Crafting Change: President Biden’s Recent Executive Order Targets Big Ag and Large Beer, Wine, and Spirits Distributors
On July 9, 2021, President Joe Biden issued an Executive Order comprised of 72 policy objectives aimed at “Promoting Competition in the American Economy.” The Executive Order emphasizes the vital nature of a “fair, open, and competitive marketplace” in the U.S., asserting that, “[t]he American promise of a broad and sustained prosperity depends on an open and competitive economy.” In essence, the Executive Order aims to combat corporate consolidation in the Nation’s largest industries that often leads to increased prices for consumers and decreased wages for workers. President Biden calls on the heads of agencies to implement the Executive Order’s policy objectives in addition to the protections established in industry-specific fair competition and anti-monopolization laws, including the Packers and Stockyards Act (7 U.S.C. §§ 181–231) and the Federal Alcohol Administration Act (27 U.S.C. § 201), among others.
According to a White House fact sheet, the world’s agricultural markets for seeds, fertilizer, feed, and equipment are dominated by just four companies, leaving small-scale family farms to pay 30% price increases annually or cease operations. Similarly, only four companies dominate the meat-packing industry, controlling about 80% of the beef market and dropping farmers’ share of rising beef prices by more than 25% over the last five years. As the fact sheet explains, the Executive Order directs the United States Department of Agriculture “to develop a plan to increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmers markets and developing standards and labels so that consumers can choose to buy products that treat farmers fairly.”
Additionally, the Executive Order specifically calls out anti-competitive practices in the beer, wine, and spirits industries and charges the U.S. Secretary of Treasury with assessing “any threats to competition and barriers to new entrants in these markets.” In effect, President Biden imposes a responsibility on the Secretary of Treasury, through the Administrator of the Alcohol and Tobacco Tax and Trade Bureau, to revise and update existing regulations that “unnecessarily hinder competition,” and diminish “any barriers that impede market access for smaller independent brewers, winemakers, and distilleries.”
With a target on the backs of the most powerful corporations in the U.S., small businesses and startups may be facing a unique opportunity to establish their identities as competitors in a more equitable marketplace. Beer industry experts in particular suggest that it is at the distributor level, not the producer level, where the greatest consolidation and least competition lies. Even with conglomerates (i.e., AB InBev and others) dominating the market for beer, industry experts suggest that the vastly increasing number of breweries in the U.S. indicates no need for competitive reform at the producer level. In contrast, there is continued consolidation and reduction in competition at the distributor level—where large corporations maintain strong historical influence over state governments—suggesting a need to further regulate or break up large distributors.