Latest / Bloomberg Law / A Year End Antitrust Special: Google, Kroger-Albertsons, and the FTC's Non-Compete Ban

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A Year End Antitrust Special: Google, Kroger-Albertsons, and the FTC's Non-Compete Ban · Bloomberg Law

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Law.
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  Speaker 1: Bloomberg Law with June Grosso from Bloomberg Radio. Welcome to
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  Speaker 1: a special edition of Bloomberg Law. I'm Ami Morris in
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  Speaker 1: for June Grosso. This year saw a number of high
• 0:50
  Speaker 1: profile antitrust cases, so ahead on this show, we're going
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  Speaker 1: to take a look back at some of the big ones,
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  Speaker 1: including the blocked merger between Albertson and Kroger and the
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  Speaker 1: fan tie up between luxury brands Capri and Tapestry. We'll
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  Speaker 1: also look ahead to what President elect Donald Trump re
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  Speaker 1: entering the White House could mean for anti trust regulation
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  Speaker 1: moving forward. All that on the way on this special
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  Speaker 1: edition of Bloomberg Law. Now, what we're going to start
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  Speaker 1: with is non compete employment agreements. For decades, they've prevented
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  Speaker 1: all sorts of workers, doctors, engineers, hairstylists, and journalists from
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  Speaker 1: easily just switching jobs. The Federal Trade Commission approved a
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  Speaker 1: near total ban on these non compete clauses, but then
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  Speaker 1: that got blocked by a federal judge back in August.
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  Speaker 1: The judge said the FTC did not have the authority
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  Speaker 1: to do this. Professor Spencer Weber Waller is director of
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  Speaker 1: the Institute of the Consumer Anti Trust Studies at Loyola
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  Speaker 1: University Chicago School of Law, and joins us now to
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  Speaker 1: bring us up to speed on what this means. Professor,
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  Speaker 1: want to thank you for your time and explain about
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  Speaker 1: this block of what the FTC's proposed rule was. The
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  Speaker 1: judge called it arbitrary and capricious. But supporters say that
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  Speaker 1: if you force workers to sign and on compete that
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  Speaker 1: does harmed them.
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  Speaker 3: Well, sure, I'm chrilled to talk about this. I can't
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  Speaker 3: get into how the sausage was made. This was one
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  Speaker 3: of the projects that they worked on in twenty twenty
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  Speaker 3: two as a senior advisor for the Federal Trade Commission.
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  Speaker 3: But the idea is that these are very harmful for workers,
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  Speaker 3: and particularly in low salary workers, where there's really no
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  Speaker 3: serious question for a sandwich maker or a security guard
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  Speaker 3: or home healthcare worker about know how or technology or
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  Speaker 3: that sort of thing. And so the FTC was engaged
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  Speaker 3: in a long term project, research reports, conferences, and eventually
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  Speaker 3: the writing of an administrative rule that was released to
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  Speaker 3: the public for comments and revised and kind of toned down.
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  Speaker 4: A little bit.
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  Speaker 3: Final rule was issued. This is earlier this year, and
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  Speaker 3: there was some litigation and it's a little more complicated.
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  Speaker 3: There are three different cases. The FTC won one of
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  Speaker 3: those in Pennsylvania and lost to in the Deep South,
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  Speaker 3: one of which it resulted in an injunction. So the
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  Speaker 3: rule hasn't gone into effect. I don't think this is
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  Speaker 3: a I think it's going to go to the Court
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  Speaker 3: of Appeals and conceivably the US Supreme Court. At the
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  Speaker 3: same time, the FTC has also brought cases where it
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  Speaker 3: has the power to prohibit an unfair method of competition,
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  Speaker 3: either in litigation or in rule making. These cases only
• 3:16
  Speaker 3: deal with the rulemaking. There have been at least three
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  Speaker 3: cases that I know of where the STC has challenged
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  Speaker 3: companies behavior in the particular industry as just unfair in
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  Speaker 3: keeping workers' wages and mobility down, and the courts have
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  Speaker 3: in each case the defendants have settled, and those are
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  Speaker 3: binding rulings now on those defendants. But the rule is
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  Speaker 3: the bigger deal because it would apply nationwide to most
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  Speaker 3: industries and most non competes.
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  Speaker 1: Now, this is under the FDC's purview, is it not.
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  Speaker 1: If they can't come up with this rule, then who would.
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  Speaker 3: Well, there's any there's a turny number of industries that
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  Speaker 3: are just not subject to the FDC's jurisdiction, things like
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  Speaker 3: airlines and other other regulated industries. But the FDC is
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  Speaker 3: the main, but not the only, consumer protection and antitrust agency.
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  Speaker 3: The Department of Justice litigates, but the FTC has the
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  Speaker 3: power to do both litigation and rulemaking, and this is
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  Speaker 3: what the rule making power. It is not the only,
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  Speaker 3: but it is one of the rare times the FTC
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  Speaker 3: has issued a rule relating to their antitrust not their
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  Speaker 3: consumer protection powers.
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  Speaker 1: I wanted to ask about that this doesn't happen very
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  Speaker 1: often with the FTC, and these noncompete clauses have been
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  Speaker 1: in effect for decades. Where's the FTC been on this before?
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  Speaker 3: Well, the FTC is one of a number of actors
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  Speaker 3: that has looked at this. State attorney generals and state
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  Speaker 3: legislatures in the US Congress have looked at these. There
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  Speaker 3: are seventeen states or so that either prohibit them outright,
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  Speaker 3: like California, or imposed conditions. When you can have the
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  Speaker 3: non compete in Illinois, there's a salary cap of about
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  Speaker 3: one hundred thousand dollars, where anything below that the noncompete
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  Speaker 3: would be illegal. And what the evidence is showing is
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  Speaker 3: that even having these state rules just isn't enough. And
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  Speaker 3: if you want a uniform national treatment of this issue,
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  Speaker 3: the FTC is the logical place. Whether they have the
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  Speaker 3: powers to do so is what's being litigated in the
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  Speaker 3: federal courts right now.
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  Speaker 1: Is this another example of sort of reigning in power
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  Speaker 1: from federal agencies resting that from them.
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  Speaker 3: That's hard to say. You know, you're absolutely correct that
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  Speaker 3: the FTC has not issued a lot of antitrust unfair
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  Speaker 3: methods of competition rules, but that doesn't mean they don't
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  Speaker 3: have the power but that is one of the issues
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  Speaker 3: that the federal courts have to wrestle with, and looking
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  Speaker 3: at this particular rule, I don't know the history of
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  Speaker 3: why past administrations didn't do it. I think perhaps they
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  Speaker 3: thought that it was better to proceed just on a
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  Speaker 3: case by case basis in general, rather than getting into
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  Speaker 3: a rulemaking proceeding. But I thought it was necessary and
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  Speaker 3: quite a good thing that the FTC did, and I
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  Speaker 3: hope it'll hold up in court. But you know, I
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  Speaker 3: don't have a crystal ball that's any better than anybody
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  Speaker 3: else at this point.
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  Speaker 1: And it is interesting how you say how complicated this is,
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  Speaker 1: because it also put companies in a bit of an
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  Speaker 1: odd position. For a while. It wasn't really clear if
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  Speaker 1: the FDC was able to do this, if this was
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  Speaker 1: going to pass muster, if there was going to have
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  Speaker 1: to be shelved. For a while, employers were kind of
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  Speaker 1: in this mezzanine level where they didn't know if they
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  Speaker 1: were able to tell their workers that the non compete
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  Speaker 1: was no and void, or if it was something that
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  Speaker 1: they could enforce, and so everything was in limbo for
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  Speaker 1: a while.
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  Speaker 3: Well, and it is still in limbo, you know, as
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  Speaker 3: this gets resolved. And so you know what I understand.
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  Speaker 3: I'm not a labor and employment expert. I'm an anti
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  Speaker 3: trusted the consumer law person. But my friends in that
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  Speaker 3: minor work are telling companies to be very cautious and
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  Speaker 3: not to use these unless they have a strong reason
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  Speaker 3: to do so. Do them more selectively rather than across
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  Speaker 3: the board, and be aware that there's some states that
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  Speaker 3: they're simply flat out forbidden, like California, and also that
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  Speaker 3: there's legislation coming in other states that's cracking down on this.
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  Speaker 3: So state companies are on notice. And you know, the
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  Speaker 3: rule is just one aspect of how this is going
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  Speaker 3: to be regulated in the future.
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  Speaker 1: I know you don't have a crystal ball, you said
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  Speaker 1: so yourself, But what does this say then about the
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  Speaker 1: future of work? How far can this go?
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  Speaker 3: Well, you know what's likely to tee this up for
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  Speaker 3: Supreme Court review is if you get a split in
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  Speaker 3: the circuits. If you get, say, for example, the case
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  Speaker 3: in Pennsylvania where the FTC won, if the third circuit
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  Speaker 3: were to uphold that point of view, and let's say
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  Speaker 3: one of the circuit courts in the South were to
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  Speaker 3: find it's unlawful, and that's the kind of thing where
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  Speaker 3: the Supreme Court offer often ways in and yes, you're
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  Speaker 3: absolutely correct. They're not a fan of independent agency regulatory power,
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  Speaker 3: and the FDC faces a number of constitutional administrative wat challenges.
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  Speaker 3: The narrow list is that you know, the agency is
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  Speaker 3: fine for methods of competition are fine. They're even fine
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  Speaker 3: if you use them in a particular case against noncompete clauses.
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  Speaker 3: But there's a narrow path where they could say, you
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  Speaker 3: don't have the rulemaking authority to do this, but you
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  Speaker 3: do have the power to seek an individual case against
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  Speaker 3: an individual of the Senate. Problem with that is that's
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  Speaker 3: like lack of mole really in all fairness to business
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  Speaker 3: and to consumers and to employers employees, a nationwide uniform
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  Speaker 3: orle is the best way to tackle this in my view.
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  Speaker 1: Okay, we're going to continue to watch that as it
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  Speaker 1: makes its way through the courts. Meanwhile, we're going to
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  Speaker 1: shift gears now and talk about big tech and Google
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  Speaker 1: antitrust enforcing, wanting the search giant Google to make some
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  Speaker 1: big changes, including potentially selling its Chrome browser now. Professor
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  Speaker 1: Google says any remedy would allow competing browsers like Apple
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  Speaker 1: Safari to actually have the freedom to do the deals
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  Speaker 1: with whatever search engine that they think is best for
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  Speaker 1: their users. That's what they want to see happen. That's
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  Speaker 1: what they say should happen. The judges said that it's
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  Speaker 1: illegal for Google to pay Apple to use Google's browser
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  Speaker 1: as their default. Does Google have a point here, you know,
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  Speaker 1: market freedom, free enterprise, that sort of thing.
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  Speaker 3: Well, you know, this is one of a number of
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  Speaker 3: you know, probably the busiest few years in monopolization law
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  Speaker 3: in my lifetime, and Google was the case that finished first,
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  Speaker 3: and it was a great victory for the government. Google
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  Speaker 3: was found to have monopoly power over different aspects of
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  Speaker 3: search and that they violated the law by entering into
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  Speaker 3: those exclusive deals, paying the huge amounts of money that
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  Speaker 3: we've all read about. But they didn't obtain this monopoly unlawfully,
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  Speaker 3: at least the court didn't make any findings like that.
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  Speaker 3: But they did unlawfully maintain that monopoly. So you're right,
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  Speaker 3: everything rests with the remedy. And this case follows in
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  Speaker 3: the footsteps of Microsoft about a generation ago, where you
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  Speaker 3: have a company that didn't do anything wrong but had
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  Speaker 3: a monopoly and then started doing lots of things wrong
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  Speaker 3: to maintain that monopoly. And the problem in the Microsoft
• 9:42
  Speaker 3: case was that the court kind of lost its mind
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  Speaker 3: when it got to the remedy's face. It wrote a
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  Speaker 3: really terrific, lengthy, detailed opinion the district court of why
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  Speaker 3: Google had acted unlawfully, why I had no pro competitive
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  Speaker 3: justification or business justification for what it's doing. And the
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  Speaker 3: court back in in the nineties early two thousands just
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  Speaker 3: rushed through a very short hearing on remedy and also
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  Speaker 3: had done some other kind of outlandish procedural things. And
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  Speaker 3: they had originally said you have to split essentially the
• 10:14
  Speaker 3: Windows operating system from the application software like Word and
• 10:18
  Speaker 3: Office and that kind of thing. And the Court of
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  Speaker 3: Appeals you said, you rushed it, you did some other
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  Speaker 3: things wrong. We're only going to prohibit the specific things
• 10:26
  Speaker 3: that you found were you're legal. Not that much changed
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  Speaker 3: in the marketplace. And that's the issue before Judge Meta
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  Speaker 3: in Google, not just what did they do wrong and
• 10:37
  Speaker 3: how do you stop it? But how do you deprive
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  Speaker 3: them of their unlawful profits from their illegal behavior, and
• 10:43
  Speaker 3: how do you restore competition? And so I know in
• 10:46
  Speaker 3: filibustering you a little bit, but the remedy stuff is
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  Speaker 3: absolutely key. And you have Microsoft as a roadmap for
• 10:54
  Speaker 3: how to have a government victory that doesn't change very
• 10:57
  Speaker 3: much in the marketplace. And I know the government and
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  Speaker 3: the court said on their mind to serve deciding the
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  Speaker 3: remedy stuff right now.
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  Speaker 1: It does seem like this is another example of the
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  Speaker 1: law trying to catch up with the technology a little bit.
• 11:10
  Speaker 3: You know, ant trust lagation is backward looking. In Europe
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  Speaker 3: you have kind of more prospective legislation like the Digital
• 11:17
  Speaker 3: Markets Act and the Digital Services Act. But here court
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  Speaker 3: has judged that they acted unlawfully maintain their monopoly in
• 11:24
  Speaker 3: a way that goes beyond competition on the merits, and
• 11:27
  Speaker 3: you have to stop that. And you don't want the
• 11:30
  Speaker 3: Microsoft situation where the government wins but not really that
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  Speaker 3: much changes. And I know the government has recommended the
• 11:36
  Speaker 3: sale of chrome or otherwise separating kind of the search
• 11:40
  Speaker 3: function from the from the browser, and that's something I
• 11:44
  Speaker 3: hope that court considers very seriously because these behavioral remedies
• 11:49
  Speaker 3: often don't work. The history of Microsoft is a history
• 11:52
  Speaker 3: of really really long periods of time where they're under
• 11:56
  Speaker 3: court supervision. They did most but not all, the things
• 11:59
  Speaker 3: that they were ordered too, and again not much changed.
• 12:02
  Speaker 3: They had to share lots of technical information so that
• 12:05
  Speaker 3: competitors could better interoperate with him. That's going to be
• 12:08
  Speaker 3: part of this solution here. But when you do structural remedies,
• 12:13
  Speaker 3: it's cleaner, it's more painful for the company. But they're
• 12:16
  Speaker 3: the ones who are helped to break the law. This
• 12:18
  Speaker 3: is not a criminal case. No one's going to jail,
• 12:20
  Speaker 3: nobody's being fined. The question is what changes in structure
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  Speaker 3: and behavior are going to be enough to change the
• 12:27
  Speaker 3: take away the fruits that there unlawful monopoly.
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  Speaker 1: Professor, We're going to leave it there. Thank you so
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  Speaker 1: much for your time, and it has been a pleasure.
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  Speaker 3: Well, thank you. I appreciate any our.
• 12:37
  Speaker 1: Thanks to Professor Spencer Weber Waller. He is director of
• 12:39
  Speaker 1: the Institute of Consumer Anti Trust Studies at Loyal University
• 12:43
  Speaker 1: Chicago School of Law. Up next, we take a look
• 12:45
  Speaker 1: at the block deal between Kruger and Albertson and a
• 12:48
  Speaker 1: few other big ani trust cases in the retail space.
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  Speaker 1: You're listening to a special year end edition of Bloomberg Law.
• 12:54
  Speaker 1: I'm Amy Morris and this is Bloomberg. This is Bloomberg
• 13:05
  Speaker 1: Law with June Grosso from Bloomberg Radio. This is a
• 13:09
  Speaker 1: special edition of Bloomberg Law as we look at some
• 13:12
  Speaker 1: of the big antitrust cases from this past year. I'm
• 13:15
  Speaker 1: Amy Morris in for June Grosso. Now, we saw several
• 13:19
  Speaker 1: big merger deals blocked, including one that would have created
• 13:22
  Speaker 1: a grocery behemoth. A federal judge blocked Kroger's nearly twenty
• 13:26
  Speaker 1: five billion dollar acquisition of Albertson, saying that proposed tie
• 13:30
  Speaker 1: up would create a competition problem for shoppers. To take
• 13:33
  Speaker 1: it close to look at the failed deal and the
• 13:35
  Speaker 1: fallout for both grocers, plus a look at some other
• 13:37
  Speaker 1: big cases in the retail space. We welcome Professor Peter Carstenson,
• 13:42
  Speaker 1: Professor of Law Emeritus at University of Wisconsin Law School. Professor,
• 13:46
  Speaker 1: thank you so much for taking the time.
• 13:48
  Speaker 4: It's a pleasure to be here.
• 13:50
  Speaker 1: Let's talk about this particular merger. The FTC blocked the deal,
• 13:55
  Speaker 1: arguing that it would violate antitrust law. That was seen
• 13:59
  Speaker 1: as an ft SE win, of course, but then Albertsons
• 14:02
  Speaker 1: sued Kroger. Walk us through how this worked well.
• 14:07
  Speaker 4: Albertson's got looted before it was sold. They gave up
• 14:12
  Speaker 4: several billion dollars to their shareholders, so they're already impoverished
• 14:18
  Speaker 4: expecting that this deal with Kroger was going to go through.
• 14:22
  Speaker 4: They now claim that Kroger did not really do the
• 14:28
  Speaker 4: best job it could have in defending and justifying the merger,
• 14:33
  Speaker 4: inadequate proposed divestiture, et cetera, and that that obviously has
• 14:38
  Speaker 4: harmed Albertson's enormously, And so they're seeking huge damages as
• 14:44
  Speaker 4: a way of trying to get some funding back in
• 14:46
  Speaker 4: place to restore themselves as a competitor, even.
• 14:49
  Speaker 1: Though it was the FTC that blocked it.
• 14:52
  Speaker 4: Right right well up until this case, the FTC, best
• 14:59
  Speaker 4: of my present recollection, never actually stopped a grocery merger totally.
• 15:06
  Speaker 4: It would say, you've got to give up these grocery stores,
• 15:08
  Speaker 4: or those grocery stores. You proposed to give up one
• 15:11
  Speaker 4: hundred and twenty grocery stores. We want you to give
• 15:13
  Speaker 4: up two hundred and twelve grocery stores. But they let
• 15:16
  Speaker 4: the mergers go through. This time they finally got the
• 15:20
  Speaker 4: courage of my convictions and said, no, well, they've made
• 15:26
  Speaker 4: a really stupid settlement actually with Albertson's. A few years
• 15:30
  Speaker 4: ago they divested the one hundred and fifty something like
• 15:33
  Speaker 4: that stores to a company that almost immediately went bankrupt,
• 15:39
  Speaker 4: and partly because the stores that were divested were the
• 15:43
  Speaker 4: dogs in part of the of the Safeway empire, so
• 15:49
  Speaker 4: that this time the Trade Commission said, no, we're just
• 15:53
  Speaker 4: not going to approve the merger. There was something like
• 15:56
  Speaker 4: fourteen hundred local markets were Albertson's and Kroger were significant
• 16:05
  Speaker 4: competitors with each other. They were proposing to fix a
• 16:10
  Speaker 4: significant number of those overlaps, but not all of them.
• 16:14
  Speaker 4: And so this is sort of where the tractory said,
• 16:17
  Speaker 4: that's not an adequate settlement. First of all, this is
• 16:20
  Speaker 4: a clearly any competitive merger in terms of those overlaps,
• 16:25
  Speaker 4: and what you're proposing by way of a settlement simply
• 16:29
  Speaker 4: doesn't solve the problem. Very good opinion by the judge.
• 16:32
  Speaker 4: By the way, we've seen this year at least four
• 16:38
  Speaker 4: really good decisions, three that I can think of from
• 16:43
  Speaker 4: trial judges, this one, the one in the Google monopoly case,
• 16:50
  Speaker 4: and the.
• 16:54
  Speaker 2: Tapestry.
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  Speaker 4: All of them the judges did really really good jobs.
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  Speaker 4: And the judge said on the settlement was it would
• 17:08
  Speaker 4: reduce the number of markets where there are arms substantially
• 17:12
  Speaker 4: if and only if the company acquiring these assets is
• 17:17
  Speaker 4: actually one hundred percent successful, if it has any failure,
• 17:20
  Speaker 4: there's going to be more markets harmed. And this is
• 17:23
  Speaker 4: a company that in the past has bought grocery stores
• 17:26
  Speaker 4: and then sold them one way or another. So the
• 17:30
  Speaker 4: judge said, this is really not a very good settlement
• 17:36
  Speaker 4: proposal from Kroger. I'm not going back to Albertsons. I
• 17:39
  Speaker 4: think this is why Albertson's is irritated that Kroger did
• 17:44
  Speaker 4: not come up with a more credible buyer and did
• 17:48
  Speaker 4: not offer more stores by way of a settlement, which
• 17:57
  Speaker 4: made it harder to justify the proposed dissolution of the
• 18:03
  Speaker 4: our se the the M just by the merger because
• 18:06
  Speaker 4: of what was being sold off. U.
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  Speaker 1: Well, so does albertson S d uh have a j
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  Speaker 1: a shot at winning this case?
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  Speaker 4: I this gets over into outside really of antitrust law,
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  Speaker 4: over into corporate duties. Uh ha, did they fail to
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  Speaker 4: engage in good faith? Uh? Advancement of the merger. They're
• 18:37
  Speaker 4: gonna be saying something on more or less along the
• 18:39
  Speaker 4: lines of ours was a really good proposal that judge
• 18:43
  Speaker 4: just didn't accept it. It was as far as we
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  Speaker 4: was reasonable to go given how much we were gonna
• 18:49
  Speaker 4: pay for Albertson's or wards to that general effect. And
• 18:52
  Speaker 4: so that's gonna turn it's it's in Delaware, it's in
• 18:55
  Speaker 4: state court. It's gonna turn on the duties of a
• 18:59
  Speaker 4: buyer to a seller where there are some conditions. And
• 19:04
  Speaker 4: that's my pay grade to speculate. I mean, I would
• 19:12
  Speaker 4: guess if Albertson's has some pretty good evidence, there'll be
• 19:16
  Speaker 4: a settlement. Kroger will pay some more money to Albertson's.
• 19:20
  Speaker 1: Now, you mentioned Caprian Tapestry earlier in this interview, and
• 19:24
  Speaker 1: that deal wasn't blocked, but they mutually decided to end
• 19:27
  Speaker 1: the agreement after a court order froze them. To walk
• 19:30
  Speaker 1: us through that decision, it sounds like it's not quite
• 19:34
  Speaker 1: as contentious as the Albertson Kroger.
• 19:36
  Speaker 4: Oh, I think it was at least as contentious. On
• 19:41
  Speaker 4: what's called the market definition. These are high priced purses
• 19:49
  Speaker 4: that are in the popular high price or something like that.
• 19:53
  Speaker 4: And the argument was a purse is a purse, and
• 19:58
  Speaker 4: you can get a purse for twenty dollars at Walmart.
• 20:01
  Speaker 4: You can get a purse from one of these fancy
• 20:04
  Speaker 4: folks for one thousand dollars. I've been seeing some ants
• 20:06
  Speaker 4: recently and I keep asking myself, why would anybody pay
• 20:10
  Speaker 4: that much for a purse, But it's not me. So again,
• 20:15
  Speaker 4: this was a set they were seeking preliminary injunction as
• 20:17
  Speaker 4: I recall for the Trade Commission so they could proceed.
• 20:22
  Speaker 4: And the question was whether you could distinguish in this
• 20:30
  Speaker 4: purse and other accessories world a domain an an area
• 20:38
  Speaker 4: of competition involving this sort of middle price range from
• 20:45
  Speaker 4: like one hundred dollars to nine hundred dollars for a
• 20:49
  Speaker 4: purses as opposed to purses that were priced one thousand
• 20:52
  Speaker 4: dollars or under a hundred. And the Trade Commission put
• 20:59
  Speaker 4: in some pretty good evidence of the way in which
• 21:03
  Speaker 4: these two companies had specifically identified themselves as being in
• 21:09
  Speaker 4: that zone of perse competition accessory competition, and it identified
• 21:16
  Speaker 4: each other as being their most major competitor. And so
• 21:22
  Speaker 4: again the argument was under the antitrust law, a merger
• 21:26
  Speaker 4: which may underscy the word may substantially lesson competition or
• 21:32
  Speaker 4: tend to create a monopoly, is unlawful. So it doesn't
• 21:35
  Speaker 4: have to actually eliminate the harm competition, restrain competition. It
• 21:40
  Speaker 4: simply is something that may is reasonably likely to harm competition,
• 21:47
  Speaker 4: and these two firms identified themselves as each other's primary competitor.
• 21:52
  Speaker 4: There were other associated facts that really, in the judges
• 21:57
  Speaker 4: view and the Trade Commission's earlier view, really did create
• 22:02
  Speaker 4: this kind of competitive zone where if these firms merged,
• 22:08
  Speaker 4: there really would not be they had four or five
• 22:11
  Speaker 4: different brands as well, there really would not be another
• 22:16
  Speaker 4: other equally significant competitors in that band of person accessory supplies.
• 22:25
  Speaker 4: The high end producers brand named European outfits would be
• 22:32
  Speaker 4: unlikely to want to cut price to enter that area,
• 22:36
  Speaker 4: and that the low priced people have a very hard
• 22:41
  Speaker 4: time apparently raising their profile, so that if you traditionally
• 22:48
  Speaker 4: saw one of their purses as a ninety eighty or
• 22:51
  Speaker 4: ninety dollars perse, for them to convince you that it's
• 22:56
  Speaker 4: real that a different line but with the same brand
• 23:01
  Speaker 4: name is really a two hundred and fifty dollars person
• 23:05
  Speaker 4: is apparently a very difficult advertising promotion credibility problem. So
• 23:12
  Speaker 4: that the judge felt that there was good reason to
• 23:15
  Speaker 4: believe that this would this merger would significantly affect competition
• 23:22
  Speaker 4: in that domain.
• 23:24
  Speaker 1: Well, professor, before I let you go I'm curious about
• 23:27
  Speaker 1: what this could mean for future M and A type deals.
• 23:29
  Speaker 1: We've just talked about two really big ones that got
• 23:32
  Speaker 1: frozen and got dissolved. Does this have a chilling effect
• 23:35
  Speaker 1: on others who may be looking at mergers and acquisitions?
• 23:40
  Speaker 4: I would so like that to be the case. Most
• 23:43
  Speaker 4: of these mergers of this scale have no legitimate justification
• 23:49
  Speaker 4: in terms of efficiency, product promotion, innovation. I think if
• 23:58
  Speaker 4: the Biden Harris administered had been had been retained by
• 24:04
  Speaker 4: the voters, there was a reasonable probability that this would
• 24:08
  Speaker 4: have had an inhibiting effect. What is very uncertain is
• 24:15
  Speaker 4: with the new Trump administration, even though the designated heads
• 24:19
  Speaker 4: for the Anti Trust Division and the Trade Commission are
• 24:23
  Speaker 4: actually pretty pro anti trust, how active they will be
• 24:30
  Speaker 4: in enforcing merger law at this level. The certainly the
• 24:38
  Speaker 4: market and the folks who are putting deals together don't
• 24:43
  Speaker 4: think so. There are a whole lot of deals that
• 24:45
  Speaker 4: are set to come forward after January twentieth, and that
• 24:50
  Speaker 4: would suggest that the market, the investment bankers think that
• 24:57
  Speaker 4: merger rules are going to be relaxed. A number of
• 25:02
  Speaker 4: them were, of course, substantial contributors to the new administration's
• 25:09
  Speaker 4: campaign and to its, the inauguration, etc. And it is
• 25:18
  Speaker 4: allegedly a transactional administration, which would again suggest that they
• 25:24
  Speaker 4: may know something here.
• 25:26
  Speaker 1: Professor, we're going to have to leave it there. Thank
• 25:28
  Speaker 1: you so much for taking the time with us. Our
• 25:30
  Speaker 1: thanks to Professor Peter Carstensen for joining us, Professor of
• 25:33
  Speaker 1: Law Emeritus at the University of Wisconsin Law School. Now
• 25:36
  Speaker 1: up next, we are going to look ahead to twenty
• 25:38
  Speaker 1: twenty five and preview how another Trump administration could impact
• 25:43
  Speaker 1: the regulatory environment. You're listening to a special edition of
• 25:46
  Speaker 1: Bloomberg Law. I maybe Morris in for June Grosso. This
• 25:49
  Speaker 1: is Bloomberg. This is Bloomberg Law with June Grosso from
• 26:05
  Speaker 1: Bloomberg Radio. Thanks for listening to a special edition of
• 26:09
  Speaker 1: Bloomberg Law. I'm Abe Morris filling in for June Grosso,
• 26:12
  Speaker 1: and we're focusing on anti trust regulations on this show.
• 26:15
  Speaker 1: President elect Donald Trump ass promised to make some sweeping
• 26:18
  Speaker 1: changes to government at the federal level. He'll inherit a
• 26:21
  Speaker 1: record amount of pending antitrust cases. We get a preview
• 26:25
  Speaker 1: now of how a Trump White House might be handling things.
• 26:28
  Speaker 1: We bring in Bloomberg News Anti trust reporter Leah Nylan, Leah,
• 26:32
  Speaker 1: a pleasure, thanks for joining us, Thanks for having me
• 26:35
  Speaker 1: Assistant Attorney General for Anti Trust. Jonathan Canter leaving the agency.
• 26:40
  Speaker 1: Got a lot of cases pending. What's happening here?
• 26:42
  Speaker 5: Yes, So Jonathan Canter has officially gone. For the next
• 26:46
  Speaker 5: couple weeks. His number two at the agency, Doha Mechi,
• 26:49
  Speaker 5: is in charge, and then on January twentieth, somebody from
• 26:53
  Speaker 5: the Trump administration will come in. Donald Trump has nominated
• 26:56
  Speaker 5: Gail Slater to take over the position. She is a
• 27:00
  Speaker 5: long time any trust lawyer with experience at the other agency,
• 27:04
  Speaker 5: the FTC. For the past couple of years, she has
• 27:06
  Speaker 5: been working at a number of anti Google companies, including
• 27:10
  Speaker 5: Fox Corp and Roku, and she has recently served as
• 27:14
  Speaker 5: the academic advisor to Jade Vance. So she's very familiar
• 27:18
  Speaker 5: with these lawsuits and has, you know, lots of thoughts
• 27:23
  Speaker 5: about how they could go forward. At the Federal Trade Commission,
• 27:27
  Speaker 5: Trump has nominated one of the current GOP commissioners to
• 27:30
  Speaker 5: take the chairmanship from Lena Khan, who is expected to
• 27:33
  Speaker 5: step down after the inauguration. His name is Andrew Ferguson.
• 27:37
  Speaker 5: He is a former hillstaffer for former Senate Majority Leader
• 27:41
  Speaker 5: Mitch McConnell, and has also served as the Solicitor General
• 27:44
  Speaker 5: of Virginia. He has also a lot of anti big
• 27:47
  Speaker 5: tech views and has recently spoken about the need to
• 27:51
  Speaker 5: look into the tech platforms over there censorship of conservative viewpoints.
• 27:56
  Speaker 1: Okay, there's a lot to unpack there, but obviously people
• 27:59
  Speaker 1: are being moved into those positions, are getting positioned to
• 28:02
  Speaker 1: move in come January twentieth, the next administration is going
• 28:07
  Speaker 1: to have to be the ones that pick up the
• 28:09
  Speaker 1: baton and move this forward. From what you know about
• 28:13
  Speaker 1: these nominees, these people who may be taking these positions,
• 28:16
  Speaker 1: is that something that they are inclined to do, or
• 28:18
  Speaker 1: would they go a different direction?
• 28:20
  Speaker 5: Now, both of them have already sort of made clear
• 28:22
  Speaker 5: that they intend to move forward with these cases that
• 28:26
  Speaker 5: have already been filed, and in his nomination announcements, Donald
• 28:30
  Speaker 5: Trump indicated that he picked them in large part because
• 28:34
  Speaker 5: of their views on tech and so, yes, the Google
• 28:39
  Speaker 5: case is sort of the first one, the biggest one
• 28:42
  Speaker 5: that remains pending at the Justice Department, and there is
• 28:45
  Speaker 5: supposed to be a trial in that one in April
• 28:48
  Speaker 5: over what sort of conditions the courts made place on
• 28:53
  Speaker 5: the company after it was found to be an illegal monopoly.
• 28:56
  Speaker 5: The Trump administration will have a chance in March to
• 28:59
  Speaker 5: weigh in if they have any views that are slightly
• 29:01
  Speaker 5: different from the Biden folks. The Biden team put in
• 29:05
  Speaker 5: a proposal for how they think the court should make
• 29:10
  Speaker 5: some changes to Google's business, but as I mentioned, the
• 29:13
  Speaker 5: Trump team can make some changes to that before this
• 29:16
  Speaker 5: trial takes place in April, and then we'll go forward
• 29:20
  Speaker 5: with a several week hearing and the judge has promised
• 29:24
  Speaker 5: to issue a ruling before August of next year.
• 29:28
  Speaker 1: Now that's Google, but there are also other cases Ticketmaster, Apple, Visa,
• 29:34
  Speaker 1: all accused of illegally dominating markets and the Justice Departments
• 29:38
  Speaker 1: suing them, and plus there's that monopolization suit against Google
• 29:42
  Speaker 1: that you were talking about. Those cases are still are
• 29:46
  Speaker 1: still pending. They don't even have trial dates yet.
• 29:48
  Speaker 5: Yeah, those are our ones that are all sort of
• 29:50
  Speaker 5: in the early stages. They were filed by the Biden
• 29:53
  Speaker 5: administration in the past year, so they're very early. It's
• 29:57
  Speaker 5: definitely possible that folks from those companies try and persuade
• 30:02
  Speaker 5: the Justice Department to settle with them. That is, you know,
• 30:05
  Speaker 5: something that has happened in a lot of previous administrations.
• 30:08
  Speaker 5: People often point back to the Microsoft case, which was
• 30:11
  Speaker 5: started by the Clinton administration, and then after George W.
• 30:16
  Speaker 5: Bush came in in twenty eleven, his administration opted to
• 30:19
  Speaker 5: settle with the company. So it's pretty much guaranteed that
• 30:23
  Speaker 5: the companies will at least make attempts to settle. Whether
• 30:27
  Speaker 5: Slater and the Trump team are interested in the settlement
• 30:30
  Speaker 5: sort of remains to be seen, but you know, they
• 30:33
  Speaker 5: might be interested in seeing what the companies might be willing.
• 30:35
  Speaker 1: To offer up. The Trump administration is known for being
• 30:38
  Speaker 1: a friend of big companies, big tech, and I wonder
• 30:43
  Speaker 1: if that is going to play a role in how
• 30:45
  Speaker 1: he makes his decisions as to whether to move the
• 30:49
  Speaker 1: towards the anti trust type cases that are already pending.
• 30:54
  Speaker 1: It just there's a question as to whether would he
• 30:56
  Speaker 1: move forward with them.
• 30:57
  Speaker 5: Yeah, that's that's definitely ago question. You know, some of
• 31:01
  Speaker 5: the CEOs of the companies have already sort of made
• 31:04
  Speaker 5: overtures towards President Trump. You know, Mark Zuckerberg donated a
• 31:08
  Speaker 5: lot of money to Trump's inauguration fund. Tim Cook went
• 31:11
  Speaker 5: down to mar A Lago and had dinner with Donald Trump,
• 31:14
  Speaker 5: and afterwards Trump announced that any sort of trade sanctions
• 31:19
  Speaker 5: that are imposed on Chinese companies would not apply to Apple.
• 31:23
  Speaker 5: So it's definitely possible that there is going to be
• 31:27
  Speaker 5: like this lobbying pushed to try and persuade Donald Trump
• 31:30
  Speaker 5: to settle some of these cases. So that's sort of
• 31:35
  Speaker 5: why they're all a little bit up in the air
• 31:37
  Speaker 5: for you know, the next couple months. I mean, the
• 31:40
  Speaker 5: thing about some of these cases, like the Chicken Master
• 31:43
  Speaker 5: case for example, is they are like very unpopular with
• 31:46
  Speaker 5: the public. So if he were to sort of settle
• 31:49
  Speaker 5: that case, it's not going to make him a lot
• 31:53
  Speaker 5: of friends with the average voter. But then again, he
• 31:55
  Speaker 5: might not care.
• 31:57
  Speaker 1: I see, So where do you since you've been covering
• 32:01
  Speaker 1: this and you are the anti stress reporter for Bloomberg News,
• 32:04
  Speaker 1: where do you see this headed now? And how long
• 32:06
  Speaker 1: does it take to unravel these types of cases?
• 32:09
  Speaker 5: Yeah, if you know, they do opt to take any
• 32:12
  Speaker 5: kind of a settlement, we could see that by next summer.
• 32:15
  Speaker 5: You know, they're they're not just going to drop them.
• 32:17
  Speaker 5: Probably they would want something in exchange either. That's some
• 32:21
  Speaker 5: kind of settlement where the company agrees to change some
• 32:23
  Speaker 5: of its business practices, maybe pay a little bit of money.
• 32:26
  Speaker 5: It sort of depends, you know, in the Microsoft case
• 32:29
  Speaker 5: that everyone keeps putting back to you because it's our
• 32:31
  Speaker 5: sort of best example. You know, Microsoft agreed to be
• 32:35
  Speaker 5: under government supervision for the next five years. That ended
• 32:38
  Speaker 5: up turning into like a decade long saga. So right,
• 32:41
  Speaker 5: you know, right, people they want.
• 32:43
  Speaker 1: It takes such a long time to unravel all of this,
• 32:46
  Speaker 1: And also there may be more coming down the pipe.
• 32:48
  Speaker 5: Yes, that's certainly true. There are still a number of
• 32:51
  Speaker 5: cases that both the FTC and the dj have been
• 32:54
  Speaker 5: investigating into large companies for the past several years, some
• 32:57
  Speaker 5: of the health insurance companies, meat packers, all sorts of
• 33:01
  Speaker 5: stuff in the sort of pharmaceutical and the pharmaceutical benefit manufacturers,
• 33:06
  Speaker 5: the drug middleman area. So I mean, we could see
• 33:09
  Speaker 5: more lawsuits, you know, coming in the next year. All
• 33:13
  Speaker 5: of this sort of depends on how the Trump administration
• 33:17
  Speaker 5: really wants to play this issue.
• 33:19
  Speaker 1: And that's kind of a mystery at this point.
• 33:20
  Speaker 5: It still is a little bit of a mystery.
• 33:22
  Speaker 1: Because none of us have a crystal ball.
• 33:25
  Speaker 5: Definitely true. Someone wants to described Donald Trump's sort of
• 33:28
  Speaker 5: method to me as saying like he doesn't get involved
• 33:32
  Speaker 5: in like the policy details. He tends to delegate decision
• 33:36
  Speaker 5: making to a person that he trusts, and that person
• 33:39
  Speaker 5: is sort of allowed to run with it until sometimes
• 33:42
  Speaker 5: something big happens, and then he oftentimes wants to get
• 33:44
  Speaker 5: back involved. So if you think about the way that
• 33:47
  Speaker 5: the sort of TikTok band played out, you know, they
• 33:49
  Speaker 5: were looking at banning TikTok and that was moving along
• 33:53
  Speaker 5: until there was then like sort of the auctioning process
• 33:56
  Speaker 5: where people were involved, and Donald Trump wanted to be
• 33:58
  Speaker 5: very involved in that because he likes sort of making
• 34:01
  Speaker 5: deals and negotiating with companies in them himself.
• 34:04
  Speaker 1: Where do you anticipate coming up in twenty twenty five
• 34:06
  Speaker 1: as far as any more antitrust cases that may be
• 34:09
  Speaker 1: coming down the pipe.
• 34:10
  Speaker 5: Yeah, So, in addition to the Google case, we already mentioned,
• 34:14
  Speaker 5: the FTC's big case against Facebook, which is over whether
• 34:17
  Speaker 5: Facebook should be forced to sell off Instagram and WhatsApp,
• 34:20
  Speaker 5: is scheduled to go to trial starting also in April
• 34:24
  Speaker 5: for about ten weeks. That one should be very interesting.
• 34:27
  Speaker 5: Mark Zuckerberg, Sheryl Sandberg and some other very senior Facebook
• 34:30
  Speaker 5: executives are set to testify and it is really about
• 34:35
  Speaker 5: sort of fixing what a lot of the antitrust people
• 34:37
  Speaker 5: think is like one of the seminal mistakes of the
• 34:43
  Speaker 5: Internet generation, which was allowing you know, Facebook to acquire Instagram.
• 34:46
  Speaker 5: So it will be interesting to see what the court
• 34:48
  Speaker 5: does there. It's that one is sort of at the
• 34:51
  Speaker 5: point where it's it would be difficult for the Trump
• 34:54
  Speaker 5: administration to roll it back because it's already sort of
• 34:56
  Speaker 5: slated to had to trial very soon. But some of
• 35:00
  Speaker 5: the other ones that are pending, as we mentioned, the
• 35:02
  Speaker 5: Apple case, the Amazon case, those are sort of ones
• 35:05
  Speaker 5: that might potentially see settlements.
• 35:07
  Speaker 1: Interesting that they're mostly big tech.
• 35:09
  Speaker 5: Yes, you know. This all started towards the end of
• 35:13
  Speaker 5: the first Trump administration in twenty nineteen, the DOJ and
• 35:17
  Speaker 5: the FTC did this big divide where they decided that
• 35:20
  Speaker 5: the Justice Department would look into Google and Apple and
• 35:22
  Speaker 5: the FTC would look into Facebook and Amazon, and right
• 35:26
  Speaker 5: at the very end of the Trump administration, they sued
• 35:29
  Speaker 5: both Google and Facebook, and then they sort of turned
• 35:33
  Speaker 5: their attention to the other tech giants, Apple and Amazon
• 35:37
  Speaker 5: and ended up bringing cases against them in twenty twenty
• 35:40
  Speaker 5: three and then earlier this year. But though that has
• 35:44
  Speaker 5: taken a lot of agency resources, because you know, these
• 35:47
  Speaker 5: are not that's large agencies. They only have about like
• 35:50
  Speaker 5: eight hundred to twelve hundred people. And when you're talking
• 35:52
  Speaker 5: about some of the largest companies in the world, it
• 35:55
  Speaker 5: certainly takes a lot of resources to go up against them.
• 35:58
  Speaker 5: So they have these major cases and sort of the
• 36:01
  Speaker 5: outcome is still very much in doubt.
• 36:05
  Speaker 4: Andy.
• 36:05
  Speaker 5: Trust cases also tend to take a very long time.
• 36:07
  Speaker 5: So even though the cases we're originally the Google and
• 36:11
  Speaker 5: Facebook cases were filed in twenty twenty, we're still here
• 36:14
  Speaker 5: in twenty twenty four going into twenty twenty five, and
• 36:17
  Speaker 5: we don't have them resolved. So I wouldn't I wouldn't
• 36:21
  Speaker 5: expect a quick resolution to anything. Really.
• 36:24
  Speaker 1: Wow, but it's going to be very interesting to watch,
• 36:26
  Speaker 1: that's certainly true. We're gonna watch it right along with you.
• 36:29
  Speaker 5: Keeps me employed, so I don't mind too much.
• 36:31
  Speaker 1: Well, there's nothing wrong with that either. Well, let's shift
• 36:34
  Speaker 1: gears for a second and move to the FTC. You
• 36:36
  Speaker 1: had mentioned that Donald Trump has already got somebody in
• 36:39
  Speaker 1: line ready to take over and to move into the
• 36:42
  Speaker 1: one of the FTC positions. There's been a lot of
• 36:45
  Speaker 1: there have been a lot of questions about one of
• 36:48
  Speaker 1: the roles of the FTC. They had tried to do
• 36:51
  Speaker 1: the non compete clause, you know, put a ban on
• 36:53
  Speaker 1: the non compete clause that got squashed. Where is that
• 36:57
  Speaker 1: going to be going now under a Trump administration.
• 36:59
  Speaker 5: Yeah, So the chair of the FTC right now is
• 37:02
  Speaker 5: Lena Khan. She is expected to step down once Trump
• 37:05
  Speaker 5: is inaugurated, sort of to open up the space for
• 37:07
  Speaker 5: him to nominate a third Republican so that they have
• 37:10
  Speaker 5: a majority. But that oftentimes that process takes several months.
• 37:14
  Speaker 5: So as soon as she leaves, the agency is going
• 37:17
  Speaker 5: to be deadlocked two to two. Because they have two
• 37:20
  Speaker 5: Republicans and two Democrats in office right now, that sort
• 37:24
  Speaker 5: of prevents any like really major shifts because you know,
• 37:28
  Speaker 5: if the agency, for example, wanted to withdraw any of
• 37:31
  Speaker 5: these rules, it can't do it without a vote. But
• 37:33
  Speaker 5: these proposals are probably going to end up being pulled back.
• 37:37
  Speaker 5: Both of the Republicans who are on the commission right
• 37:39
  Speaker 5: now voted against nearly all of the rules that have
• 37:42
  Speaker 5: been put in place, including the noncompete piany. One of
• 37:47
  Speaker 5: the Republicans voted in favor of the more recent junk
• 37:50
  Speaker 5: few rules so that one might be able to stay,
• 37:52
  Speaker 5: but some of the major ones are probably going to
• 37:55
  Speaker 5: be pulled back, though not until they have their third
• 37:58
  Speaker 5: Republican in place later in the year. That third Republican
• 38:02
  Speaker 5: is has been nominated as Mark Metter. He is the
• 38:07
  Speaker 5: longtime chat staffer for Senator Mike Lee. Very well known
• 38:11
  Speaker 5: in anti trust circles. He has made a name for
• 38:14
  Speaker 5: himself representing some of the conservative platforms in cases that
• 38:19
  Speaker 5: they've brought against the tech platforms, including Rumble, which has
• 38:23
  Speaker 5: sued Google over some of the alleged d platforming that
• 38:27
  Speaker 5: has taken place. That's when they're removed from app stores
• 38:30
  Speaker 5: and things like that. So that is probably going to
• 38:34
  Speaker 5: be like a major focus of the next FTC.
• 38:37
  Speaker 1: Or Thanks to Leah Nylan. Thank you Leah for taking
• 38:40
  Speaker 1: the time, Thank you for having me. She covers antitrust
• 38:43
  Speaker 1: for Bloomberg News, and thank you for joining us on
• 38:45
  Speaker 1: this special edition of Bloomberg Law. I'm Abe Morris and
• 38:48
  Speaker 1: for June Grosso. Stay with us. Today's top stories in
• 38:51
  Speaker 1: global business. Headlines are coming up right now.