Small Business Impact of the Promoting Competition Executive Order

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On July 9, 2021, President Biden issued an Executive Order “Promoting Competition in the American Economy” directing federal agencies to create frameworks intended to support competition between various businesses. While many people agree that both capitalism and competition are good things, how to achieve the appropriate balance can be the subject of some debate as we will likely see in the coming months.

Action

President Biden has indicated that this order is intended to benefit small businesses, farmers, and others by creating “more choices among suppliers and major buyers, leading to more take-home income, which they could reinvest in their enterprises.” For everyone, consumers in particular, “… it means more choices, better service, and lower prices.” 

While the order requires robust enforcement of various antitrust laws, there are other components as well. The order directs various federal agencies which are charged with enforcing the sometimes overlapping and complex regulations relating to anti-competition by promulgating new notes and invigorating their enforcement actions. Additionally, an Obama-era order addressing competition was also reinstituted.

Impact on small businesses

The Executive Order directs the Federal Trade Commission, as well as the Attorney General’s Office, to evaluate and address issues of “wage collusion” including potentially revising the Antitrust Guidance for Human Resource Professionals originally issued in October 2016.

There is also a directive to potentially regulate agreements “that may unduly limit workers’ ability to change jobs, specifically non-competition agreements.” The order specifically directs the FTC to assess curtailing “the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” 

There is no indication as to the size of the companies that may be affected by such regulation, but it should be noted that while Iowa has no statutory limitation on non-compete clauses and Iowa courts have consistently enforced non-competes in a variety of areas, other states have enacted statutes to limit the use of non-competes in employment. 

Other components of the order direct the FTC to look at issues such as unfair data collection (presumably, corporate espionage), federal regulation on consumer privacy, and restrictions on third-party or consumer self-repair of equipment.

Agricultural impact

In an agricultural state like Iowa, it should be noted that there are also directions that the Secretary of Agriculture further strengthen the Packers and Stockyards Act. Changes and new rules may address everything from whether almonds can be considered to create milk (which has been the subject of several lawsuits) up to how meat and poultry are labeled in the grocery store. Cost-saving measures in the Executive Order also include a direction to the Department of Agriculture to create or expand “useful information for farmers” which may include model contracts, forms, and other documentation that farmers can consistently use when working with vendors. 

The big picture

This order touches a huge number of agencies that regulate everything from baggage fees and how your meat is labeled to internet access, so it is difficult to quantify the potential impact at this early stage. 

While much of the Executive Order is directed at the implementation of rules and regulations which will primarily affect large businesses, some of it may benefit smaller companies, particularly in the entrepreneur and development areas. 

In agriculture, smaller providers and farms are likely to see an impact. Employment anti-competitive issues will have to be assessed after specific rules are drafted. Employers will need to monitor for any potential regulation changes from the FTC, DOL, or other industry-specific agencies.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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