Overview
On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy (“Executive Order” or “Order”). The Order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across the economy. Once implemented, these initiatives will result in concrete improvements and should help entrepreneurs and small businesses thrive and grow.
Why is this Executive Order deemed necessary by the Administration? One reason is that, over the past two decades, fewer companies control more than 75% of U.S. industries. This corporate consolidation makes it harder for existing and aspiring small businesses to break into markets. Since 1970, the rate of new businesses has dropped by nearly 50%.
This sweeping Executive Order directs changes in healthcare, technology, agriculture, transportation and many other sectors. Here, we’ll focus on just a few of the initiatives and how they should positively impact our small business clients.
Competition Initiatives
Federal Contracting
Are you a Federal Contractor or do you want to be? Smaller businesses often have difficulty applying for federal contracts because of burdensome requirements and regulations. The Order directs all federal agencies to increase competition in their procurement and spending decisions and will create more opportunities for small businesses to apply for and receive them.
Banking and Consumer Finance
Over the past 40 years, there have been approximately 10,000 bank closures, representing 40% of U.S. banks. Many of these closures are the result of corporate mergers and acquisitions. Statistics show that branch closures related to corporate consolidations restrict credit for small businesses. Branch closures can reduce the amount of small business lending by about 10% and lead to higher interest rates.
The Executive Order encourages the federal agencies responsible for banking to update guidelines and scrutiny on banking mergers, which should decrease some of these anti-competitive effects on small businesses.
Unfair Marketing Practices by Online Platforms
Digital tools are important to help small businesses grow. Small businesses leverage and rely on the online marketing tools of larger technology companies’ platforms to reach customers. But the large technology companies often engage in unfair and anti-competitive practices. They can evaluate the small business’ products and how they sell, then create their own copycat products and display them more prominently. Critics have raised concerns about the dual role that technology companies like Amazon and Apple play, both as digital platform operators and participants within them, competing with smaller retailers.
The Executive Order directs the Federal Trade Commission (“FTC”) to create rules barring this unfair practice. It also calls on the FTC to set new rules to combat unfair competition in online marketplaces. The Executive Order also announces an Administration policy of greater scrutiny of mergers of dominant internet platforms.
Healthcare Costs and Drug Prices
A recent survey of small business owners found that nearly 90% believe it is important that the Biden Administration and Congress take action to lower prescription drugs costs. And 55% of businesses providing coverage to employees say the rising costs of healthcare have delayed their business growth opportunities.
The Executive Order instructs the Food and Drug Administration, Federal Trade Commission, and the U.S. Patent and Trademark Office to identify and address anti-competitive behaviors and patent abuses that impede price competition from generic drugs. More competition will lead to lower drug prices.
The Executive Order also directs Health and Human Services (HHS ) to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging.
Shipping Goods
If your business engages in ocean shipping to procure parts or products that you sell, you may spend large sums of money in fees waiting for your parts or products to be loaded or unloaded. This is because of the overall lack of competition in the shipping market, with the largest 10 shipping companies controlling more than 80% of the market.
President Biden’s Executive Order encourages the Federal Maritime Commission to vigorously prohibit shippers from charging American businesses these exorbitant fees.
Conclusion
The Executive Order makes clear that tackling entrepreneurial and small business decline is now a clearly stated priority of President Biden. The entire Executive Branch is now charged with that priority, which is important because countless thousands of other laws and regulations hold back entrepreneurs, not just the 72 issues listed. The Executive Order elevates this issue on the federal level and heightens the visibility of these issues at state and local levels of government where many of these barriers primarily exist.
Contact Counxel Legal Firm
With important new initiatives to help entrepreneurs and small businesses flourish, this might be the time for you to make the jump to start or expand your business. To set up a strategy session, contact us at (480) 744-6621 or at request@counxel.com. Don’t forget to check out the good things that others are saying about the services they received from Timothy Coons on Google.
This article is intended for informational purposes only and does not constitute legal advice for your specific situation. Use of and access to this article does not create an attorney-client relationship between you and Counxel Legal Firm. Please contact request@counxel.com or (480) 744-6621 to request specific information for your situation.
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