An Executive Order and Fair Competition

9246210092?profile=RESIZE_400xFor years, Red Sky Alliance has helped monitor cyber security threats and vulnerabilities during mergers and acquisitions (M&A’s).  Supporting businesses with cyber security is a big part of our business model.  For decades, corporate consolidation has been growing and now the US President is taking aim at this trend in a new Executive Order (E.O.), dated 9 July 2021.

Our friends at the US National Defense Transportation Association (NDTA) shared that this new E.O. is affecting the transportation sector.  This order will directly affect the air travel, rail, and shipping industries. 

Airlines - The top four commercial airlines control nearly two-thirds of the domestic market.  Reduced competition contributes to increasing fees like baggage and cancellation fees.  These fees are often raised in lockstep, demonstrating a lack of meaningful competitive pressure, and are often hidden from consumers at the point of purchase.  The top ten airlines collected $35.2 billion in ancillary fees in 2018, up from just $1.2 billion in 2007.  Inadequate competition also reduces incentives to provide good service. For example, the Department of Transportation (DOT) estimates that airlines were late delivering at least 2.3 million checked bags in 2019.[1]

In the E.O., the President directs the DOT to consider issuing clear rules requiring the refund of fees when baggage is delayed or when service is not actually provided; like when the plane’s WiFi or in-flight entertainment system is broken.[2]  Additionally, the E.O. directs the DOT to consider issuing rules that require baggage, change, and cancellation fees to be clearly disclosed to the customer.

Rail - In 1980, there were 33 “Class I” freight railroads, compared to just seven today.  Four major rail companies now dominate their respective geographic regions.  Freight railroads that own the tracks can privilege their own freight traffic, making it harder for passenger trains to have on-time service and can overcharge other companies’ freight cars.

In the E.O. it encourages the US Surface Transportation Board to require railroad track owners to provide rights of way to passenger rail and to strengthen their obligations to treat other freight companies fairly.

Shipping - In maritime shipping, the global marketplace has rapidly consolidated.  In 2000, the largest 10 shipping companies controlled 12% of the market.  Today, it is more than a shocking 80%, which leaves domestic manufacturers who need to export goods at these large foreign companies’ mercy.  This has let powerful container shippers charge exporters exorbitant fees for the time their freight was sitting waiting to be loaded or unloaded.  These fees, called “detention and demurrage charges,” can add up to hundreds of thousands of dollars.

The E.O. explains and encourages the US Federal Maritime Commission to ensure vigorous enforcement against shippers charging US exporters exorbitant charges.

The E.O. is comprised of 72 actions and recommendations, with the focus intended to promote competition in the entire US economy by encouraging more than a dozen federal agencies to scrutinize corporate mergers and other ways that a growing number of companies build their outside market power, according to a White House fact sheet.  Not to be left out in this sweeping new executive order, again aimed at cracking down on anti-competitive behavior, protected ‘Big Tech’ and other critical sectors are included such as labor, health care and financial services. 

This particular E.O., sounds good and in many ways it is.  But any government’s regulatory mandates (in this case an executive order) will at times create a motivation for hackers to begin attacking businesses.  As an example, in the transportation sector, Red Sky Alliance analysts have seen that all levels of criminal hackers and with state sponsored (APT) hackers are often focused all parts of the transportation supply chain – which is huge.  Our current and past Vessel Impersonation reports expose this out in fine detail.  Now with 80% of maritime shipping being controlled by 10 companies, it now makes it that much easier for targeted cyber-attacks.       

Red Sky Alliance is in New Boston, NH   USA and we are proud to be helping in the over-all cyber defense posture.  We   are   a   Cyber   Threat   Analysis   and   Intelligence Service organization.     For questions, comments or assistance, please contact the lab directly at 1-844-492-7225, or feedback@wapacklabs.com.

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[1] https://www.ndtahq.com/presidential-action-takes-aim-at-consolidation-in-transportation/

[2] https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/

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