“Bad mergers” and noncompete clauses targeted in Biden executive order
President Joe Biden announced his anticipated executive order today, and it’s a sweeping document that seeks to counter rising corporate consolidation and foster greater competition in everything from labor markets to mergers, banking, healthcare, device repairs, transportation, broadband, and more.
“For decades, corporate consolidation has been accelerating,” the White House said in a statement. “In over 75 percent of US industries, a smaller number of large companies now control more of the business than they did twenty years ago. This is true across healthcare, financial services, agriculture and more.” (We published a separate article today that dives into the broadband portions of the executive order.)
Some of the order’s broadest and most immediate effects will be felt in the labor market. Biden encourages the FTC to outright ban or substantially limit noncompete agreements in employee contracts. The practice was once largely limited to top executives who were highly paid and had broad insight into a company’s inner workings, but over the years, it has trickled down to prevent employees in a variety of industries from taking new jobs with competitors, including sub sandwich makers, janitors, and summer camp counselors.
The order also encourages the FTC to use antitrust laws and regulations to prevent employers from collaborating to suppress wages or reduce benefits, which is often done by sharing wage and benefit information with each other. Biden is pushing the FTC to restrict “unnecessary occupational licensing” that can create barriers to entry—sometimes costly ones—for people seeking to enter a new field.
