Biden Administration Announces New Initiative to Challenge Unfair and Illegal Pricing Practices

At a Glance

• The newly announced strike force is one in a series of three new actions announced by President Biden’s Competition Council to promote enforcement of his 2021 Executive Order on Promoting Competition in the American Economy.
• Key sectors where the administration is looking to curb potentially illegal inflation of prices include prescription drugs and health care, food and grocery, housing, financial services, and more.

On March 5, 2024, the Biden administration announced the launch of a “strike force” aimed at cracking down on unfair and illegal pricing practices. The strike force is one in a series of three new actions announced by President Biden’s Competition Council to promote enforcement of his 2021 Executive Order on Promoting Competition in the American Economy, which asserted that “over the last several decades, as industries have consolidated, competition has weakened in too many markets, denying Americans the benefits of an open economy and widening racial, income, and wealth inequality.” We have written previously about the Biden administration’s other efforts to combat consolidation and other anticompetitive conduct across industries, including in the food and agriculture sectors.

Companion initiatives of the Competition Council focus on curtailing credit card late fees and bulk billing junk fees.

The strike force, which will be co-chaired by the Department of Justice’s (DOJ) Assistant U.S. Attorney General for Antitrust Jonathan Kanter and Federal Trade Commission (FTC) Chair Lina Khan, seeks to “strengthen interagency efforts to root out and stop illegal corporate behavior that hikes prices on American families through anti-competitive, unfair, deceptive, or fraudulent business practices.” The administration has characterized the existing emphasis of both the DOJ and FTC on “key sectors where corporations may be violating the law and keeping prices high, including prescription drugs and health care, food and grocery, housing, financial services, and more” as in tune with the strike force’s goals.

Historically, the federal antitrust laws have been applied to address anticompetitive conduct, not inflation. Where external economic factors such as supply shortages help facilitate soaring prices, it is not clear that either the Sherman Act or the Clayton Act — the two principal federal antitrust statutes — can effectively address those concerns. However, President Biden noted in his remarks to the Competition Council that the creation of the strike force was driven in part by companies’ engagement in price gouging practices during the Covid-19 pandemic. While enforcement against price gouging is typically driven by state consumer protection laws, rather than federal statutes or regulations, the FTC has previously been urged to utilize its power under Section 5 of the FTC Act to ban “unfair methods of competition,” though the FTC Act has not to date been used to combat price gouging. And the Price Gouging Prevention Act, which was recently reintroduced by a group of progressive lawmakers, including Elizabeth Warren, Tammy Baldwin, Jan Schakowsky and Bob Casey, would clarify that “unfair and deceptive” trade practices under the FTC Act include price gouging and empower the FTC and state attorneys general to enforce the federal ban regardless of an offending seller’s position in the supply chain.

Negative responses to the strike force initiative have been swift and strong. U.S. Chamber of Commerce Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy Neil Bradley stated that the strike force represents an ominous return to government overreach in the form of price controls. He continued, “To make matters worse, the strike force will be led by two agencies that, for the past three years, have been openly hostile to market efficiencies — blatantly ignoring lower prices and better outcomes for consumers.”

Policy experts contend that, while the strike force’s purpose is broad, it may not be effective. There exists no set standard for determining whether the price of any given product is too high, and while the DOJ and FTC regularly bring enforcement actions in cases relating to price-fixing and other anticompetitive practices under the Sherman Act, price regulation has not traditionally been a part of their wheelhouse. Others have argued that the strike force seems incompatible with continuing investigations into and enforcement actions against companies like Amazon and Google, whose platforms are built around advertising the lowest available prices to consumers.

In addition, other agency initiatives aimed at combatting the negative effects of increased consolidation on smaller retailers could undermine efforts to fight high consumer prices. The DOJ and FTC have indicated their intentions to pursue claims under the Great Depression-era Robinson-Patman Act (RPA), which was enacted to protect “mom-and-pop” stores from big-box retailers that use their market power to negotiate lower wholesale prices on large volume purchases, and then pass on some of those discounts to consumers. While the RPA has been enforced solely by private plaintiffs for decades, recent FTC investigations into the food and beverage and pharmaceutical industries could make it harder for large retailers to purchase inventory from manufacturers at low prices, and then pass through their volume discounts to customers.

In sum, the new strike force signals yet again that the Biden administration is actively looking for ways to support consumers during periods of scarcity and inflation. While it is not immediately obvious whether and how any particular initiative of the Competition Council will ultimately benefit customers, what is clear is that the administration and its antitrust enforcers are committed to exploring creative applications of traditional antitrust laws to benefit the public.  

Businesses should take note that industry practices that have not traditionally implicated the antitrust laws could nonetheless attract scrutiny from federal antitrust authorities if such practices are perceived to be unfair or anticompetitive in some way. Whether the agencies could convince the courts to effectively expand the applicability of the federal antitrust laws to extend to new types of business conduct is yet to be seen. Regardless, businesses would be well-served to revisit their practices with an eye toward avoiding DOJ and FTC attention and the legal fees, business disruptions and public scrutiny that come with it.

The antitrust laws are nuanced and complex, and their application to particular circumstances requires a fact-intensive analysis and an assessment of the current political and enforcement climates. Businesses, and especially those operating in one of the “key sectors” identified in the strike force announcement, should consult experienced antitrust counsel regarding the implications of recent federal antitrust initiatives for their own business practices.