By Valentina Rodriguez
46th President of the United States Joseph R. Biden recently passed an Executive Order on July 9, 2021 titled “Executive Order on Promoting Competition in the American Economy.”
The goal of this Executive Order is “to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony…” in a variety of industries by:
1) policing unfair, deceptive, and abusive business practices;
2) resisting consolidation and promoting competition within industries through the independent oversight of mergers, acquisitions, and joint ventures;
3) promulgating rules that promote competition, including the market entry of new competitors; and,
4) promoting market transparency through compelled disclosure of information.
The American economy is grounded on principles of competition, supply and demand, and other economic concepts that typically covered in an AP Microeconomics course. “Competition” allows smaller businesses to be able to sell their products, drives prices down for consumers as more businesses offer similar products, and reduces the market control. Furthermore, competition sometimes helps reduce the abuse of larger, more powerful corporations that have more money, have been in the industry longer, etc. Executive orders, bills, and laws that target the economy are always a hot topic.
This Executive Order takes a deep dive into a variety of industries in an effort to increase competition within those industries. It treats the health industry as the health industry, targeting specific issues with competition such as drug prices and the consequences of hospitals mergers. The Executive Order assigns responsibilities to specific government officials, asking these public servants to fully research and understand a specific industry in order to make recommendations as to how to increase competition, bring smaller businesses into the competitive atmosphere, and reduce the market control of the bigger players.
One of the industries that this Executive Order seeks to improve is the alcohol industry. The Executive Order assigns the Secretary of the Treasury the task to research and develop sufficient knowledge about the alcohol industry to make recommendations that will improve competition and meet the goals of the executive order. Here are the key excerpts of the executive order related to the alcohol industry:
“I. The Secretary of the Treasury has 120 days after the date of this order to submit a report to the Chair of the White House Competition Council that assesses the current market structure and conditions of competition, including an assessment of any threats to competition and barriers to new entrants, including:
(i) any unlawful trade practices in the beer, wine, and spirits markets, such as certain exclusionary, discriminatory, or anticompetitive distribution practices, that hinder smaller and independent businesses or new entrants from distributing their products;
(ii) patterns of consolidation in production, distribution, or retail beer, wine, and spirits markets; and
(iii) any unnecessary trade practice regulations of matters such as bottle sizes, permitting, or labeling that may unnecessarily inhibit competition by increasing costs without serving any public health, informational, or tax purpose.
(i) initiating a rulemaking to update the Alcohol and Tobacco Tax and Trade Bureau’s trade practice regulations;
(ii) rescinding or revising any regulations of the beer, wine, and spirits industries that may unnecessarily inhibit competition; and
(iii) reducing any barriers that impede market access for smaller and independent brewers, winemakers, and distilleries.”
In summary, the Executive Order requires that the Secretary of the Treasury investigate the industry and make recommendations to promote competition in the alcohol industry in an effort to achieve the goals of President Joseph Biden’s Executive Order on Promoting Competition in the American Economy. Brewers, importers, distillers, and everyone in between, patiently await the recommendations made by the Secretary of the Treasury to truly measure the impact that this executive order will have on the current alcohol industry. Only then will industry participants be able to plan ahead for a future hopefully marked by a stronger American economy.