On July 9, President Joe Biden issued an executive order on promoting competition in the American economy (the order). According to the fact sheet accompanying the order, “in over 75% of U.S. industries, a smaller number of large companies now control more of the business than they did 20 years ago … the lack of competition drives up prices for consumers.” The order goes on to state that “when there are only a few employers in town, workers have less opportunity to bargain for a higher wage and to demand dignity and respect in the workplace.” “Inadequate competition holds back economic growth and innovation.” Further, “tens of millions of Americans … are required to sign noncompete agreements as a condition of getting a job, which makes it harder for them to switch to better-paying options.” Among other things, the order is intended to limit noncompete agreements and increase opportunities for small businesses by directing federal agencies to promote greater competition. Although the order is not aimed solely at the liquor industry, it will certainly impact the beer, wine and spirits markets.
The order outlines several actions that will be taken by various federal agencies that are designed to promote competition throughout the U.S. economy and provide opportunities to small businesses to compete against larger actors in the market. Section 5(j) of the order directs the Secretary of Treasury, in consultation with the Attorney General and the Chair of the FTC, to submit a written report “assessing the current market structure and conditions of competition, including an assessment of any threats to competition and barriers to new entrants 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; patterns of consolidation in production, distribution, or retail beer, wine, and spirits markets; and 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.” Upon completion of this assessment, the Secretary of the Treasury, through the administrator of the Alcohol and Tobacco Tax and Trade Bureau, will be required to consider: “initiating a rulemaking to update the Alcohol and Tobacco Tax and Trade Bureau’s trade practice regulations; rescinding or revising any regulations of the beer, wine, and spirits industries that may unnecessarily inhibit competition; and reducing any barriers that impede market access for smaller and independent brewers, winemakers, and distilleries.” Per the order, the Department of Treasury; Alcohol and Tobacco Tax and Trade Bureau recently published a Request for Information to “solicit input regarding the current market structure and conditions of competition in the American markets for beer, wine, and spirits, including an assessment of any threats to competition and barriers to new entrants.” So, what does this mean for the beer, wine and liquor markets?