Speaker 1: Welcome to Votes and Verdicts, the podcast of the litigation
Speaker 1: and policy team at Bloomberg Intelligence. I'm justin terracy in
Speaker 1: this week for Elliott Stein, who's taking some very well
Speaker 1: deserved time off. But don't worry, We've got a great
Speaker 1: episode for you today. I'll be joined by my colleague
Speaker 1: Jennifer Ree. We'll talk all things the summer season of Antitrust.
Speaker 1: Holy Frome joins us for an update on the ever
Speaker 1: changing landscape of tariffs this week, and Matt Shettenhelm also
Speaker 1: tunes in about FCC regulation on broadcasting and what's changing there.
Speaker 1: But first, before we jump into today's episode, a quick
Speaker 1: word about Bloomberg Intelligence. We're the investment research platform on
Speaker 1: the Bloomberg terminal with five hundred analysts and strategy is
Speaker 1: working across the globe and focus on all major markets.
Speaker 1: Our coverage includes over two thousand equities and credits, and
Speaker 1: we have outlooks on more than ninety industries and one
Speaker 1: hundred market industries, currencies and commodities. So leading off this week,
Speaker 1: I thought we'd start with antitrust. I might be a
Speaker 1: little bit biased since it's my own coverage area, but
Speaker 1: there definitely has been quite a bit going on, I'd say,
Speaker 1: as us of late out of the Department of Justice
Speaker 1: and starting things off, I think we'll turn to generate. So, Jen,
Speaker 1: there's been a lot of controversy in the news the
Speaker 1: last few weeks over a settlement that the Department of
Speaker 1: Justice entered with Hewlett Packard over its acquisition of Juniper Networks.
Speaker 1: This was entered on the eve of trial from what
Speaker 1: I understand, So you give us a bit of a
Speaker 1: sense of what's going on with that one over.
Speaker 2: There, Yeah, sure, thanks, justin you know, really definitely, we're
Speaker 2: seeing some things happening in the antitrust world that are
Speaker 2: troubling from an enforcement perspective, and you know, you put
Speaker 2: your finger on it. The first one is this deal.
Speaker 2: So just as a little bit of background on this deal,
Speaker 2: it was fourteen billion dollars signed back in January of
Speaker 2: twenty twenty four. So what happened with it, as happens
Speaker 2: with many deals, is the Department of Justice investigated and
Speaker 2: then sued to block the deal about a year later,
Speaker 2: that was in January of this year, and the concern
Speaker 2: in the DOJ had was that the combination was going
Speaker 2: to harm what they called enterprise customers for w land solutions.
Speaker 2: So what that is is really just basically wireless networks
Speaker 2: for really huge entities like a big business, a hospital,
Speaker 2: or a university, you know, much like we all have
Speaker 2: Wi Fi at home. This is just a larger network
Speaker 2: for these really large spread out entities. And they're basically
Speaker 2: three main competitors that provide this product Hulot, Packard, Juniper,
Speaker 2: and then Cisco. Cisco's actually the biggie in the market.
Speaker 2: And the products you look, Packard and Juniper had that
Speaker 2: overlap that compete were called Aruba and missed. So trial
Speaker 2: was supposed to start in early July of this year.
Speaker 2: But on June twenty seventh, this this settlement that you
Speaker 2: referenced was announced, and what it included, right, is a divestiture. Oftentimes,
Speaker 2: as you know, merger settlements include selling off some small
Speaker 2: piece of the business to eliminate the overlap. That's really
Speaker 2: what it's supposed to be. But in this case, the
Speaker 2: divestiture was a small part of Hewlett Packard's networking business
Speaker 2: and also a limited bit of license to some technology
Speaker 2: that comes from Juniper. Now here's the rub. The allegation,
Speaker 2: as I mentioned, was that it's large enterprise consumers that
Speaker 2: would be harmed. But the divestiture was not a product
Speaker 2: sold to large enterprise consumers. It was for very small businesses.
Speaker 1: Interesting, interesting and a lot of products most people have
Speaker 1: probably never heard of either, but really interesting.
Speaker 2: That wrinkle there, Yeah, the business to business products, it's
Speaker 2: a whole world and we're not always familiar with those.
Speaker 2: But really, at the end of the day, it doesn't
Speaker 2: resolve the overlap that caused concerns. You still have this
Speaker 2: problematic competitive overlap between MYST and Aruba. So now here's
Speaker 2: the thing that after this very odd settlement that surprised
Speaker 2: most of us, I mean I was getting ready to
Speaker 2: go to travel to this trial to listen, in all
Speaker 2: of a sudden we see news reports. So it's news reports.
Speaker 2: I can't confirm this, but what these reports have said
Speaker 2: is that Hewlett Packard hired these lobbyists very close to
Speaker 2: the president, and that these settlements were pushed on the
Speaker 2: DOJ anti trust staff very much against their will. So
Speaker 2: what you have then is a decision that's not based
Speaker 2: on anti trust expertise, but based on influence and sort
Speaker 2: of the transactional nature of this administration. And that's not
Speaker 2: the way it's supposed to be right.
Speaker 1: Hearing a lot about things like that, as I've laid
Speaker 1: out of DC for sure, right right.
Speaker 2: And so we know that Gail Slater, who is the
Speaker 2: Assistant Attorney General in charge of anti trust at the DJ,
Speaker 2: that would be the leading person for decision maker for
Speaker 2: anti trust at the DJ, pushback, but she was overruled
Speaker 2: by those senior to her, including Pambondi, who are not
Speaker 2: anti trust experts. And then two of her deputies, who
Speaker 2: also apparently objected to the settlement, were fired. And what
Speaker 2: was report is that HPE had hired non the antitrust
Speaker 2: but very politically connected lawyers to negotiate the settlement. These
Speaker 2: are people who are close to Trump or have worked
Speaker 2: for them in the past. And the Wall Street Journal
Speaker 2: even just reported, by the way that one of these
Speaker 2: politically connected lawyers appeared to take it on as a
Speaker 2: personal challenge to get this settlement done after the anti
Speaker 2: trust enforcers questioned his role in the process.
Speaker 1: Oh boy.
Speaker 2: Yeah. So this is a real divergence from how things
Speaker 2: have been done in the M and A anti trust
Speaker 2: world essentially since the Nixon administration, and it's not good
Speaker 2: news for enforcement, our consumers.
Speaker 1: Yeah, Yeah, that sounds like a pretty complicated situation there.
Speaker 1: You know, hard to read the tea leaves too, obviously
Speaker 1: when we're talking about news reports, and not necessarily a
Speaker 1: confirmation about how things have necessarily rolled out by the
Speaker 1: actual folks at the DOJ either. But I guess you know,
Speaker 1: is there any recourse for this? I mean, the deals closed,
Speaker 1: what happens now?
Speaker 2: Well, so what happens now is that it has to
Speaker 2: go through what's called a Tunny Act procedure. That's a
Speaker 2: little bit of a safeguard for this kind of political influence,
Speaker 2: but really, honestly, it's very limited. And what that means
Speaker 2: is that the settlement isn't final until a judge has
Speaker 2: reviewed it and signed off. And this happens, by the way,
Speaker 2: for all Department of Justice anti trust settlements and not
Speaker 2: for the FTC. And the reason, by the way, it
Speaker 2: was because it was passed during the Nixon administration and
Speaker 2: after allegations that ITT, a company that had been sued
Speaker 2: under anti trust by the anti trust enforcers at that time,
Speaker 2: basically got their case dropped by paying a lot of
Speaker 2: money to the nineteen seventy two Republican National Convention and
Speaker 2: then Congress, which actually got things done in a bipartisan manner.
Speaker 2: BacT passed the Tunny Act, and that says that judges
Speaker 2: are supposed to ask whether a DOJ anti trust settlement
Speaker 2: is in the public interest. But I said it's limited right.
Speaker 2: The judges are supposed to give deference to the DOJ's
Speaker 2: expertise and can't really unwinded merger. The judge can approve, reject,
Speaker 2: or require modifications to the settlement. The courts can solicit
Speaker 2: public comments, they can hold hearings, they can require the
Speaker 2: DOJ to respond to criticisms. But I would say in
Speaker 2: ninety nine percent of the cases the judge just sign off.
Speaker 2: It's kind of pro forma. And in a very very
Speaker 2: few rare circumstances, settlements have been sent back to the
Speaker 2: DOJ to supplement them or to revise them. But the
Speaker 2: thing is justin it's a little bit backwards because if
Speaker 2: the judge doesn't like the settlement and the companies in
Speaker 2: the DJ can't agree to a new one, there's not
Speaker 2: that much that can be done because then the companies,
Speaker 2: because the companies, as soon as they settle with the
Speaker 2: DOJ are allowed to close and integrate. So if these companies,
Speaker 2: HPNG know, we are already closed, they're already integrating before
Speaker 2: the tiny A procedure's done. So if you end up
Speaker 2: with a scenario where there's no settlement because the judge
Speaker 2: is sent it back but they can't agree to a
Speaker 2: new one, and now all you have is litigation. Now
Speaker 2: the case has to be tried, it's extremely highly unlikely
Speaker 2: that any judge is going to unwind a finished deal.
Speaker 2: So it's not really it's very messy, right, So that's
Speaker 2: what we're where we are now in this case. We're
Speaker 2: we're going to wait and a lot of people are
Speaker 2: pushing this judge to really give this a solid review
Speaker 2: under the tiny Act.
Speaker 1: Got it, got it? So you know, you know, we
Speaker 1: were saying too just with what's happening at DOJ, you
Speaker 1: know a lot of what we're we're depending on our
Speaker 1: news reports right about how things are actually rolling out, right,
Speaker 1: And we've seen a few companies under a scrutiny by
Speaker 1: antitrust enforcers these days, right, whether it be from the
Speaker 1: previous administration or companies you know that were looked at
Speaker 1: under the Biden DJ that maybe we're continuing an investigation
Speaker 1: into today, right, You know, but you know, actions to
Speaker 1: kind of you know, sport those investigations or cases, you know,
Speaker 1: whether it be hiring lobbyists, making payments to Trump causes.
Speaker 1: You know, dropping DEI programs has been a big one too,
Speaker 1: you know, investment development in the US. All these different
Speaker 1: ways it seems like to create favor with the administration.
Speaker 1: I mean, what do you think, Jen, do you think
Speaker 1: the new approach really is just to transact with the
Speaker 1: president rather to you know, mount an actual a trust
Speaker 1: defense or to actually explain, you know, your business practices
Speaker 1: to the authorities. What do you think about all that?
Speaker 2: Well, you know, we have this Hewlett Packard example, but
Speaker 2: I think based on news reports that a pattern actually
Speaker 2: really is emerging because you know, another sort of oddity
Speaker 2: that happened in the M and A world, The DOJ
Speaker 2: had sued in January twenty twenty five to block a
Speaker 2: deal between American Express Global Business Travel and Carson Wagon
Speaker 2: lit Travel. Right, right, that case, very recently and without
Speaker 2: any explanation, was dropped. Now there was no settlement here,
Speaker 2: it was just dropped so doesn't go through a tiny
Speaker 2: AC procedure. And then it was reported that AMX GBT,
Speaker 2: the Global Business Travel had hired a guy called Brian Ballard,
Speaker 2: a longtime Trump becker who had raised fifty million in
Speaker 2: his twenty twenty four election. So we see that, and
Speaker 2: then I read, which is no surprise to me, that
Speaker 2: antitrust lawyers are basically advising clients now that maybe an
Speaker 2: M and A or maybe facing monopolization charges to find
Speaker 2: lawyers or obvious that are close to Trump. So we
Speaker 2: are moving toward this sort of position of defending deals
Speaker 2: as an influence maneuver and as a transactional thing, rather
Speaker 2: than and resolving the antitrust problems and getting real deal resolutions.
Speaker 1: God, what definitely a headache, I would say, And you know,
Speaker 1: I mean, I don't know if that makes the whole
Speaker 1: situation easier to comprehend what's going to happen for a client,
Speaker 1: or make some more difficult. I mean, it's really hard
Speaker 1: to say. But you know, I guess, you know, trying
Speaker 1: to apply this to what we could what else we
Speaker 1: could be seeing, you know, for the second half of
Speaker 1: the year.
Speaker 2: What other deals are.
Speaker 1: Pending right now at DOJ R FTC that still need clearance?
Speaker 2: You know, there are quite a few. Because all of
Speaker 2: a sudden, we had a little bit of as pause
Speaker 2: in the market with deal making, but now things are
Speaker 2: kind of flowing, and we do have some pretty big
Speaker 2: pending deals. Google's trying to buy Whiz Charters trying to
Speaker 2: buy cocks. You have Baker Hughes buying a company called
Speaker 2: Chart Industries, and of course probably everyone's right about Dixon Footlocker.
Speaker 2: Those are products we all understand, and you know, justin
Speaker 2: and you know this because you're covering some of these cases.
Speaker 2: They are also a whole bunch of pending monopolization suits. Absolutely, yeah, Google, Meta, Amazon, Apple,
Speaker 2: Live Nation. I mean, if they're a big, huge platform,
Speaker 2: they've probably been sou so you know, and I read
Speaker 2: read that recently Live Nation put a Trump loyalist on
Speaker 2: its board, and also that Apple has announced just the
Speaker 2: other day a major investment in US manufacturing one hundred billion.
Speaker 2: So I think we're beginning to see all sorts of
Speaker 2: movements sort of in this influence peddling area, and we'll
Speaker 2: have to see what happens because we know before the
Speaker 2: election that some of the CEOs of these big tech
Speaker 2: companies like Mark Zuckerberg, we're donating money to Republican causes.
Speaker 2: We're there with Trump at the inauguration, and it hasn't
Speaker 2: really seemed to help them yet. But maybe the tide
Speaker 2: is turning now justin sure.
Speaker 1: Sure, I mean it's you know, some days it seems
Speaker 1: that way, Jen, in another days it doesn't, right, And
Speaker 1: I think maybe we can touch upon this a little
Speaker 1: bit later with Holly. But you know, even think about
Speaker 1: companies like Nvidia, right, and you know, there were news
Speaker 1: reports last year of that that investigations had started at
Speaker 1: DOJ related to anti trust issues, you know. And then
Speaker 1: you know, just two weeks ago, we have President Trump saying,
Speaker 1: you know, quite quite frankly, at at at an event
Speaker 1: that you know, we considered breaking up the company and
Speaker 1: opted against it once he you know, found out how
Speaker 1: difficult that would be to do. Then yesterday we see
Speaker 1: tariffs of maybe one hundred percent on chips that are
Speaker 1: imported into the United States. Right, So that it seems
Speaker 1: like things are making some movements in one direction. Then
Speaker 1: you know, a week goes by and perhaps things move
Speaker 1: backward to another.
Speaker 2: But I think you're right.
Speaker 1: I think we're definitely seeing this interplay between folks in
Speaker 1: the White House that that certainly seems to be a
Speaker 1: growing trend. There's there's no doubt about that, right.
Speaker 2: Right exactly, and it's it's it's going to be interesting
Speaker 2: to see the next three and a half years here.
Speaker 2: But you know, I have been saying for quite a
Speaker 2: long time about the Google Search case that if a
Speaker 2: remedy comes down, which we expect any day, which is
Speaker 2: that Google has to sell Chrome, I don't think that's
Speaker 2: what's going to be in the remedy, but let's just
Speaker 2: say it is. There is a chance, about a forty
Speaker 2: percent chance I think that that could be in the remedy.
Speaker 2: And then Google appeals that the Trump administration then settles
Speaker 2: the case with Google for something less, and we'll we'll
Speaker 2: have to see because that would be sort of history
Speaker 2: replaying itself, because that's kind of what happened with the
Speaker 2: Microsoft situation. But I could talk about this all day.
Speaker 1: Let's move on.
Speaker 2: Let's move on to some of the anti trust topics.
Speaker 2: Sticking with antitrust, let's move on topics you're covering and
Speaker 2: it so that you don't have to talk to yourself
Speaker 2: and ask yourself questions. I'll take over here, perfume many.
Speaker 1: I appreciate that any help I can get as well
Speaker 1: as much appreciated Jed.
Speaker 2: So, justin let's move on to other anti trust matters
Speaker 2: that you're covering, since we've kind of split stuff up here,
Speaker 2: since there's so much going on in PBMs, that's a
Speaker 2: really big area that's been a focus all over the place.
Speaker 2: These are pharmacy benefit managers, and you've been covering the
Speaker 2: litigation been ongoing against these middlemen in the pharmaceutical area.
Speaker 2: So we have a case at the FTC that's in
Speaker 2: what's called a Part three which is litigation but different
Speaker 2: than in the federal courts. Why don't you explain all
Speaker 2: that to us?
Speaker 1: Yeah, definitely, J. And So this one really started bubbling
Speaker 1: up last fall. I think it's probably the last real
Speaker 1: significant Part three enforcement action outside of a merger context
Speaker 1: that we have kind of as a hangover, if you will,
Speaker 1: from the con FTC right before the Trump administration in January.
Speaker 1: But what the case is is really built upon these
Speaker 1: reports and investigations that were conducted at the FTC, and
Speaker 1: it basically alleges that these middlemen, these drug middlemen, if
Speaker 1: you will, the pharmacy benefit managers that sit between the
Speaker 1: pharmaceutical companies, the insurance companies and consumers, really what they
Speaker 1: have done is in order to place a particular drug
Speaker 1: on a formula ay at an insurance company. It's alleged
Speaker 1: that they demand these high rebates from the drug manufacturers
Speaker 1: in order to do so. The alligation is that they
Speaker 1: might pocket those rebates not pass them onto consumers, and
Speaker 1: as a result, the list prices for drugs that are
Speaker 1: paid by folks who are uninsured are perhaps underinsured, are
Speaker 1: astronomically high, way higher than they need to be. That
Speaker 1: is the chief allegation of the case is that drug
Speaker 1: prices are driven up by the practices of these PBMs
Speaker 1: who sit in the middle of the chain. So what
Speaker 1: happened though, the case was brought, as you said, internally
Speaker 1: as a part three preceding case at the internal Tribunal
Speaker 1: over at the FTC and not in a federal court.
Speaker 1: And right now, you know, it seems like all roads
Speaker 1: eventually lead to a federal court on this one, and
Speaker 1: there are a few reasons why. But you know, Jen,
Speaker 1: I know we've talked about this before, but it seems
Speaker 1: like every last kind of constitutional issue or you know,
Speaker 1: new way of thinking I would say about the FTC's
Speaker 1: scope of power and how broad it should be really
Speaker 1: seems to be triggered by this litigation. And right now
Speaker 1: the reason why I'm this up today is that there's
Speaker 1: been a motion to lift a stay of the case.
Speaker 1: Chair Ferguson at the FTC and Commissioner Mater had proved,
Speaker 1: you know, Chair Ferguson had been recused from the case.
Speaker 1: We now have Commissioner Major in at the FTC. There
Speaker 1: are two FTC commissioners who are now available to participate
Speaker 1: in the litigation. There were none before. That's why this
Speaker 1: day was issued. So the reason for issuing that sday
Speaker 1: is now gone. I think for that reason, the state
Speaker 1: probably becomes lifted. But the PBMs have indicated they're going
Speaker 1: to file a motion to dismiss very shortly at the
Speaker 1: FTC in this tribunal, and I think the effect of
Speaker 1: that is to push the case up to Chair Ferguson
Speaker 1: and up to Commissioner Mater. It frankly give them some
Speaker 1: kind of an opportunity to say whether bringing this case
Speaker 1: in a part three was really the way to proceed
Speaker 1: in the first place. I think we're going to have
Speaker 1: to see that some decision making made around that concept.
Speaker 1: Does it get refiled in federal court maybe, does it
Speaker 1: have different claims than those assert it. Maybe it does
Speaker 1: to Both Chair Ferguson and Commissioner Mater have been somewhat
Speaker 1: critical of this expansive view of Section five of the
Speaker 1: FTC Act, which is the actual way the claims are structured.
Speaker 1: Here there could be some changes made to how they're
Speaker 1: actually pursuing this from an anti trust perspective.
Speaker 2: Okay, so remains to be seen then, whether this continues
Speaker 2: on as a Part three, whether it gets moved to
Speaker 2: Federal Quarter, whether it continues at all.
Speaker 1: Right, yeah, I think that's right, you know. But even
Speaker 1: if it continues as a Part three. You know, there
Speaker 1: are our broader problems, I would say, with the litigation
Speaker 1: outside of the claims itself, and those really lie in
Speaker 1: the area of some Supreme Court precedent that's been handed
Speaker 1: down the last couple of years. In the first case,
Speaker 1: there is the Darquesy decision from last year that took
Speaker 1: issue with the litigation of private rights right in an
Speaker 1: actual internal preceding itself. And that's a pretty complicated concept,
Speaker 1: I'd say. But the argument basically is, look, there are
Speaker 1: too many big things, big ticket items being litigated as
Speaker 1: part of this case for it to be litigated at
Speaker 1: the agency belong in a federal court. That's the really
Speaker 1: basic way to kind of paint the picture around that.
Speaker 1: And the other issue is this whole discussion we've seen
Speaker 1: about whether or not the president can remove FTC commissioners
Speaker 1: and thereby the judges that sit under them. Is there
Speaker 1: if the removal is not allowed, can this court then
Speaker 1: be hearing Is it constitutional for this internal court to
Speaker 1: be hearing the case? Those are some really big questions.
Speaker 1: They're currently on appeal to the Eighth Circuit in this case,
Speaker 1: and we'll probably have a hearing on that this fall,
Speaker 1: and that could also be determinative of whether or not
Speaker 1: the litigation can continue as a Part three even if
Speaker 1: the commissioners do you want it to continue it that way?
Speaker 2: So what about some of the other cases I know
Speaker 2: that you were following, starting kind of late in the
Speaker 2: Biden administration when we still had Lena Khan as the
Speaker 2: chair of the FTC. I know that they brought some unusual,
Speaker 2: somewhat novel cases against Pepsiico and also Deer I know
Speaker 2: as John Deere, but I think they go by Deer
Speaker 2: in company they do. Yeah, those Part threees are what's
Speaker 2: going on? With those cases.
Speaker 1: Yeah, So interestingly enough, neither of those were brought as
Speaker 1: a Part three But you know, we've already kind of
Speaker 1: seen these these developments and changes the cases, frankly along
Speaker 1: with the changes in ideology that we have running the Commission. Right,
Speaker 1: So the PEPSI case, Commissioners Ferguson and Holyoak were really
Speaker 1: critical of that litigation when it was filed. The case
Speaker 1: has been since dismissed. The FTC which volunteerily withdrew that matter.
Speaker 1: They're not pursuing it anymore. It was a Robinson Patment
Speaker 1: Act case, right, which we could see it's complicated statute
Speaker 1: for sure, but we could see more attempts to bring
Speaker 1: a case under that law in the future. And the
Speaker 1: deer case that's continuing on as part of a multi
Speaker 1: district litigation and federal court in Illinois so alive and well,
Speaker 1: probably see a settlement there later on. But you know,
Speaker 1: to your point, we haven't seen a new Part three
Speaker 1: action from an enforcement perspective outside of mergers with this
Speaker 1: new commission, and I think there really is there are
Speaker 1: a lot of valid questions to be asked as to
Speaker 1: whether the current makeup of the Commission is really interested
Speaker 1: in you using that tool for an enforcement matter outside
Speaker 1: of merger clearance.
Speaker 2: Well, you know, justin I know, you and I could
Speaker 2: sit around and talk for like the next two hours
Speaker 2: just about anti rust matter and everything that's happening in
Speaker 2: the antrust world because it's so interesting to us. But
Speaker 2: maybe it's time to move on to some other legal
Speaker 2: subjects and policy subjects.
Speaker 1: Our listeners might appreciate that.
Speaker 2: I might appreciate that, and our colleagues that are waiting
Speaker 2: patiently might also. So I'm going to turn the moderator
Speaker 2: roll back to you and you can move on to
Speaker 2: some of the other subjects.
Speaker 1: Sounds great, thanks, Jen. So let's bring in Holly from
Speaker 1: now to talk a little bit about tariffs this week. Holly,
Speaker 1: I feel like we could have a weekly podcast just
Speaker 1: about tariffs and everything that you're covering week to week.
Speaker 1: It seems to be the perennial topic. Although something perennial
Speaker 1: is the word if it's every week there's something new
Speaker 1: that's happening. But uh yeah, let me start just asking you.
Speaker 1: You know, so you've been following a bunch of lawsuits
Speaker 1: right recently that challenge the reciprocal tariffs and fentanyl tariffs.
Speaker 1: Can you just give us a quick update about what
Speaker 1: the STAF is on that litigation?
Speaker 2: Thanks, Justin.
Speaker 3: I think you could safely say that it's the daily
Speaker 3: changes on tariffs. So what's happening now in the courts
Speaker 3: are there are various appeals making their way around the
Speaker 3: appellate court. So the most advanced case is the one
Speaker 3: before the Federal Circuit, and that's the Appellate court for
Speaker 3: the International Trade Court. And as some of you may know,
Speaker 3: that court found reciprocal and pentanal trafficking tariffs unlawful. It
Speaker 3: found the reciprocal tariffs the president posed were unbounded and
Speaker 3: so it said that the statute doesn't allow them, but
Speaker 3: if it did, the statute would be an unconstitutional delegation
Speaker 3: of Congress's power. And with regard to fentanyl teriffs, it
Speaker 3: found those terriffs weren't sufficiently related to the emergency. The
Speaker 3: presidents cited the fentanyl emergency as the basis for them.
Speaker 3: So the Federal Circuit heard oral argument on the appeal
Speaker 3: of that ruling on July thirty first, and based on
Speaker 3: that hearing, we think they may agree the tariffs are unlawful.
Speaker 3: We think their opinion could come in late August. And
Speaker 3: there are also appeals before other circuits. So there's an
Speaker 3: appeal of a Washington District court's ruling finding tariffs unlawful
Speaker 3: that appeals before the Washington d c. Circuit. So the
Speaker 3: district court found tariffs unlawful on different grounds than the
Speaker 3: International Trade Court and basically said the statute the President used,
Speaker 3: which is the International Emergency Economic Powers Act or AIPA,
Speaker 3: it doesn't allow tariffs at all, and so struck the
Speaker 3: tariffs on those grounds. So a hearing on that appeal
Speaker 3: is set to be heard September thirtieth. And then the
Speaker 3: third appeal is before the Ninth Circuit, and that arises
Speaker 3: from a California federal court's ruling that it doesn't have
Speaker 3: jurisdiction to hear challenges to the tariffs, only the International
Speaker 3: Trade Court does. So we expect that this Supreme Court
Speaker 3: will ultimately have to decide this case, and we'll render
Speaker 3: an opinion relatively quickly, possibly as early as four Q.
Speaker 3: And what we said is that the Supreme Court may
Speaker 3: find reciprocal terrorists lawful, but may say that the fentanyl
Speaker 3: tariffs are lawful.
Speaker 1: Okay, got it? And holiday President Trump was in the
Speaker 1: news this week because he's pledged to impose tariffs of
Speaker 1: up to two hundred and fifty percent on pharmaceuticals.
Speaker 2: What is that?
Speaker 1: What would that would that also fail if the reciprocal
Speaker 1: tariffs are deemed unlawful? Is there a tie in there
Speaker 1: between the two?
Speaker 3: Well, not necessarily, because the statute the president would you
Speaker 3: would likely use to impose the terriffs on pharmaceuticals is
Speaker 3: section two thirty two of the Trade Expansion Act. And
Speaker 3: what that section allows is if the President's Commerce Department
Speaker 3: finds imports threatened to impair national security, the president can
Speaker 3: quote adjust imports, and the statute also mentioned in the
Speaker 3: headline duties, so that language is arguably a lot clearer
Speaker 3: than the language and the emergency Statute, which merely says
Speaker 3: the President can regulate imports but never mentions the word tariffs.
Speaker 3: And so courts have held that section two thirty two
Speaker 3: allows president to impose tariffs, and that section has been
Speaker 3: used by multiple presidents to do so, whereas President Trump
Speaker 3: is the first president to use the emergency statue to
Speaker 3: imposed tarffs. So even if reciprocal tariffs are deemed unlawful,
Speaker 3: it doesn't mean that the section two thirty two terraffs
Speaker 3: will be deemed unlawful.
Speaker 1: Okay, got it, Thanks, Holly. Really appreciate the updates on tariffs,
Speaker 1: and I'm sure we'll be talking about them again next week.
Speaker 1: That seems to be the name of the game right now,
Speaker 1: but right now turning over last, but it's certainly not
Speaker 1: leads to Matt shutting Helm down in DC. So, Matt,
Speaker 1: I know you've been tracking developments at the Federal Communications
Speaker 1: Commission related to broadcasting, including some significant deregulatory moves down there.
Speaker 1: You've had some action there this week related to national
Speaker 1: TV ownership cabs and could you tell us a.
Speaker 2: Bit about that.
Speaker 4: Yeah, thanks, justin. Yeah, a lot of client interest around
Speaker 4: the potential for deregulation for the broadcast TV industry, which
Speaker 4: has for decades been subject to these FCC rules that
Speaker 4: all of their competitors that you know, over the Internet,
Speaker 4: all these new ways we get video, they don't face
Speaker 4: these sorts of limits, and yet broadcasters are still stuck
Speaker 4: with these these these limits on how many stations they
Speaker 4: can own and how big they can get that that
Speaker 4: date back from from a different time, and there's a
Speaker 4: considered push from this administration to ease those rules. We
Speaker 4: saw the first steps towards that goal this week when
Speaker 4: comments were filed. When the FCC asked, how should we
Speaker 4: ease the national ownership cap. The national ownership cap is
Speaker 4: this thirty nine percent limit on how many households TV
Speaker 4: broadcasters can reach. We're talking about companies like Nextstar, Sinclair, Tegna,
Speaker 4: Disney Fox, companies that own your local broadcast TV stations,
Speaker 4: and how many stations they can own. As I said,
Speaker 4: right now, it's thirty nine percent of the US subject
Speaker 4: to a limit. The FCC asked for comments on how
Speaker 4: and whether it should ease that limit or remove it entirely,
Speaker 4: and we saw this week the every interested party filing
Speaker 4: their opening comment about what the FCC should do, And
Speaker 4: as I went through those, I'm not really surprised by
Speaker 4: anything that I saw there. The broadcast broadcasters pushed strongly
Speaker 4: for elimination of the national ownership cap. People the interests
Speaker 4: on the other side of the negotiating table, the cable
Speaker 4: groups that have to negotiate with the broadcasters, they say, no,
Speaker 4: we need to keep this rule in place. It still
Speaker 4: serves an important value. Public interest groups that like to
Speaker 4: protect localism also defended the rule. All of that was expected,
Speaker 4: and so I wasn't really surprised by anything we saw there.
Speaker 4: The one thing I wanted to footnote and keep an
Speaker 4: eye on was the opposition from Newsmax and its potential
Speaker 4: ties to President Trump. And so the one thing I'd
Speaker 4: be a little bit cautious of from the broadcasters perspective
Speaker 4: is if President Trump suddenly jumps in the middle of
Speaker 4: this in a way that we don't expect and and
Speaker 4: so right now, I don't think that's going to happen.
Speaker 4: But when you see Newsmax pushing hard against the deregulation,
Speaker 4: it does make you, you know, want to keep an
Speaker 4: eye on whether President Trump might get involved here.
Speaker 1: Interesting it sounds like Newsmax might have the Trump card,
Speaker 1: so to speak, at us, at least.
Speaker 4: You want to be watchful of that possibility the day.
Speaker 1: Yeah, and I personally can't believe we haven't made that
Speaker 1: pun on this podcast before now, either, But there you go.
Speaker 4: I'm glad you brought us there. Yeah.
Speaker 1: Yeah, So, Matt, what happens next with all of this?
Speaker 4: Yeah? So, so I don't think the FCC is going
Speaker 4: to take real long. Sometimes these FCC rulemakings can can
Speaker 4: drag out for months or years. Formally, we have reply
Speaker 4: comments due in a couple of weeks. August twenty second
Speaker 4: is the final deadline for filing. Typically the FCC will
Speaker 4: keep the docket open after that and take meetings with
Speaker 4: interested parties. But I think the FCC is, you know,
Speaker 4: not going to sit around real long on this. So
Speaker 4: I think action in the fourth quarter is a real
Speaker 4: possibility when the FCC will adopt a final order easing
Speaker 4: or eliminating this national ownership cap. October twenty eighth meeting
Speaker 4: looks like a real possibility to me. So after that,
Speaker 4: what we're inevitably going to have a court fight about
Speaker 4: whether the FCC can do it or not, or only
Speaker 4: Congress can can remove this national ownership cap. I think
Speaker 4: the FCC can win that fight. I'd give the FCC
Speaker 4: a slight edge in that court case, but it's a
Speaker 4: tough issue. It might depend on what court ends up
Speaker 4: hearing this, what three judge panel ends up hearing it.
Speaker 4: So a lot of moving pieces to come, but I
Speaker 4: don't think we'll be waiting long. I think the FCC
Speaker 4: will move on this by the end of the year.
Speaker 1: Got it, Got it all right?
Speaker 2: Thanks? So much.
Speaker 1: Matt really appreciate that update. So thanks to all my
Speaker 1: colleagues for joining me today. Really appreciate that. And thanks
Speaker 1: most especially to you the listener for tuning in I'm
Speaker 1: justin trecy and for Elliott Segin this weekend. This with
Speaker 1: votes and verdicts.