Real Whole-of-Government Competition Policy Hasn't Been Tried Yet, Has It?
Pres. Biden created a Council to solve conflicts between 100+ agencies doing competition work. Good idea. Instead, it played hype man for regulators. The next admin should do better. Here's how.
Welcome back to Competition on the Merits.
This week – our focus turns from the FTC’s attempt to use its consumer protection authority to become a civil rights regulator back to competition policy. But not just any old competition policy. And certainly not just antitrust. But a secret, third thing. OK, maybe not a secret. But a relatively new idea – at least when supported by formal institutions and the imprimatur of the President – “whole-of-government competition policy.”
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On July 9, 2021 the Biden Administration issued Executive Order 14036: Executive Order on Promoting Competition in the American Economy. The primary function of Executive Order 14036 was to create institutions to facilitate whole-of-government (“WOG”) competition policy.
It was a good idea, too. And an important one. In theory it is a coordinated effort to solve some well known problems in competition policy. In practice, it was a bit of a disaster under the Biden administration. Today’s Competition on the Merits is all about the concept of WOG competition policy, the problems it is designed to solve, why it has failed so far, and what a successful version might look like.
Let’s get started.
WHAT PROBLEMS IS WHOLE-OF-GOVERNMENT COMPETITION POLICY IS TRYING TO SOLVE?
Federal competition policy is a decentralized beast. Layered atop the peculiar dual jurisdiction of the FTC and DOJ at the federal level is a remarkably complex and decentralized system of competition enforcement authority distributed among myriad federal sectoral regulators, state attorneys general, and private litigants that enforce the federal antitrust laws. Competition authority is distributed broadly and generously across the federal government.
Even experienced antitrust practitioners are often surprised to learn exactly how broadly the authority to consider competition is distributed to federal sectoral regulators and others. While the bulk of federal competition authority vests in either the Antitrust Division of the DOJ or the FTC, there are over 100 sections of the U.S. Code – scattered across 24 titles – that either vest some other federal agency with responsibility for preserving competition or otherwise require the agency to take competition into Consideration.
For what it is worth – and I hope quite a bit given the effort to compile the information – an appendix collecting these provisions can be found at Douglas H. Ginsburg & Joshua D. Wright, Appendix of Competition Authority in the U.S. Code (Feb. 28, 2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4712328.
Some examples are instructive. Some of that authority is “direct.” For example, the FCC, STB, SEC, ITC, and the FAA have authority to prohibit unfair methods of competition. The STB, FERC, FCC, Federal Reserve, DOT, FDIC, and Comptroller of the Currency are assigned merger authority, typically shared with the FTC and DOJ.
Others have the obligation to seek the opinion of the Antitrust Division about the competitive implications of a proposed regulation or transaction. For example, the Secretary of the Interior is required to consult with the Attorney General about the antitrust significance of any contracts she may issue to explore the Alaska Petroleum Reserve. The Secretary of the Interior must also consult with the Attorney General, who shall in turn consult with the FTC, about the competitive significance of any rulemaking regarding oil or gas leasing on the continental shelf (43 U.S.C. § 1334), and the Attorney General, after consultation with the FTC, may comment on the competitive significance of any such leases (43 U.S.C. § 1344(d)).
Some are more indirect, and require the agency to consider or promote competition in making decisions. For example, the EPA, PCAOB, and CPSC statutes include provisions that require some sort of duty to consider or promote competition. These provisions can vary substantially. The SEC is required to consider “whether the action will promote efficiency, competition, and capital formation,” alongside a public interest factor. In addition to these umbrella duties to consider competition, half a dozen other statutory provisions require the SEC to consider competition in a variety of
narrower circumstances. Duties to consider competition are scattered across the federal code from the CFPB to tourism policy to the Railroad-Shipper Transportation Advisory Council to the CFTC and at least a half a dozen cabinet secretaries that must consider competition in some form or another.
And that is just federal sectoral agencies. It does not include state antitrust authority to enforce the federal antitrust laws. You get the point: federal competition policy is remarkably decentralized across the government. The decentralization leads kinds of problems:
Regulatory conflicts between overlapping authorities;
Some federal competition policy decisionmakers do not have much competition expertise.
WOG Competition Policy is meant to solve both problems.
Overlapping authority among these authorities and interaction between them often leads to externalities that hinders policies’ effectiveness. Sometimes the issue is outright conflict between federal government entities with each carrying out visions of the Executive’s competition policy in ways that are in conflict with one another. I’ll give some examples below. But one WOG Competition Policy objective is to give the Executive’s competition policy vision a voice in each agency and to coordinate policy among them.
Competition expertise is mostly concentrated in the FTC and DOJ. After all, that is their single mission, and they have a breadth of experience across most of the economy. The sectoral regulators, in contrast, are at best experts in their sector. Competition is something to be considered when their agency is making regulatory decisions – it is not the sole purpose or charter of their agency. If competition issues do not frequently arise before them, they may not be very adept at analyzing competition within their bailiwick. This describes the state of affairs at many of the more than 100 federal agencies with some sort of competition policy mandate.
BIDEN-HARRIS WOG COMPETITION POLICY
Executive Order 14036 expressly recognized the overlapping authority problem and attempted to solve it. It also created WOG Competition Policy by laying out the themes of the Executive Branch’s approach to competition policy. Importantly, it created the Competition Council within the Executive Office of the President to help coordinate individual agencies. The Competition Council would be led by “the Assistant to the President for Economic Policy and Director of the National Economic Council, who shall serve as Chair of the Council.”
The Biden WOG Competition Policy order identifies 72 separate initiatives and mentions rulemaking 21 times. It calls for competition rulemaking across the economy and from nearly a dozen federal agencies. Just a few examples:
The Secretary of Agriculture is to consider a variety of competition rules under authority granted under the Packers and Stockyards Act;
The Secretary of the Treasury, through the Administrator of the Alcohol and Tobacco Tax and Trade Bureau, “shall consider” initiating or rescinding rules to promote competition in wine, beer, and spirits;
The FCC is to consider “Net Neutrality” and other competition rules;
The Secretary of Transportation “shall, to better protect consumers and improve competition, and as appropriate and consistent with applicable law, promote enhanced transparency and consumer safeguards, as appropriate and consistent with applicable law, including through potential rulemaking, enforcement actions, or guidance documents”;
The Surface Transportation Board is to “consider commencing or continuing a rulemaking to strengthen regulations pertaining to reciprocal switching agreements pursuant to 49 U.S.C. 11102(c), if the Chair determines such rulemaking to be in the public interest or necessary to provide competitive rail service”;
The Secretary of Health and Human Services is to consider a variety of rules;
The Director of the Consumer Financial Protection Bureau, “is encouraged to consider commencing or continuing a rulemaking under section 1033 of the Dodd-Frank Act to facilitate the portability of consumer financial transaction data so consumers can more easily switch financial institutions and use new, innovative financial products”;
The Competition Council’s mandate is to identify and minimize conflict among federal agencies to create a coherent competition policy across the federal government. In its own words, the Council’s mandate was to:
“work across agencies to provide a coordinated response to overconcentration, monopolization, and unfair competition in or directly affecting the American economy. The Council shall also work with each agency to ensure that agency operations are conducted in a manner that promotes fair competition, as appropriate and consistent with applicable law.”
Tim Wu, who has been credited with authoring the Executive Order and served as an advisor to the NEC and the Competition Council has spoken about the WOG effort:
This – by which I mean the notion of an institutionalized presence in the White House thinking about and advocating for sound competition – is a great idea. And it is more important than ever. Within just the last month the FTC, FAA, CFPB, FCC, DOJ, FERC and others have engaged in competition policy decisions. Many of these impact Little Tech.
In theory, the Competition Council can play coordinator for competition across these 100 agencies. That is not just important for offensive ventures, e.g. rulemaking and enforcement actions. It is important for deregulation as well. The Executive Order actually calls out “rescinding regulations that create unnecessary barriers to entry that stifle competition” but this Administration has largely ignored that part of the mandate. And instead, we have seen an enormous surge in regulation.
I’ve written before here about that surge in regulation creating the conditions for an incoming Trump-Vance to split the uprights between aggressive and principled antitrust enforcement on the one hand and deregulation on the other. The Council has the potential to serve as a useful vehicle to help mitigate the costs and burdens of regulatory overlap while coordinating and focusing the President’s competition policy objectives. That is what the Biden-Harris administration wanted out of the Council. As I’ll discuss – they did plenty of regulation, but there is not much to coordinate if your worldview is that more regulation is always better. The next Administration – Republican or Democrat – probably will not have that luxury. But a Trump-Vance administration in particular will want to identify tradeoffs and calibrate its policy to split the antitrust and deregulation uprights.
The punchline: The next Administration should keep the Competition Council. The Council can be useful in helping to split the uprights discussed above. The Executive Order needs rewriting to express the next President’s priorities. And it needs to give more than lip service to deregulation or existing barriers to competition. But the core idea of a WOG Competition Policy coordinator in the WH is a sound one. As you’ll see below – it is needed.
BIDEN-HARRIS ADMINISTRATION WOG COMPETITION POLICY COORDINATION HAS BEEN A FAILURE
Don’t get me wrong. The Biden-Harris administration did plenty of regulation. I’ve written already about how the case-by-case enforcement records of the FTC and DOJ do not look extraordinary in terms of activity level. A point one would miss if they only read the glowing profiles of Kanter, Khan and Wu’s every move from the NY Times and Bloomberg.
Some of this is pretty good stuff. The FDA Hearing Aid Rule – which to be fair, started in the Obama administration – is a good example. That was good. Others not so much. The FTC’s non-compete rule will not survive judicial review. I won’t do a full report card of Biden-Harris competition regulations here. The main point I want to explore is about how well coordination across agencies is happening. And frankly, the Administrative worldview that “more is always better” when it comes to regulation does not lend itself much to coordination between agencies. Indeed, the primary role member Tim Wu seems to describe for the Competition Council sounds much more like cheerleading individual agencies to dust off old powers or even find new and controversial ones than it sounds like identifying conflicts much less analyzing them:
Perhaps given that description it is not too surprising that there are many examples of regulatory conflict in the Biden-Harris administration that leaves its so-called WOG Competition Policy at war with itself, to borrow a phrase.
You want some examples. OK. So let’s hold aside the competition policy objectives of the Biden administration. I disagree with many of their competitive objectives on standard economic analysis grounds. But I do not want to focus on that here. Even taking their objectives and goals as given there are some decisions that make zero sense and are certainly in tension or outright conflict with one another. Perhaps the most important of those from the perspective of WOG Competition Policy and the Competition Council are those where two federal agencies have an incoherent set of competition policies that could have been solved by better coordination – but perhaps were cheered on instead. Let’s focus on just a handful of those to illustrate the point.
Example 1: Grocery Prices
Grocery prices have gotten a lot of attention this political season. Some people get very upset with calling Vice President Harris’s new, federal price gouging legislation a price control. This despite the fact that the plan would, well, control prices. It would quite literally limit their movement under some set of conditions determined by legislators. But that is not the point. We have a federal government that simultaneous is offering the following set of competition policy plans in grocery markets without a hint of even recognizing conflict much less solving it:
Plan 1: Prevent price increases caused by supply and demand;
Plan 2: Bring Robinson-Patman cases against grocery product manufacturers and retailers (like Walmart) who offer discounts and low prices – precisely on the legal grounds that those discounts are successful in attracting consumers from higher priced rivals.
I’ve written a lot about this. You can start my Robinson-Patman series here. But I do not want to get bogged down in how anti-consumer the Robinson-Patman Act is here. But it is really anti-consumer. I do not think either of these plans are a good idea. In fact, both are really bad ideas and the latter is particularly cruel to low income Americans. But if you think preventing high grocery prices is a good idea, you cannot simultaneously believe that chilling discounts and preventing Walmart or Costco from operating a business model that creates low prices is coherent policy. I’ll ignore the second-order conflicts in this space (if Walmart and Amazon are the 700 pound grocery gorillas, why sue Albertsons/ Kroger, etc.).
This one really jumps out as a nice candidate for the Competition Council to get in the same room and talk about Executive priorities and then coordinate. Instead, one hand of the administration is fighting the other while consumers lose but agencies get headlines.
Example 2: Space X, Space X, and Space X
This might be my favorite example. And it is one FCC Commissioner Brendan Carr has focused attention on in recent weeks. Space X faces incoherent competition policy from the FCC and other corners of the government. Within the FCC itself, as Carr points out, the FCC in 2020 “secured a commitment from Starlink to offer high-speed Internet to 640,000 rural locations for $1,300 per location in federal support.” What happens next?
As Carr reports, this federal government flip flop has been a disaster for Americans, who are paying about $100,000 per location instead. Hmmm, I wonder what happened at Space X between 2020 and 2023? (Hint: Google: “When Did Elon Musk Buy Twitter”).
Here is Carr making precisely this point:
Isn’t this just flat out anticompetitive government thuggery rather than failure of coordination, you ask? Fair enough, I suppose. But that is bad enough to make the list. Also, Chairman Rosenworcel’s explanation for the rejection does appear to conflict with American antitrust policy. Read her first: “Our economy doesn't benefit from monopolies. So we've got to invite many more space actors in, many more companies that can develop constellations and innovations in space.
But American antitrust law quite proudly does not take the view that our economy is harmed by monopolies that are created by innovation, ingenuity and entrepreneurship. In fact, that feature of American antitrust law is one that distinguishes us from our European and Chinese counterparts. Wonder how things are going over there?
I’ve been singing this song for decades, but no part of the consumer welfare standard is more important than the Supreme Court’s holding in Verizon v. Trinko (2004) that:
"The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system."
This is a simple, and powerful principle. It is a core feature of American antitrust and, in my view, a fundamental reason why the targets of antitrust suits in the US and Europe are American. Successful, innovative, entrepreneurial firms choose to locate here, not there.
In any event, it is not a complicated assertion that changing the number of effective competitors in a space from Zero to 1, as Peter Thiel put it, is a procompetitive and socially valuable thing. But if you like your examples with even more regulatory conflict, how about the FAA delaying and making more costly launches to space?
Example 3: Mattress Prices
Back to earth for this example: Mattress prices. The Federal Trade Commission is poised to try to block Tempur Sealy’s proposed $4 billion acquisition of Mattress Firm in federal court. The theory of the vertical merger case – which perhaps we will discuss in greater detail soon – is that Tempur Sealy will foreclose rivals’ access to Mattress Firm in the “premium mattress market.”
Here’s the FTC in its own words:
I won’t comment on the merits of that case here. But you get the point – your WOG Competition Policy dollars are being used to attack high prices in the mattress market. OK?
Imagine the scene in the Competition Council meeting as Chair Lina Khan presents their set of active cases:
Khan: We’ve decided to sue Temper Sealy to block the transaction. Low mattress prices are really important. We cannot have limits on competition in the mattress market. How will the people sleep?
Competition Council: Sounds great. Everyone on the same page?
ITC Chair Amy Karpel: Mmmm. This is awkward.
What is the ITC doing? Well, as Dominic Pino has reported in National Review, the ITC is on a mission to prevent competition from … you guessed it … low price mattresses. Here’s Pino:
The International Trade Commission (ITC) has arisen from its slumber and has determined that the U.S. mattress industry has been injured by imports from Kosovo, India, Mexico, and Spain. That follows its determination from July 5 that mattress imports from Bosnia and Herzegovina, Bulgaria, Burma, Italy, the Philippines, Poland, Slovenia, and Taiwan were also injuring U.S. mattress-makers.
This is really the classic regulatory conflict / spillover that the Competition Council was designed to solve. One hand pursues high prices; the other low prices. To some, that is a regulatory problem worth solving. And the Biden administration actually set up an institution designed to solve it, or at least identify it. But instead, each regulatory silo is left to maximize its own output with American consumers paying the bill.
Example 4: Big Tech and Little Tech
I have an entire newsletter on this one – but there is deep, deep conflict between the Biden administration approach to Big Tech regulation while simultaneously smothering Little Tech.
Taking the view that Big Tech poses a significant antitrust problem and should be prosecuted when they violate the antitrust laws is one thing. And perfectly fine. But that ought to be coupled with a competition policy that makes things easier, not harder, for Little Tech to compete. And that is the sort of thing a Competition Council could be very effective at conveying across the 100 federal agencies with a competition mandate as an Executive priority.
The administration has done the opposite.
From the new Merger Guidelines to FTC policy statements that have singled out “serial acquirers” and transactions that impact “nascent competition” as special targets of antitrust scrutiny, the administration’s consistent message to Little Tech has been to make life more costly. Some of the action has been sub rosa – simply imposing merger review burdens and delays to deter transactions. Proudly at times, for this FTC in particular, with its worldview that all commerce and transactions are and efficiencies arising from acquisitions are not real. It is nonsense. But this view finds its way into policy not just in statements and litigated cases, but also abuse of process. A second request for a transaction like this can cost upwards of $5 to $10 million dollars. And that is just the second request. The FTC and DOJ have ample leverage to make life hard on startup firms and they often use it. Not to mention a prohibitive approach to AI policy and innovation that is more likely to favor incumbents than challengers.
For the sake of brevity, I will stop there. But there are many other examples. The administration gives lip service to winning the AI and tech wars with China but punishes Nvidia for its success. The EPA punishes innovation and competition in many sectors across the economy. Immigration policy punishes American competitiveness in high-tech sectors. Each of these problems is worthy of identification, analysis, discussion, and a coherent solution.
What good is Whole-Of-Government Competition Policy if it does not represent the whole of the government?
WOG Competition Policy is no panacea. It is a meeting room. The meeting facilitates coordination. But the coordination has to happen. And it is a roll-up-your-sleeves kind of work. Only the naive worldview that each of these problems is solved with more and bigger and stronger regulation leads to the conclusion that the Competition Council should be a pep rally rather than a braintrust strategy session. Rooting on scared heads of agencies to do more – as Wu describes the Council – is no more than an admission that the wrong people are running agencies. And it appears serious identification of conflicts and problem-solving took a back seat. And it shows.
Some of these problems are easy to solve. The mattress and grocery price conflicts are relatively simple, once identified. Some are tougher. Especially when one takes into account that one desirable goal of competition policy is deregulation: to remove obstacles to competition. Ask Space X. Ask Little Tech. Ask private equity or the oil and gas industry. Ask retail. Pursuing sensible Big Tech cases while fostering conditions for Little Tech to thrive requires expertise in competition law and economics, it requires industry knowledge, it requires ability to communicate across agencies, it requires knowledge of how agencies work, and it requires hard thinking about tradeoffs.
These problems are harder and more complicated than they used to be. Deregulation must be part of the solution to make life easier for competition in the American economy. Rigorous and principled application of existing antitrust law is also part of the solution. But the reality is that more than 100 federal government agencies are executing competition policy and the conflicts among them are very real and very costly at a time that is critical to get this stuff right. We can be Europe or China with a set of bad decisions.
The Biden administration was right to create the Competition Council. It is truly a good idea. And like many first projects – they left some money on the table. If the sole goal of the WOG Competition Council was to play hype man to the competition policy objectives of individual agencies, then they did a fine job. But perhaps the Competition Council can have aim for goals a bit higher than being the Flava Flav of competition policy – no disrespect intended to Mr. Flav.
The Competition Council is not all about regulatory confidence. They have plenty of that. It should not be all about hype. It should be about results. The Biden WOG Competition Policy – to be fair – had some of those. Again, the FDA Hearing Aid rule comes to mind as an unequivocal win. And they achieved some regulatory objectives that I might disagree with, but are wins from their own perspective.
But objectively, the highest value function of the Competition Council is to prevent and minimize the costs associated with regulatory spillovers and conflict. The second highest value function is to amplify the Executive’s competition agenda across the federal government with expertise and political capital. On the second function, the Biden-Harris WOG policy gets an B+/ A-. On the first function, it cannot get more than a D. Simply not enough identification and serious thinking about conflicts between federal agencies and solutions and too much over-simplified thinking that more regulation, even contradictory regulation, is always better.
The next Administration should modify the Executive Order to represent its own priorities. It should emphasize deregulation. And it should take seriously the expertise and analytical commitments required to turn WOG Competition Policy from a bumper sticker slogan to a real analytical framework for handling regulatory conflict.
Have a great weekend. See you next week.