Latest / Bloomberg Law / Handbag Antitrust Trial & Justice Alito's Stock Portfolio

Transcript

Handbag Antitrust Trial & Justice Alito's Stock Portfolio · Bloomberg Law

• 0:03
  Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
• 0:10
  Speaker 1: Google is back on trial just one month after losing
• 0:14
  Speaker 1: a landmark ruling finding that it illegally monopolizes Internet search.
• 0:20
  Speaker 1: Now the Justice Department is alleging that Google monopolizes the
• 0:24
  Speaker 1: six hundred and seventy seven billion dollar advertising market. Joining
• 0:28
  Speaker 1: me is Bloomberg Anti Trust reporter Leah Nylan, who's covering
• 0:32
  Speaker 1: the trial and joins us from the courthouse tell us
• 0:35
  Speaker 1: about the government's case against Google.
• 0:39
  Speaker 2: So, the Justice Department alleges that Google has illegally monopolized
• 0:44
  Speaker 2: the ad tech tool market. This is a market that
• 0:47
  Speaker 2: most consumers are probably not familiar with at all, because
• 0:50
  Speaker 2: it is sort of the plumbing behind online advertising, and
• 0:54
  Speaker 2: so it's the way that websites put, you know, ads
• 0:58
  Speaker 2: up for sale and advertiseers buy them.
• 1:01
  Speaker 3: So it's a.
• 1:01
  Speaker 2: Lot of technically complicated stuff, but it is the way
• 1:04
  Speaker 2: that Google makes billions of dollars each year. And so
• 1:07
  Speaker 2: the government alleges that they have monopolized this market by
• 1:11
  Speaker 2: buying up some rival competitors who are going to offer
• 1:14
  Speaker 2: different products, controlling the way that their customers are able
• 1:18
  Speaker 2: to interact with rivals. And changing sort.
• 1:22
  Speaker 3: Of the rules of the game.
• 1:24
  Speaker 2: Midstream, because a lot of these ads are actually sold auctions,
• 1:28
  Speaker 2: and Google controls that auction and therefore can change some
• 1:31
  Speaker 2: of the rules behind how those auctions work.
• 1:33
  Speaker 1: In the opening statement, the Justice Department's attorney said, what
• 1:37
  Speaker 1: we have is a trifecta of monopolies here. What did
• 1:40
  Speaker 1: she mean.
• 1:42
  Speaker 2: Yeah, they're actually alleging that there are three separate monopolies
• 1:45
  Speaker 2: that Google has. One of them is on what they
• 1:48
  Speaker 2: call the publisher side. That means some of the tools
• 1:51
  Speaker 2: that are used by websites to help put their adspace
• 1:55
  Speaker 2: up for sale. Those are called the ad server market.
• 1:58
  Speaker 3: They have alleged that there is a.
• 2:00
  Speaker 2: Market for the advertising exchanges. These are just like a
• 2:03
  Speaker 2: stock exchange, is where the advertisements are bought and sold.
• 2:07
  Speaker 2: And the third one is the advertiser side tools.
• 2:10
  Speaker 3: This is the tools that.
• 2:11
  Speaker 2: The advertisers use to put their ads out there for sale.
• 2:16
  Speaker 1: Google's attorney what did they stress in their openings?
• 2:20
  Speaker 3: Yeah.
• 2:20
  Speaker 2: Google stressed a couple different things in their opening statement.
• 2:24
  Speaker 2: The first one was that, you know, the market, in
• 2:28
  Speaker 2: their view, is very competitive. They compete against a lot
• 2:31
  Speaker 2: of different companies in a lot of different types of advertising,
• 2:35
  Speaker 2: and they say that the Justice Department has sort of
• 2:37
  Speaker 2: gerrymandered a market here to sort of bring their case. So,
• 2:41
  Speaker 2: the Justice Department alleges that Google has monopolized the open
• 2:46
  Speaker 2: web display advertising. This is the display ads, the sort
• 2:50
  Speaker 2: of the things that you see on like blogs or
• 2:53
  Speaker 2: news websites, sports websites, things like that.
• 2:55
  Speaker 3: They often appear at the top of the page.
• 2:57
  Speaker 2: Or like beside the content that you're reading. And Google
• 3:01
  Speaker 2: argues that there are lots of other types of advertising.
• 3:03
  Speaker 2: You know, you can advertise on social media, you can
• 3:06
  Speaker 2: advertise in video, you can advertise all sorts of places,
• 3:09
  Speaker 2: and it's weird, in their opinion for the Justice Department
• 3:12
  Speaker 2: to be focused in on this one. They have two
• 3:15
  Speaker 2: other arguments legally.
• 3:16
  Speaker 3: One of them is.
• 3:17
  Speaker 2: That they don't actually have an obligation under the antitrust
• 3:21
  Speaker 2: law to do business with anyone. So if they decide
• 3:24
  Speaker 2: that they don't want to make the tools that they
• 3:27
  Speaker 2: use for advertising work with.
• 3:29
  Speaker 3: Other people's tools, that that's completely fine.
• 3:32
  Speaker 2: And then their third argument is that we should really
• 3:34
  Speaker 2: think about this not as open web display advertising, but
• 3:38
  Speaker 2: as a transaction, almost like a credit card.
• 3:40
  Speaker 3: And under the law the.
• 3:41
  Speaker 2: Supreme Court had made of rulings about how to think
• 3:44
  Speaker 2: about markets in what they call two side transaction platforms,
• 3:48
  Speaker 2: and so Google is arguing that that sort of legal
• 3:51
  Speaker 2: overlay should apply here.
• 3:52
  Speaker 1: I like this line by the Google attorney. There's no
• 3:55
  Speaker 1: such thing as open web display advertising. She accused the
• 3:59
  Speaker 1: government of trying to open a time capsule that would
• 4:02
  Speaker 1: reveal a BlackBerry iPod and a Blockbuster video card.
• 4:07
  Speaker 3: Yes, it was a pretty good line.
• 4:10
  Speaker 2: Essentially, what they are saying is like, maybe at one
• 4:13
  Speaker 2: point in time, the in networked this way, but lots
• 4:16
  Speaker 2: of things have moved on, and the government is still
• 4:19
  Speaker 2: very focused on what, in Google's view is a vision
• 4:22
  Speaker 2: of the market that no longer exists anymore.
• 4:24
  Speaker 1: And so Google also this echoed the argument that we
• 4:28
  Speaker 1: heard in the other Google anti trust case that it's
• 4:31
  Speaker 1: end to end integration makes the technology more efficient and
• 4:35
  Speaker 1: secure and reliable. On that marketers and publishers choose it
• 4:39
  Speaker 1: because they're superior, not because they don't have any other options.
• 4:43
  Speaker 1: And in the other antitrust trial that they lost, they
• 4:46
  Speaker 1: said that, you know, Google's just better, that's why people
• 4:49
  Speaker 1: come to Google.
• 4:50
  Speaker 2: Yeah, they're making a similar argument here. You know, they
• 4:53
  Speaker 2: have pointed out that there are a lot of other options,
• 4:56
  Speaker 2: both for where you can buy advertising and.
• 4:58
  Speaker 3: For how you can buy advertising.
• 5:00
  Speaker 2: So you can do it through Google's tools, but there
• 5:02
  Speaker 2: are certainly other companies that offer similar tools that you
• 5:05
  Speaker 2: can buy these same ads through. And so their argument is,
• 5:09
  Speaker 2: you know, people are using these tools because they're well
• 5:11
  Speaker 2: known and sort of trusted. The government's response is actually
• 5:15
  Speaker 2: pretty similar to the previous case. They argue that, you know,
• 5:18
  Speaker 2: in these kinds of markets, scale is really important, So
• 5:22
  Speaker 2: like the publishers want to go to where the advertisers are,
• 5:27
  Speaker 2: and the advertisers want to go to where the publishers are.
• 5:29
  Speaker 2: And because Google owns the ad server part on.
• 5:33
  Speaker 3: The publisher side, and they also own the other.
• 5:36
  Speaker 2: Tools for publishers, you know, they sort of have an
• 5:39
  Speaker 2: advantage here that a lot of other players.
• 5:42
  Speaker 3: Do not have.
• 5:43
  Speaker 2: And while now Google has this what they call an
• 5:46
  Speaker 2: integrated stack, for a long time that wasn't true. Nobody
• 5:49
  Speaker 2: had an integrated stack. These were all sort of separate products,
• 5:52
  Speaker 2: and the government argues that maybe they should be separated
• 5:55
  Speaker 2: because they keep going back to this thing that you've
• 5:58
  Speaker 2: seen in a lot of Google's documents, which there have
• 6:01
  Speaker 2: been some emails in which people have suggested it's a
• 6:04
  Speaker 2: little bit like Google is operating both like Goldman Sachs
• 6:09
  Speaker 2: a trader and the New York Stock Exchange the place
• 6:12
  Speaker 2: where they're making trade. And in the financial world, that
• 6:15
  Speaker 2: would never be allowed, like you would not allow somebody
• 6:18
  Speaker 2: who is transacting on the platform to also own the platform.
• 6:21
  Speaker 2: But here Google does own.
• 6:23
  Speaker 3: All of the pieces, the buy side, the cell side.
• 6:25
  Speaker 2: And the platform itself, and that represents sort of a
• 6:29
  Speaker 2: conflict of interest that the Justice Department says is very problematic.
• 6:33
  Speaker 1: Who has the Justice Department put on the stand?
• 6:35
  Speaker 3: So far, we've actually been gone really fast.
• 6:39
  Speaker 2: I think we're on like Witness eight or nine.
• 6:40
  Speaker 3: A really yes.
• 6:41
  Speaker 2: So the various parts. We've heard from two website publishers,
• 6:45
  Speaker 2: Gannett and News Corps, and they've talked a little bit
• 6:48
  Speaker 2: about how that kine in online advertising has significantly impacted
• 6:53
  Speaker 2: their business. They've had to, you know, shut our publications
• 6:56
  Speaker 2: and fire journalists because they're just not getting as much
• 6:58
  Speaker 2: advertising through these online tools as they used to. We've
• 7:01
  Speaker 2: also heard from a couple rivals who offer other ad
• 7:05
  Speaker 2: tech tools that are similar to what Google offers. So
• 7:08
  Speaker 2: we heard from another company that is an exchange called
• 7:11
  Speaker 2: index Exchange, and we heard from another company that offers
• 7:15
  Speaker 2: an ad server. It's a little bit different from Google,
• 7:18
  Speaker 2: and their argument was that they tried to initially get
• 7:20
  Speaker 2: in the same market as Google and they couldn't because
• 7:22
  Speaker 2: it was sort of the gorilla in the room. And
• 7:25
  Speaker 2: we've also heard from two former Google employees so far
• 7:29
  Speaker 2: who worked on the display ad business and sort of
• 7:32
  Speaker 2: had a hand in how some of these tools were developed.
• 7:35
  Speaker 1: Does the government intend to also call people who are
• 7:39
  Speaker 1: still at Google.
• 7:41
  Speaker 2: Yes, they do plan to call some folks who are
• 7:44
  Speaker 2: still at Google. I think they're trying to get through
• 7:46
  Speaker 2: some of what we might call like the victim witnesses first,
• 7:49
  Speaker 2: so they were trying to establish some of the harm
• 7:51
  Speaker 2: from Google's conduct. But they do have a number of
• 7:54
  Speaker 2: Google witnesses that they plan to call. The most senior
• 7:56
  Speaker 2: one is Neil Mohan. He is actually now the CEO
• 7:59
  Speaker 2: of YouTube, but for a long time he was very
• 8:03
  Speaker 2: involved in Google's display advertising business. And then after him,
• 8:06
  Speaker 2: the most sort of senior person is somebody by the
• 8:08
  Speaker 2: name of Don Harrison. He's a pretty senior executive at Google.
• 8:12
  Speaker 3: He didn't testify in the search trial.
• 8:15
  Speaker 2: That he did testify in the Epics trial that was
• 8:18
  Speaker 2: over Android.
• 8:20
  Speaker 1: Well, those are going to be very interesting witnesses to see,
• 8:23
  Speaker 1: you know, hostile witnesses. And who does Google plan to call?
• 8:26
  Speaker 2: Yeah, most of the people Google plans to call are
• 8:29
  Speaker 2: again its own employees, because they are hoping to sort
• 8:32
  Speaker 2: of show that, you know, Google has really innovated in
• 8:35
  Speaker 2: the market. Their argument is that they've made a lot
• 8:37
  Speaker 2: of changes to make this ecosystem better. In particular, they've
• 8:41
  Speaker 2: spent a lot of resources trying to focus on rooting
• 8:44
  Speaker 2: out like.
• 8:45
  Speaker 3: BAM and ad fraud.
• 8:46
  Speaker 2: So they plan to call a number of witnesses who
• 8:48
  Speaker 2: will talk about Google's efforts there and why some of
• 8:51
  Speaker 2: the specific things that the government alleges their anti competitive were,
• 8:55
  Speaker 2: in their views, sort of done for legitimate business purposes.
• 8:58
  Speaker 1: Is the government call for a breakup of Google's ad
• 9:03
  Speaker 1: tech business here?
• 9:04
  Speaker 2: Yes, they are specifically calling for a breakup of the business.
• 9:07
  Speaker 3: Here.
• 9:08
  Speaker 2: They argue that Google should not essentially be allowed to
• 9:11
  Speaker 2: operate on all sides of the market, you know, the
• 9:13
  Speaker 2: by side, the sell side, and the exchange, and that.
• 9:15
  Speaker 3: They should have to at least sell off one side
• 9:18
  Speaker 3: of that.
• 9:18
  Speaker 2: Google you know, maintains that that would really break the
• 9:22
  Speaker 2: sort of feamless experience that they've really created for marketers
• 9:26
  Speaker 2: and website publishers.
• 9:28
  Speaker 1: Yeah, because in the other trial, there's a possibility they
• 9:31
  Speaker 1: could ask for their breakup, but they didn't say that,
• 9:34
  Speaker 1: like right at the start.
• 9:35
  Speaker 2: Yeah, in this one they did, like right at the
• 9:37
  Speaker 2: very beginning, say that they thought a breakup was needed.
• 9:40
  Speaker 2: Here in part they have identified a couple of transactions
• 9:43
  Speaker 2: that Google has engaged in over the years, including in
• 9:46
  Speaker 2: particular the two thousand and eight acquisition of double Click,
• 9:49
  Speaker 2: and in that one they bought what has now become.
• 9:52
  Speaker 3: The exchange of Google's exchange.
• 9:55
  Speaker 2: And so they argue that that was in the complaint.
• 9:58
  Speaker 2: They have a nice phrase that that was the beginning
• 9:59
  Speaker 2: of marched to monopoly. But that transaction and then a
• 10:03
  Speaker 2: couple others that they outlined really gave Google the tools
• 10:06
  Speaker 2: to build this sort of ad empire, and that maybe
• 10:09
  Speaker 2: we should just unwind some of those transactions.
• 10:11
  Speaker 1: Google has lost the last two antitrust trials. A lot
• 10:16
  Speaker 1: seems to be riding on this for Google, and a
• 10:19
  Speaker 1: judge is going to decide this, right, there's no jury here, Yes.
• 10:22
  Speaker 2: There was no jury. It was initially going to be
• 10:23
  Speaker 2: a jury trial, but Google did a very interesting thing
• 10:27
  Speaker 2: in which it just agreed to pay the government's damages,
• 10:29
  Speaker 2: which were two point three million, and that obviated the
• 10:33
  Speaker 2: need for a jury, so it is now just a
• 10:35
  Speaker 2: judge trial. She is expected to rule sometime after the trial,
• 10:40
  Speaker 2: maybe even by the end of the year.
• 10:42
  Speaker 1: And how long is a trial expected to last?
• 10:45
  Speaker 2: So initially they were suggesting it might be four to
• 10:47
  Speaker 2: six weeks. They have, however, this week gone much much
• 10:50
  Speaker 2: faster than they had anticipated, in part because the judge
• 10:54
  Speaker 2: is really focused on moving things along very expeditiously, So
• 10:58
  Speaker 2: the current estimate is maybe.
• 10:59
  Speaker 1: Three to four Thanks so much, Lea. We'll catch up
• 11:02
  Speaker 1: with you when the trial ends. That's Bloomberg Anti trust
• 11:05
  Speaker 1: reporter Leah Niln coming up next on the Bloomberg Law Show.
• 11:10
  Speaker 1: It's a trial where lots of handbags are on display.
• 11:13
  Speaker 1: The Federal Trade Commission is suing to block Tapestry and
• 11:17
  Speaker 1: Capri from merging in an eight point five billion dollar deal.
• 11:22
  Speaker 1: This is Bloomberg. It's not often that a rack of
• 11:26
  Speaker 1: handbags is rolled into court as evidence. They range from
• 11:30
  Speaker 1: a green and white Kate Spade tote priced at two
• 11:33
  Speaker 1: hundred and seventy nine dollars to a one thousand, ninety
• 11:37
  Speaker 1: five dollars brown leather Coach Rogue handbag. There's the merch
• 11:41
  Speaker 1: and there's the money. In the anti trust trial that
• 11:45
  Speaker 1: will spell the fate of the eight point five billion
• 11:48
  Speaker 1: dollar deal to marry the Coach and Kate Spade brands
• 11:52
  Speaker 1: with Versace and Michael Core's joining me is Bloomberg Intelligence
• 11:56
  Speaker 1: senior litigation analyst Jennifer Ree, who's covering the trial. Jen
• 12:00
  Speaker 1: it's the FTC so in to stop this deal. Tell
• 12:04
  Speaker 1: us about the opening statements by its lawyer.
• 12:07
  Speaker 4: They actually say they have two theories of harm by
• 12:09
  Speaker 4: which they could block this deal. And it's sort of
• 12:12
  Speaker 4: what we think of as a typical horizontal deal, meaning
• 12:15
  Speaker 4: there are two companies that want to merge that have
• 12:17
  Speaker 4: products that compete against each other, So pretty straightforward, the
• 12:20
  Speaker 4: traditional kind of merger that has been challenged by the
• 12:23
  Speaker 4: FTC or Department of Justice in the past. And in
• 12:25
  Speaker 4: this case, what they're really looking at is handbags and
• 12:28
  Speaker 4: a market for what they call accessible luxury handbags and
• 12:32
  Speaker 4: what that really means. They're sort of the handbags in
• 12:34
  Speaker 4: the middle market. They say, it's not the ultra premium,
• 12:37
  Speaker 4: ultra luxury usually European handbags made by companies like Louis
• 12:42
  Speaker 4: Vuitan and Prada and Gucci, and it's not really these
• 12:45
  Speaker 4: mass market bags that are often not leather and usually sold,
• 12:49
  Speaker 4: you know, for under one hundred dollars. But it's kind
• 12:51
  Speaker 4: of what's in between. And if you look at that
• 12:53
  Speaker 4: piece of the market, Tapestry has Coach and Kate's Bade brands,
• 12:58
  Speaker 4: and Capri has the Michael Core's brand, And what the
• 13:01
  Speaker 4: FTCT says is, look, these are each other's primary competitors.
• 13:05
  Speaker 4: Coach and Kate Spade primarily see themselves as competing in
• 13:08
  Speaker 4: the US at least against Michael Core's, and Michael Corres
• 13:11
  Speaker 4: primarily sees itself as competing against Coach and Kate Spade.
• 13:15
  Speaker 4: And if you look at the other bags that are
• 13:17
  Speaker 4: within what they call the successible luxury market, the market
• 13:20
  Speaker 4: shares combined would be, according to the FTC, fifty eight percent,
• 13:24
  Speaker 4: and this would be a market that is unduly concentrated
• 13:27
  Speaker 4: and would be presumed harmful. So that's kind of one argument,
• 13:31
  Speaker 4: which is a fairly typical argument. They define a market,
• 13:34
  Speaker 4: they look at what the market shairs are in the market.
• 13:36
  Speaker 4: They look at what the concentration in the market would
• 13:38
  Speaker 4: be before and after the deal. Their second theory is
• 13:42
  Speaker 4: a somewhat novel one, and it comes out of new
• 13:44
  Speaker 4: guidelines that the Federal Trade Commission and Department of Justice
• 13:47
  Speaker 4: issued at the end of last year. Now, they've had
• 13:50
  Speaker 4: guidelines for many, many years that lay out how they
• 13:53
  Speaker 4: assess the deal and whether the deal violates the antitrust
• 13:56
  Speaker 4: laws or not. They're not binding on judges, but most
• 13:58
  Speaker 4: judges find them to be persuasive and have followed them.
• 14:02
  Speaker 4: This FTC updated the guidelines that happens periodically, as I said,
• 14:06
  Speaker 4: at the end of twenty twenty three, and they added
• 14:09
  Speaker 4: a new provision. And what that provision says is they
• 14:13
  Speaker 4: don't really have to define a market or lay out
• 14:15
  Speaker 4: what the combined market shares would be if they can
• 14:18
  Speaker 4: prove that the merging parties are each other's primary head
• 14:22
  Speaker 4: to head competitors, they constrain each other's pricing essentially in
• 14:26
  Speaker 4: the market, and that if they come together, that constraint
• 14:29
  Speaker 4: on pricing will be eliminated and they'll have the incentive
• 14:32
  Speaker 4: in the ability to increase price.
• 14:33
  Speaker 3: So they're also.
• 14:34
  Speaker 4: Relying on this new guideline in case the judge doesn't
• 14:37
  Speaker 4: buy this concept of an accessible luxury handbag market.
• 14:42
  Speaker 1: The FTC lawyer said in the opening statement that the
• 14:46
  Speaker 1: case is about working and middle class women who will
• 14:49
  Speaker 1: suffer harm if the acquisition goes through, harm because they
• 14:54
  Speaker 1: can't buy a semi luxury.
• 14:56
  Speaker 4: Harm because what they claim is that that sector of
• 15:01
  Speaker 4: the population or the primary buyers of these handbags, and
• 15:04
  Speaker 4: that there will be three hundred and sixty five million
• 15:07
  Speaker 4: dollars annually in increased prices across the three brands. That
• 15:11
  Speaker 4: is what the FTC's economist has calculated out through his modeling,
• 15:15
  Speaker 4: and that the primary buyers are a certain segment of
• 15:18
  Speaker 4: the population that tend to make under eighty thousand dollars
• 15:22
  Speaker 4: or up to about eighty thousand dollars a year, and
• 15:25
  Speaker 4: that these are the people that will be harmed.
• 15:27
  Speaker 1: Okay, it always seems odd to me because you don't
• 15:29
  Speaker 1: have to buy right a cold handbag.
• 15:33
  Speaker 4: Yeah, that's the thing that's so odd about this case.
• 15:36
  Speaker 4: It's a highly discretionary purchase. And as some of the
• 15:39
  Speaker 4: witnesses for the companies have said, understand, look, you know,
• 15:41
  Speaker 4: we compete for share of dollars spend. A person goes
• 15:45
  Speaker 4: into a store to buy something, they may decide to
• 15:47
  Speaker 4: buy that handbag, or they might decide to buy those
• 15:49
  Speaker 4: boots instead. And it's a very discretionary purchase. If the
• 15:52
  Speaker 4: price is too high, the buyer can walk away. And
• 15:55
  Speaker 4: that is what makes this case quite unusual. It's not
• 15:58
  Speaker 4: like FDC versus Kroger and Albertson. People must buy food, right,
• 16:02
  Speaker 4: but they don't have to necessarily buy a coach or
• 16:04
  Speaker 4: a Kate's bad or Michael Core's handbag.
• 16:06
  Speaker 1: So now tell us about the opening by Tapestry's lawyer.
• 16:10
  Speaker 4: Well, Tapestries lawyers I think have done a very very
• 16:12
  Speaker 4: good job. I mean what they said is they've portrayed
• 16:15
  Speaker 4: the market is being much more competitive, far more dynamic,
• 16:19
  Speaker 4: fast moving, competitive and changing and fragmented than what the
• 16:23
  Speaker 4: FTC is portrayed. Now, first they've said, look, there isn't
• 16:26
  Speaker 4: this successible luxury market. There's just this span of prices
• 16:30
  Speaker 4: that go from what you think of as a less
• 16:32
  Speaker 4: expensive mass market bag all the way up to the
• 16:35
  Speaker 4: thousands of dollars for these luxury bags. And that many
• 16:38
  Speaker 4: of consumers they survey have a lot of different bags
• 16:41
  Speaker 4: that widely varied price points within their closet, and that
• 16:44
  Speaker 4: the market's changed radically, including in the last few years
• 16:47
  Speaker 4: kind of the birth of or the growth of the
• 16:50
  Speaker 4: purchase of previously used handbags, which has become a big
• 16:54
  Speaker 4: thing both online and in some department stores. And that
• 16:57
  Speaker 4: the FTC is sort of not looking at the commercial
• 17:00
  Speaker 4: realities of the market as it is today, and that
• 17:03
  Speaker 4: a lot of the data that the economists use to
• 17:05
  Speaker 4: look at the market and to come up with this
• 17:07
  Speaker 4: theoretical three hundred and sixty five million annual harm to
• 17:11
  Speaker 4: consumers is based on data from twenty twenty one in
• 17:14
  Speaker 4: twenty two, and it's just not relevant anymore. And they
• 17:17
  Speaker 4: did a pretty good job, I think, at making that argument.
• 17:20
  Speaker 1: He said that Lawrence Butterman, anyone who took the subway
• 17:23
  Speaker 1: to court today, or walked on Broadway or Fifth or
• 17:25
  Speaker 1: has access to an iPhone or Android phone can see
• 17:29
  Speaker 1: that the FDC's claims about market competition are completely divorced
• 17:33
  Speaker 1: from reality.
• 17:35
  Speaker 4: Yeah. And the funny thing is that the company's lawyers
• 17:38
  Speaker 4: rolled into court the very first day with a big
• 17:40
  Speaker 4: rack full of all sorts of different handbags.
• 17:42
  Speaker 1: I was going to ask you that, And on that
• 17:46
  Speaker 1: cart there was one thousand dollars coach handbag yeah, so,
• 17:51
  Speaker 1: I mean, how does that fit their market definition?
• 17:54
  Speaker 4: Let's see you And that's the difficulty I think in
• 17:56
  Speaker 4: this market definition they sort of tentatively said that there
• 18:00
  Speaker 4: aren't really precise boundaries or parameters, but generally these accessible
• 18:05
  Speaker 4: luxury handbags range between one hundred dollars and one thousand dollars.
• 18:10
  Speaker 4: And that's the real difficulty of their market because it's
• 18:13
  Speaker 4: very hard to argue that one hundred dollars bag doesn't
• 18:16
  Speaker 4: compete with a ninety dollars bag, or that a thousand
• 18:18
  Speaker 4: dollars bag doesn't compete with let's say, one thousand and
• 18:21
  Speaker 4: fifty dollars bag. You know, the difficulty of defining a
• 18:24
  Speaker 4: market and putting the boundaries around where competition lies when
• 18:28
  Speaker 4: you have such a wide range of pricing and a
• 18:30
  Speaker 4: wide range of different consumers that have a different idea
• 18:33
  Speaker 4: about what they want or what they're willing to spend,
• 18:36
  Speaker 4: makes it difficult to come up with these market shairs.
• 18:38
  Speaker 4: And that's why the Federal Trade Commission is also relying
• 18:41
  Speaker 4: on that second theory coming from their new guidelines, that
• 18:44
  Speaker 4: they don't really have to do that that if they
• 18:46
  Speaker 4: can just prove that these two companies view each other
• 18:49
  Speaker 4: as their primary competitor and compete head to head.
• 18:52
  Speaker 3: That to us.
• 18:53
  Speaker 4: And the thing is, there are a lot of documents
• 18:54
  Speaker 4: that actually support company documents that support this assertion by
• 18:58
  Speaker 4: the FTC. It's the difficulty here, It's going to kind
• 19:02
  Speaker 4: of be what do the documents look like versus how
• 19:05
  Speaker 4: credible is the testimony of the witnesses, Because there are
• 19:08
  Speaker 4: plenty of documents where these companies call each other their
• 19:11
  Speaker 4: primary competitor or where they tend to compare their pricing
• 19:15
  Speaker 4: to just a small group that generally consists of Michael Core's,
• 19:20
  Speaker 4: Kate Spade, Coach, Mark Jacobs, and Toribirch. There seem to
• 19:23
  Speaker 4: be a lot of documents like that, and that does
• 19:25
  Speaker 4: suggest a smaller sphere of competition than what the witnesses
• 19:29
  Speaker 4: from the companies are portraying.
• 19:31
  Speaker 1: Yeah, because I mean a coach bag is going to
• 19:33
  Speaker 1: be more expensive than a Michael Core's bag, yes, right, generally,
• 19:38
  Speaker 1: and as is a Kate Spade bag. And you're talking about,
• 19:40
  Speaker 1: you know, a pretty wide difference there, right.
• 19:44
  Speaker 4: So the economists for the FTC basically said from his modeling,
• 19:48
  Speaker 4: coach bags sell at an average of one hundred and
• 19:50
  Speaker 4: forty seven dollars more than a Cores bag. And what
• 19:54
  Speaker 4: he calculated out via his modeling, which is quite complicated,
• 19:58
  Speaker 4: is that once tapped Street owns Capri and has the
• 20:01
  Speaker 4: Cores bag, they have the ability incentive to raise prices
• 20:05
  Speaker 4: because to the extent that they raise the price of
• 20:08
  Speaker 4: a Corps bag and lose sales, they're gaining enough of
• 20:11
  Speaker 4: those sales the substitute buy by. That buyer is going
• 20:15
  Speaker 4: to be a Coach or at kate'spadebag, and so they're
• 20:17
  Speaker 4: gaining backs enough to make it profitable to raise prices.
• 20:20
  Speaker 1: Can tell us about the first witnesses.
• 20:23
  Speaker 4: So the first witnesses were called by the SEC, but
• 20:25
  Speaker 4: they are company representatives. We had, you know, the CEO
• 20:28
  Speaker 4: of Capri, the CEO of Tapestry, you had the president
• 20:31
  Speaker 4: of Coach, you had a senior vice president from Tapestry,
• 20:36
  Speaker 4: and you know, I think that all of them across
• 20:39
  Speaker 4: the board have done a good job of basically saying
• 20:43
  Speaker 4: that they don't view Michael Core's bags as their primary competitor,
• 20:47
  Speaker 4: that they view competition as broad and dynamic and ever changing,
• 20:52
  Speaker 4: and that part of the reason that these documents only
• 20:54
  Speaker 4: reference this smaller set of competitors is because a lot
• 20:57
  Speaker 4: of their competitors aren't publicly traded. It's hard to get
• 21:01
  Speaker 4: the data, and these are the companies where there's an
• 21:03
  Speaker 4: ease of data. So it's just they can get the data,
• 21:05
  Speaker 4: they can get financial information, and they can easily compare
• 21:08
  Speaker 4: themselves to them. And they also say that they compare
• 21:11
  Speaker 4: themselves Tapestry to Capri and Capri to Tapestry. They compare
• 21:14
  Speaker 4: themselves quite a lot in earnings calls with investors because
• 21:18
  Speaker 4: they are similar companies in the eyes of investors, in
• 21:21
  Speaker 4: that they are two publicly traded American fashion houses, and
• 21:24
  Speaker 4: that's why they come up a lot as competitors in
• 21:28
  Speaker 4: these investor calls. So they did a good job of
• 21:31
  Speaker 4: sort of explaining away what I would call bad documents.
• 21:34
  Speaker 4: And that's why I kind of see this as you know,
• 21:37
  Speaker 4: which way is the judge going to go. Is she
• 21:39
  Speaker 4: going to say, no, the documents really tell me the story,
• 21:43
  Speaker 4: or are the witnesses really telling me the story? You know,
• 21:45
  Speaker 4: which is more credible in her eyes in terms of
• 21:48
  Speaker 4: making some decision here.
• 21:50
  Speaker 1: Has Michael core said it needs an infusion of capital.
• 21:54
  Speaker 1: They're not doing as well as they used to.
• 21:56
  Speaker 4: Their sales have been declining and they've lost what all
• 21:59
  Speaker 4: of the witness is called brand heat. I've never heard that,
• 22:03
  Speaker 4: but now I know.
• 22:04
  Speaker 1: I can feel it.
• 22:05
  Speaker 4: You can feel it that when a bag is hot,
• 22:07
  Speaker 4: a bag is hot, maybe Taylor Swift warret on a
• 22:11
  Speaker 4: picture on Instagram and that bag is now going to
• 22:13
  Speaker 4: be hot. And so they said Michael Cores at one
• 22:16
  Speaker 4: time had brand heat and seems to have lost the
• 22:18
  Speaker 4: brand heat and not been able to regain it, and
• 22:20
  Speaker 4: as the result, has had declining sales and in order
• 22:23
  Speaker 4: to move bags, has had to discount heavily. Now Tapestry says,
• 22:27
  Speaker 4: we can take that brand and we just have better
• 22:29
  Speaker 4: resources to revitalize it bring back the brand heat. Michael Cores, though,
• 22:34
  Speaker 4: seems to also within their ordinary course documents, have a
• 22:37
  Speaker 4: plan that they're implementing and plan to implement in the
• 22:40
  Speaker 4: future to try to again gain traction and gain momentum
• 22:43
  Speaker 4: and bring back that brand heat. So even though you know,
• 22:46
  Speaker 4: the argument here is that Tapestry can help them, they
• 22:49
  Speaker 4: seem to also have their own internal plan to revitalize.
• 22:52
  Speaker 4: So it's not so much about whether they need an
• 22:54
  Speaker 4: infusion of capital. It's more about, you know, can they
• 22:57
  Speaker 4: bring that brand back so that it's popular again.
• 23:00
  Speaker 1: So Wall Street's merger arbitrageres are currently giving Tapestry and
• 23:05
  Speaker 1: Capri a better than even chance of closing the transaction.
• 23:09
  Speaker 1: What does Jennifer Ree give it?
• 23:11
  Speaker 2: Well, I tell you.
• 23:12
  Speaker 4: I think I agree. You know, coming into the trial,
• 23:15
  Speaker 4: I was really very fifty to fifty on it. And
• 23:18
  Speaker 4: part of the problem here, June is that an enormous
• 23:20
  Speaker 4: amount of the documents are sealed, so we don't know
• 23:22
  Speaker 4: what they say. So I don't know how bad those
• 23:24
  Speaker 4: documents are that the judge will see. But I think
• 23:27
  Speaker 4: the company witnesses have seemed very credible to me. They
• 23:30
  Speaker 4: seem to be earnest. It doesn't seem to be a
• 23:32
  Speaker 4: lawyer argument that they're making, and what they're saying seems
• 23:35
  Speaker 4: to be common sense. And the market that just I,
• 23:38
  Speaker 4: as a consumer observed seems to align with what they're saying,
• 23:41
  Speaker 4: that it is dynamic, it is rapidly changing, and there
• 23:44
  Speaker 4: are a lot of options. And then the second thing
• 23:46
  Speaker 4: is that the FTC's economic expert testified yesterday morning, and
• 23:49
  Speaker 4: I felt like his conclusions were backed by data that
• 23:53
  Speaker 4: was just a little bit weak. I think that data
• 23:56
  Speaker 4: is difficult and the judge may not credit his conclusions
• 24:00
  Speaker 4: because the inputs are sketchy. You know, it is older data.
• 24:04
  Speaker 4: It's data from twenty twenty one. In twenty twenty and
• 24:07
  Speaker 4: some of the sales data he used came from a
• 24:10
  Speaker 4: database called NPD that tracks sales by brand, by wholesalers
• 24:15
  Speaker 4: that means just department stores that's at Dillard's, Macy's, Nordstrom.
• 24:19
  Speaker 4: And he was able to calculate chares essentially using that data.
• 24:22
  Speaker 4: But that data doesn't track all sales and handbags, I
• 24:25
  Speaker 4: mean people buy them online. It excludes the previously owned bags,
• 24:29
  Speaker 4: that excludes the e commerce direct to consumer, So it's
• 24:32
  Speaker 4: a little bit hard to rely on the market share
• 24:34
  Speaker 4: coming out of that data. And the second thing he
• 24:36
  Speaker 4: did caused me to shake my head a little bit
• 24:39
  Speaker 4: was that this NPD data categorized bags in many different
• 24:43
  Speaker 4: categories names like better, Premium, Active, Leisure, Moderate, Bridge, contemporary,
• 24:50
  Speaker 4: and he took two of those categories only Bridge and contemporary.
• 24:54
  Speaker 4: And you ask yourself, well, what if bags in the
• 24:56
  Speaker 4: other categories also compete, You're leaving them out. And he
• 25:00
  Speaker 4: didn't talk to the company that collects this data to
• 25:03
  Speaker 4: understand why they put different bags in different categories and
• 25:06
  Speaker 4: whether that was sort of the right category for accessible
• 25:08
  Speaker 4: luxury market that they're claiming, you know, is the appropriate market.
• 25:12
  Speaker 4: And in his opening statement, what the lawyer for the
• 25:14
  Speaker 4: company said was that if you do include one of
• 25:17
  Speaker 4: these other categories like better or active leisure, that their
• 25:21
  Speaker 4: combined market share has come down to below thirty percent,
• 25:23
  Speaker 4: and that's below the problematic level rather than fifty eight percent.
• 25:27
  Speaker 4: So it's hard to rely on what the FTC's expert
• 25:31
  Speaker 4: has done here. I don't think listening to that that
• 25:34
  Speaker 4: if I were the judge, that I could and I
• 25:36
  Speaker 4: think in reaction to that and in reaction to the
• 25:38
  Speaker 4: witnesses this week, the merger arts are feeling more positive
• 25:41
  Speaker 4: about the deal.
• 25:42
  Speaker 1: Well, we have a ways to go yet. We'll check
• 25:44
  Speaker 1: back with you, Jen, Thanks so much. That's Bloomberg Intelligence
• 25:48
  Speaker 1: Senior litigation analyst Jenniferree coming up next. Why Justice Samuel
• 25:54
  Speaker 1: Alito's stock portfolio stands out you're listening to Bloomberg. Samuel
• 26:02
  Speaker 1: Alito is the only justice with a stake in more
• 26:05
  Speaker 1: than two dozen individual companies, a distinction that threatens to
• 26:10
  Speaker 1: sideline him from major business cases. Since twenty twenty one,
• 26:14
  Speaker 1: Alito has recused himself from sixty four cases involving corporations
• 26:19
  Speaker 1: he owned shares of. This as scrutiny of the Court's
• 26:23
  Speaker 1: judicial ethics has intensified after revelations that Justice Clarence Thomas
• 26:28
  Speaker 1: and Alito, to a lesser degree, accepted undisclosed gifts and
• 26:33
  Speaker 1: travel from billionaire benefactors. Joining me is Emily Burnbaum Bloomberg
• 26:38
  Speaker 1: Lobbying and legal affairs reporter Emily tell us how Alito's
• 26:43
  Speaker 1: stock portfolio distinguishes him from the other justices.
• 26:48
  Speaker 5: Alito's stock portfolio is very different from any of the
• 26:52
  Speaker 5: other sitting justices right now. So he owns stock in
• 26:56
  Speaker 5: more than two dozen individual companies, about twenty eight companies,
• 27:00
  Speaker 5: And that was a practice that was more commonplace in
• 27:04
  Speaker 5: years past, and now he's pretty much the last justice
• 27:08
  Speaker 5: left standing with stock and individual companies. So the most part,
• 27:11
  Speaker 5: the other justices are invested in index funds. You know,
• 27:14
  Speaker 5: they invest in ways that ensure that they are not
• 27:17
  Speaker 5: conflicted when it comes to individual companies.
• 27:20
  Speaker 1: There's nothing unethical about owning stock. What are the ethics
• 27:25
  Speaker 1: rules about stock?
• 27:27
  Speaker 5: The rule is if you have a financial stake in
• 27:30
  Speaker 5: a company, that you should refuse yourself from cases involving
• 27:36
  Speaker 5: that company. So that means in Alito's case, that he
• 27:40
  Speaker 5: has recused from dozens and dozens of cases involving companies
• 27:46
  Speaker 5: in which he owns stock. So he owns stock in
• 27:48
  Speaker 5: some of our biggest companies. So that's racy on Kinoko, Phillips,
• 27:53
  Speaker 5: big oil companies, big transportation companies, and companies that are
• 27:57
  Speaker 5: in high litigation areas.
• 27:59
  Speaker 2: So he has.
• 28:01
  Speaker 5: Recused himself from sixty four cases involving corporations he owned
• 28:05
  Speaker 5: shares of since twenty twenty one, and last term alone,
• 28:09
  Speaker 5: he recused from fifteen cases due to stock ownership. So
• 28:12
  Speaker 5: that's a lot more recusals in general than his fellow justices.
• 28:17
  Speaker 5: Often they'll recuse because they've seen the case four in
• 28:20
  Speaker 5: lower courts, or maybe one of their parents was involved
• 28:24
  Speaker 5: in the case in some way. But Alito is distinct
• 28:28
  Speaker 5: in that he has to keep refusing himself over and
• 28:31
  Speaker 5: over because of his stock portfolio.
• 28:33
  Speaker 1: Justices aren't required to say why they're recusing themselves. Recently,
• 28:39
  Speaker 1: the liberal justices have been giving reasons, but the conservative
• 28:43
  Speaker 1: justices have not explain how we know that he's recused
• 28:47
  Speaker 1: himself because of stock ownership.
• 28:50
  Speaker 5: Yeah, so he doesn't say himself. This is because this stock.
• 28:54
  Speaker 5: It's essentially just a matter of looking at the publicly
• 28:57
  Speaker 5: available information.
• 28:58
  Speaker 3: You know, he.
• 28:59
  Speaker 5: Refused is from cases where one of the companies from
• 29:04
  Speaker 5: which he owns stock is a party or has filed
• 29:07
  Speaker 5: a brief, so you know, Johnson and Johnson. He doesn't
• 29:12
  Speaker 5: participate in those cases, and actually neither does Brett Kavanaugh
• 29:15
  Speaker 5: because his father was a lobbyist for the talk industry,
• 29:20
  Speaker 5: and so you basically just look at you know, Okay,
• 29:23
  Speaker 5: this case involves Boeing. Alito owns stock and Boeing he's
• 29:27
  Speaker 5: refused himself from the case. So as I was talking
• 29:30
  Speaker 5: to experts about this article, they say Alito is very
• 29:35
  Speaker 5: good most of the time at anticipating when he needs
• 29:38
  Speaker 5: to recuse. There have been a couple instances where maybe
• 29:41
  Speaker 5: a company's subsidiary was involved it was a little more gray,
• 29:45
  Speaker 5: or there was a stock he wasn't aware of owned
• 29:47
  Speaker 5: by one of his sons. That was one case. But
• 29:49
  Speaker 5: for the most part, he looks ahead of time and refuses.
• 29:52
  Speaker 5: But yes, you're right. The latest code of ethics that
• 29:56
  Speaker 5: the Supreme Court put out does say that you can
• 30:00
  Speaker 5: disclose why you're accusing, and that's something that Justice Kagan
• 30:04
  Speaker 5: has done, but Alito still has not chosen to do that.
• 30:07
  Speaker 1: And so often he'll sell off the stock so that
• 30:10
  Speaker 1: he can sit on the case.
• 30:12
  Speaker 5: Yes, there have been instances of that. So there is
• 30:14
  Speaker 5: an instance related to Exxon. In twenty sixteen, he sold
• 30:19
  Speaker 5: his stake after years of accusals related to the company.
• 30:23
  Speaker 5: He sold his stock in Oracle ahead of a really
• 30:26
  Speaker 5: important copyright case that was Oracle versus Google. So yeah,
• 30:30
  Speaker 5: throughout his time on the Court, he's chosen to sell
• 30:34
  Speaker 5: stock strategically. He actually late last year sold his Johnson
• 30:39
  Speaker 5: and Johnson's stock. He traded it in for a subsidiary
• 30:42
  Speaker 5: of Johnson and Johnson. So it's so far a little
• 30:45
  Speaker 5: unclear if that will impact whether he can weigh in
• 30:49
  Speaker 5: on Johnson Johnson related cases or not. We still yet
• 30:53
  Speaker 5: to see.
• 30:54
  Speaker 1: You mentioned the Supreme Court's Voluntary Code of Ethics, which
• 30:59
  Speaker 1: it adopted in November. Explain how that code encourages justices
• 31:06
  Speaker 1: to try to not refuse.
• 31:08
  Speaker 5: So the code has a really long section about refusal.
• 31:13
  Speaker 5: It says Supreme Court justices should try to avoid refusal
• 31:17
  Speaker 5: whenever they can. Because they're only nine members, and this
• 31:20
  Speaker 5: is a direct quote. It says much can be lost
• 31:22
  Speaker 5: when even one justice does not participate in a particular case.
• 31:26
  Speaker 5: They say it's particularly important when it comes to the
• 31:29
  Speaker 5: court deciding which cases to take, because it just makes
• 31:33
  Speaker 5: it that much harder for parties to have their cases
• 31:36
  Speaker 5: accepted when a bunch of the justices aren't even allowed
• 31:39
  Speaker 5: to participate in the decision making. So the Code of
• 31:42
  Speaker 5: Ethics says that that can have a distorting effect. So
• 31:45
  Speaker 5: while it's not an ethics issue for Aldo to own
• 31:48
  Speaker 5: stock in that you know, he's fully allowed to, there
• 31:52
  Speaker 5: are concerns about how well the court functions when one
• 31:56
  Speaker 5: of the justices is conflicted out from dozes of cases.
• 32:00
  Speaker 1: You spoke to Northwestern professor Stephen Lubad who said it's
• 32:05
  Speaker 1: a question not of ethics, but of judgment. Not everything
• 32:08
  Speaker 1: that's legal is a good idea.
• 32:11
  Speaker 5: Yeah, So he's pointing out, you know, there's no allegation
• 32:15
  Speaker 5: that Alito is violating rules. There's not a clause that
• 32:20
  Speaker 5: says don't own stock in individual companies. It's more that this
• 32:24
  Speaker 5: has really folid out of fashion, especially as scrutiny has
• 32:28
  Speaker 5: increased on the Supreme Court. Amid all of the ethics concerns,
• 32:33
  Speaker 5: a lot of justice has chosen no longer to invest
• 32:36
  Speaker 5: in individual companies. There's obviously more ethical scrutiny of the
• 32:42
  Speaker 5: Supreme Court and of our federal judiciary than ever. So
• 32:45
  Speaker 5: then it becomes a question of why does he still
• 32:47
  Speaker 5: own these stocks? You know, there's not that much evidence.
• 32:52
  Speaker 5: You know, it's much better for your accumulation of wealth
• 32:56
  Speaker 5: to own stock in individual companies, probably just as good
• 32:58
  Speaker 5: to own index funds. So then it becomes a question
• 33:01
  Speaker 5: of why, you know, when this hampers the Court's functioning,
• 33:05
  Speaker 5: When this means Alito will sit out of pretty important cases,
• 33:09
  Speaker 5: I think it just comes down to the question of
• 33:12
  Speaker 5: what's the point.
• 33:12
  Speaker 1: I can't figure it out, and I'm sure he will
• 33:14
  Speaker 1: not tell us. And also, as you're right, he is
• 33:18
  Speaker 1: a very reliable pro business vote. Can you agree with
• 33:22
  Speaker 1: the Chamber of Commerce in seventy three percent of cases
• 33:25
  Speaker 1: last term.
• 33:26
  Speaker 5: Yes, So he's been a long time critic of federal
• 33:30
  Speaker 5: environmental regulations. He often sides with business. One really important
• 33:36
  Speaker 5: case that is pending before the Court right now is
• 33:40
  Speaker 5: essentially whether states and cities can sue oil companies for
• 33:45
  Speaker 5: damages over how oil companies have contributed to climate change.
• 33:49
  Speaker 5: But this is a really big issue there's tons of
• 33:52
  Speaker 5: similar lawsuits climbing up across the country, and Alito is
• 33:57
  Speaker 5: not going to be able to weigh in. He's already
• 33:59
  Speaker 5: re use himself from the petition pending before the court
• 34:02
  Speaker 5: in this case because he owns stock in several oil companies.
• 34:06
  Speaker 5: So if I were an oil company, that would be
• 34:09
  Speaker 5: pretty disappointing. Because he's reliably pro business, so it's going
• 34:13
  Speaker 5: to have an impact on lots of similar big business cases.
• 34:17
  Speaker 1: So he might still sell his stock before the briefings
• 34:20
  Speaker 1: in oral arguments.
• 34:22
  Speaker 5: He could do that in this case, he's already refused
• 34:25
  Speaker 5: himself from considering whether the court should take it up.
• 34:29
  Speaker 5: If he sold all of his oil company stocks tomorrow,
• 34:33
  Speaker 5: then he potentially could take part.
• 34:35
  Speaker 2: But his annual.
• 34:36
  Speaker 5: Financial disclosure just came out the other day. He hasn't
• 34:39
  Speaker 5: sold any new stocks, so he could, but right now
• 34:43
  Speaker 5: it doesn't seem like he's planning to, and we don't.
• 34:46
  Speaker 1: Really know the exact stock value. It's a range.
• 34:49
  Speaker 5: Yeah, They're all reported in ranges. So he has stocks
• 34:53
  Speaker 5: that are between one and fifteen thousand. He has a
• 34:57
  Speaker 5: bunch of stocks that are between fifteen and fifty. I
• 35:00
  Speaker 5: don't think right now he has any stocks that are
• 35:01
  Speaker 5: worth more than that, so it's hard to say exactly
• 35:04
  Speaker 5: how much all of them are worth altogether. One disclaimer,
• 35:07
  Speaker 5: financial disclosures don't differentiate between the stocks owned by Alito
• 35:13
  Speaker 5: or owned by his wife, So some of these stocks
• 35:17
  Speaker 5: could belong to his wife, but just the court considers
• 35:21
  Speaker 5: them to be the same because they are married.
• 35:24
  Speaker 1: And we should mention that most of these recusals are
• 35:28
  Speaker 1: coming while the court is considering cases, not after the
• 35:32
  Speaker 1: court has taken the case.
• 35:34
  Speaker 5: Yeah, for the most part.
• 35:35
  Speaker 1: Yes, there have been a few reported instances where Alito
• 35:40
  Speaker 1: failed to accuse himself in cases where he should have
• 35:44
  Speaker 1: because of stock ownership.
• 35:46
  Speaker 5: So in twenty seventeen, there was a case involving Merk,
• 35:50
  Speaker 5: so he initially failed to recuse despite owning stock in
• 35:55
  Speaker 5: the company. He ultimately sold his shares and participated in
• 35:58
  Speaker 5: that case. And then in there was another instance in
• 36:02
  Speaker 5: which he says there was an unintentional conflict of interests,
• 36:05
  Speaker 5: so he blamed it on staff oversight. He took part
• 36:08
  Speaker 5: in a two thousand and nine ruling that involved ABC
• 36:11
  Speaker 5: News even though his children held stock in Disney, so
• 36:16
  Speaker 5: he in that case voted against ABC. He joined a
• 36:19
  Speaker 5: five to four majority, So you know, his vote was
• 36:23
  Speaker 5: pretty consequential in that case. He owed a lot of
• 36:25
  Speaker 5: stock and so he said it kind of flipped under
• 36:27
  Speaker 5: the radar.
• 36:28
  Speaker 1: That's some slip. There would have been a tie if
• 36:30
  Speaker 1: he hadn't participated, and then the decision of the lower
• 36:33
  Speaker 1: court would have stood. Instead, the Supreme Court reversed the
• 36:37
  Speaker 1: decision that was favorable to the networks in that five
• 36:40
  Speaker 1: to four vote that he took part in. Now I'm
• 36:43
  Speaker 1: not sure there's anything unethical about this, but one of
• 36:47
  Speaker 1: his trades appeared to be political.
• 36:51
  Speaker 5: Yeah, so he still hasn't said anything about this publicly,
• 36:55
  Speaker 5: but you might remember last year there was a big
• 36:58
  Speaker 5: conservative boycott of Anheuser Busch that's the maker of bud Light.
• 37:03
  Speaker 5: Basically they got a lot of hot water with conservatives
• 37:07
  Speaker 5: because they partnered with a transgender influencer to promote some beer.
• 37:12
  Speaker 5: So around the time of that boycott, Alito sold his
• 37:15
  Speaker 5: shares of Anheuser Busch and he bought shares of Arrival
• 37:20
  Speaker 5: beer maker, which is molten Core's. So a lot of
• 37:22
  Speaker 5: people noticed that speculated about whether he was participating in
• 37:27
  Speaker 5: the conservative boycott, and he hasn't said anything, but the
• 37:31
  Speaker 5: timing did align with the boycott.
• 37:33
  Speaker 1: Sort of reminds me about the flag flying incident. Thanks
• 37:37
  Speaker 1: so much, Emily, it's a really revealing story. That's Emily Burnbaum,
• 37:41
  Speaker 1: Bloomberg Lobbying and legal affairs reporter. And that's it for
• 37:46
  Speaker 1: this edition of the Bloomberg Law Podcast. Remember you can
• 37:49
  Speaker 1: always get the latest legal news by subscribing and listening
• 37:52
  Speaker 1: to the show on Apple Podcasts, Spotify, and at Bloomberg
• 37:55
  Speaker 1: dot com, slash podcast, slash Law. I'm June Grosso and
• 38:00
  Speaker 1: this is Bloomberg