorizes Investigations into Key Enforcement Priorities (July 1, 2021), https://www.ftc.gov/news-events/press-releases/2021/07/ftc-authorizes-investigations-key-enforcement-priorities.
- The White House, FACT SHEET: Executive Order on Promoting Competition in the American Economy (July 9, 2021) https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/.
- U.S. Dep’t of Ag. press release, USDA Announces $500 Million for Expanded Meat & Poultry Processing Capacity as Part of Efforts to Increase Competition, Level the Playing Field for Family Farmers and Ranchers, and Build a Better Food System (July 9, 2021), https://www.usda.gov/media/press-releases/2021/07/09/usda-announces-500-million-expanded-meat-poultry-processing.
- FTC press release, FTC Approves Final Order Imposing Conditions on E. & J. Gallo Winery’s Acquisition of Assets from Constellation Brands, Inc. (Apr. 5, 2021), https://www.ftc.gov/news-events/press-releases/2021/04/ftc-approves-final-order-imposing-conditions-e-j-gallo-winerys; DOJ press release, Justice Department Requires Anheuser-Busch InBev to Divest Stake in MillerCoors and Alter Beer Distributor Practices as Part of SABMiller Acquisition (July 20, 2016), https://www.justice.gov/opa/pr/justice-department-requires-anheuser-busch-inbev-divest-stake-millercoors-and-alter-beer; Joint FTC and DOJ Letter Raises Concerns about California Assembly Bill 1541, which would Impose New Restrictions on Beer Manufacturers Who Wish to Terminate Distribution Agreement with Wholesalers (Mar. 23, 2020), https://www.ftc.gov/news-events/press-releases/2020/03/joint-ftc-doj-letter-raises-concerns-about-california-assembly.
- FTC press release, FTC Votes to Update Rulemaking Procedures, Sets Stage for Stronger Deterrence of Corporate Misconduct (July 1, 2021) (“The rulemaking procedures build in extensive opportunities for public input, far in excess of the opportunities for public comment under the Administrative Procedure Act.”), https://www.ftc.gov/news-events/press-releases/2021/07/ftc-votes-update-rulemaking-procedures-sets-stage-stronger.