In a recent discussion on the approach taken by the Biden administration towards combatting illegal and unfair pricing, Michael S. Wise, a partner in the Antitrust and Competition division of law firm, Paul Hastings, expressed skepticism over the effectiveness of the new initiative. Called the pricing strike force, it aims to tackle prices in key sectors such as prescription drugs, healthcare, food, and housing, among others, and is set to be led by a joint effort between the Department of Justice (DOJ) and the Federal Trade Commission.
The main point of contention is whether the efforts of such a task force can bear significant results across the breadth of the economy, given that there is no clear means of deploying measures against prices deemed too high. Whilst anti-competitive practices can be contested using established and robust tools, pricing enforcement mechanisms and objective pricing standards are seemingly missing from the agencies’ toolkit. The key federal restrictions, Sections 1 and 2 of the Sherman Antitrust Act, are designed to prohibit conduct that limits competition itself but do not address high prices directly.
There are exceptions within certain regulated industries such as maritime shipping where specific oversight exists for pricing, however, these instances are not the norm. Despite inflation being a larger driver in price hikes, especially during the COVID-19 era, the focus of the Biden administration has been to combat high prices and protect consumers.
Prior efforts by federal bodies have been seen as ineffective in addressing consumers’ pricing concerns, leading some observers like Wise to conclude that this new effort may be of a similar trajectory. According to Wise, the most effective outcome of the Pricing Strike Force might just be a mild deterrent effect on pricing for some industries. For instance, a detailed report in the WSJ highlighted the over 30-year high in food expenditure by US households. A worthy note, however, is that many of these larger corporations are already well-versed in the laws surrounding pricing thereby bringing into question the initiative’s actual impact.
For effective unilateral pricing action, the involvement of Congress is seen as crucial. Whether this happens in the near future remains to be seen. Meanwhile, a healthy skepticism and cautious optimism persist around the new initiative as the Biden administration continues its fight against unfair and illegal pricing.