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What Biden’s Executive Order on Competition Means for Food Systems
Last Friday, President Joe Biden signed a sweeping executive order aimed at enhancing competition across the economy with over 70 different directives for government agencies. In announcing this order, the president emphasized issues of consolidation in food and farming, saying “Big Ag is putting the squeeze on farmers. Small and family farms, first-time farmers — like veterans coming home and Black and Latino and Indigenous farmers — they’re seeing price hikes for seeds, lopsided contracts, shrinking profits, and growing debt.”
The action represents a historic departure from decades of laissez-faire antitrust doctrine in the executive branch, but it will be up to federal agencies to turn these directives into meaningful protections for farmers, workers, and small businesses. Here is a breakdown of the key directives pertinent to food and farming:
Reforming Fair Competition and Labeling Rules in Livestock Markets, and Beyond
To promote fair terms of trade in livestock markets, the order suggests that the secretary of agriculture issue new rules under the Packers and Stockyards Act (PSA). The order’s directives largely match USDA’s current agenda for PSA reform [[link removed]]. On June 11, the USDA announced [[link removed]] plans to improve definitions of unfair, discriminatory, and deceptive practices, allow more farmers to seek justice under the PSA by removing a need to prove harm to “industry-wide” competition, and regulate tournament payment systems [[link removed]] that give some farmers bonuses at the expense of others. The order reiterates the need for these rulemakings, and it urges USDA to ban corporations from retaliating against farmers for speaking up.
The order also directs USDA to redefine standards for “Product of USA” and “Made in the USA” labels on meat. USDA already announced [[link removed]] such an effort on July 1 and in their spring unified agenda [[link removed]]. For years, some ranching groups have complained that current labeling rules allow meat from animals born and raised outside the United States to carry a “Product of USA” label if it is packaged in a U.S. facility. The order also directs USDA to submit a report to the White House with recommendations for improving price discovery in cattle markets, protecting whistleblowers across the food system, and increasing transparency for consumers into farmer and worker treatment.
“After suffering corporate abuse for so many years, it is reassuring that farmers may finally get a level playing field,” National Farmers Union President Rob Larew said in a statement [[link removed]]. “This executive order will offer them more autonomy in their relationships with corporations.” Other ranching and farming groups applauded the order [[link removed]], including the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America, United States Cattlemen’s Association, Family Farm Action Alliance, and Organization for Competitive Markets, while meat industry trade groups including the North American Meat Institute, National Pork Producers Council, and the National Chicken Council criticized it. [[link removed]]
Assessing and Regulating Retailer Buyer Power
The order also looks up the supply chain, requiring the USDA to work with the Federal Trade Commission (FTC) to create a report “on the effect of retail concentration and retailers' practices on the conditions of competition in the food industries.” This includes investigating possible violations of the Robinson-Patman Act [[link removed]], a controversial and largely dormant anti-monopoly law that bans dominant retailers from using their market power to extract discounts and favorable terms. The National Grocers Association recently urged [[link removed]] Congress and federal antitrust enforcers to revive this law, arguing that dominant retailers have used their might to receive priority fulfillment from suppliers, exacerbating pandemic-driven product shortages for smaller competitors. A report from the FTC and USDA could provide more information about how this buyer power squeeze affects farmers and workers along the supply chain. A 2018 study found [[link removed]] that suppliers selling to just one or two dominant buyers paid their workers less over time, and this dependence on fewer larger buyers can explain 10% of wage stagnation since the 1970s.
Revising and Rescinding Alcohol Trade Regulations
Perhaps the most puzzling part of the order is a series of directives aimed at increasing market access for smaller and independent beer and alcohol businesses. The Alcohol and Tobacco Tax and Trade Bureau (TTB) collects alcohol taxes, issues federal permits, and has lesser-known authority to enforce alcohol industry trade regulations. Current federal alcohol trade regulations prohibit [[link removed]] commercial bribery (when manufacturers and distributors pay for prime placement in stores), exclusive retail agreements, and consignment deals (or buying back unsold alcohol). But poor court precedent [[link removed]] has undermined TTB’s ability to crack down on these violations. “Investigations by the federal Alcohol and Tobacco Tax and Trade Bureau repeatedly uncover practices by large industry members that unlawfully exclude small producers from key retail outlets,” Bob Pease, president and CEO of the Brewers Association, said via email.
The executive order directs the TTB to issue new rules to update these trade practice regulations. This could help improve enforcement against commercial bribery and other unfair trade practices. But the order also broadly suggests that the TTB rescind or revise regulations, which might help or hurt smaller competitors. For instance, the FTC has [[link removed]] derided [[link removed]] complicated state-by-state alcohol regulations as inefficient and inhibiting competition. But some state-level alcohol laws arguably slow corporate consolidation. [[link removed]] Most states ban vertical integration of alcohol manufacturing, distribution, and retailing (often called the “three-tier” system), which prevents dominant manufacturers or retailers from cornering access to markets. Deregulating online alcohol sales in the name of expanding market access for craft brewers and small wineries, for example, could inadvertently aid goliaths such as Amazon in circumventing the three-tier system [[link removed]]. The TTB’s jurisdiction is somewhat limited, so it remains to be seen how or if deregulatory efforts could interact with state alcohol laws or the three-tier system.
Breaking Repair Monopolies
The order urges the FTC to issue rules banning “restrictions on third-party repair or self-repair of items, such as the restrictions imposed by powerful manufacturers that prevent farmers from repairing their own equipment.” Farm equipment manufacturers increasingly deploy exclusionary practices and technological locks [[link removed]] to prevent farmers from independently repairing their equipment. This has forced farmers to work with company-authorized repair techs for even minor fixes or tech glitches, costing farmers precious time and money. The FTC recently published a report [[link removed]] that found “scant evidence” to support manufacturers’ common justifications for limiting access to tools, diagnostics, manuals, software, and other critical information for self- or third-party-repair. While the exact details of future rulemakings are unclear, leading Right to Repair advocates at U.S. PIRG applauded the move [[link removed]].
Freeing Job Seekers from Non-Competes
Increasingly, employers demand that workers sign non-compete agreements preventing them from seeking jobs with competitors. Nearly 1 in every 5 American workers are bound by non-compete agreements with their current employers, and nearly 2 in 5 have been bound by a non-compete at some point in their careers, according to a 2018 study [[link removed]]. This includes low-wage food systems workers; for instance, 80% of fast food corporations [[link removed]] use non-competes, even restricting workers from going to different franchises of the same chain. The White House’s executive order urges the FTC to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility” through rulemaking, something the Open Markets Institute petitioned for in 2019 [[link removed]].
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About the Open Markets Institute
The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.
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Written by Claire Kelloway
Edited by LaRonda Peterson
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