WEBVTT - Trump M&A, PBMs, Tariffs, FCC Broadcast Regs 0:00:15.960 --> 0:00:19.120 Welcome to Votes and Verdicts, the podcast of the litigation 0:00:19.239 --> 0:00:23.239 and policy team at Bloomberg Intelligence. I'm justin terracy in 0:00:23.320 --> 0:00:26.200 this week for Elliott Stein, who's taking some very well 0:00:26.239 --> 0:00:28.920 deserved time off. But don't worry, We've got a great 0:00:28.960 --> 0:00:32.040 episode for you today. I'll be joined by my colleague 0:00:32.080 --> 0:00:36.279 Jennifer Ree. We'll talk all things the summer season of Antitrust. 0:00:36.680 --> 0:00:39.120 Holy Frome joins us for an update on the ever 0:00:39.240 --> 0:00:43.520 changing landscape of tariffs this week, and Matt Shettenhelm also 0:00:43.600 --> 0:00:48.720 tunes in about FCC regulation on broadcasting and what's changing there. 0:00:49.080 --> 0:00:52.080 But first, before we jump into today's episode, a quick 0:00:52.120 --> 0:00:56.440 word about Bloomberg Intelligence. We're the investment research platform on 0:00:56.560 --> 0:01:00.160 the Bloomberg terminal with five hundred analysts and strategy is 0:01:00.280 --> 0:01:03.480 working across the globe and focus on all major markets. 0:01:03.840 --> 0:01:07.560 Our coverage includes over two thousand equities and credits, and 0:01:07.640 --> 0:01:10.560 we have outlooks on more than ninety industries and one 0:01:10.640 --> 0:01:15.520 hundred market industries, currencies and commodities. So leading off this week, 0:01:15.560 --> 0:01:17.760 I thought we'd start with antitrust. I might be a 0:01:17.800 --> 0:01:20.640 little bit biased since it's my own coverage area, but 0:01:20.800 --> 0:01:24.040 there definitely has been quite a bit going on, I'd say, 0:01:24.120 --> 0:01:26.480 as us of late out of the Department of Justice 0:01:26.520 --> 0:01:29.760 and starting things off, I think we'll turn to generate. So, Jen, 0:01:29.840 --> 0:01:32.440 there's been a lot of controversy in the news the 0:01:32.520 --> 0:01:35.319 last few weeks over a settlement that the Department of 0:01:35.480 --> 0:01:39.200 Justice entered with Hewlett Packard over its acquisition of Juniper Networks. 0:01:39.560 --> 0:01:41.800 This was entered on the eve of trial from what 0:01:41.840 --> 0:01:43.840 I understand, So you give us a bit of a 0:01:43.880 --> 0:01:45.520 sense of what's going on with that one over. 0:01:45.400 --> 0:01:49.160 There, Yeah, sure, thanks, justin you know, really definitely, we're 0:01:49.200 --> 0:01:51.720 seeing some things happening in the antitrust world that are 0:01:51.800 --> 0:01:55.120 troubling from an enforcement perspective, and you know, you put 0:01:55.160 --> 0:01:57.200 your finger on it. The first one is this deal. 0:01:57.560 --> 0:01:59.960 So just as a little bit of background on this deal, 0:02:00.200 --> 0:02:03.400 it was fourteen billion dollars signed back in January of 0:02:03.440 --> 0:02:06.880 twenty twenty four. So what happened with it, as happens 0:02:06.880 --> 0:02:10.240 with many deals, is the Department of Justice investigated and 0:02:10.280 --> 0:02:12.480 then sued to block the deal about a year later, 0:02:12.600 --> 0:02:15.800 that was in January of this year, and the concern 0:02:15.840 --> 0:02:18.280 in the DOJ had was that the combination was going 0:02:18.360 --> 0:02:22.600 to harm what they called enterprise customers for w land solutions. 0:02:22.919 --> 0:02:25.800 So what that is is really just basically wireless networks 0:02:25.840 --> 0:02:28.760 for really huge entities like a big business, a hospital, 0:02:28.840 --> 0:02:31.120 or a university, you know, much like we all have 0:02:31.280 --> 0:02:33.920 Wi Fi at home. This is just a larger network 0:02:33.960 --> 0:02:38.160 for these really large spread out entities. And they're basically 0:02:38.160 --> 0:02:42.000 three main competitors that provide this product Hulot, Packard, Juniper, 0:02:42.040 --> 0:02:45.160 and then Cisco. Cisco's actually the biggie in the market. 0:02:45.360 --> 0:02:47.640 And the products you look, Packard and Juniper had that 0:02:47.960 --> 0:02:52.959 overlap that compete were called Aruba and missed. So trial 0:02:53.120 --> 0:02:55.560 was supposed to start in early July of this year. 0:02:55.919 --> 0:02:58.480 But on June twenty seventh, this this settlement that you 0:02:58.600 --> 0:03:03.360 referenced was announced, and what it included, right, is a divestiture. Oftentimes, 0:03:03.400 --> 0:03:06.240 as you know, merger settlements include selling off some small 0:03:06.240 --> 0:03:09.320 piece of the business to eliminate the overlap. That's really 0:03:09.360 --> 0:03:12.160 what it's supposed to be. But in this case, the 0:03:12.200 --> 0:03:15.640 divestiture was a small part of Hewlett Packard's networking business 0:03:16.000 --> 0:03:19.280 and also a limited bit of license to some technology 0:03:19.680 --> 0:03:23.359 that comes from Juniper. Now here's the rub. The allegation, 0:03:23.800 --> 0:03:27.120 as I mentioned, was that it's large enterprise consumers that 0:03:27.120 --> 0:03:30.560 would be harmed. But the divestiture was not a product 0:03:30.680 --> 0:03:34.800 sold to large enterprise consumers. It was for very small businesses. 0:03:35.320 --> 0:03:38.120 Interesting, interesting and a lot of products most people have 0:03:38.160 --> 0:03:40.640 probably never heard of either, but really interesting. 0:03:40.680 --> 0:03:43.440 That wrinkle there, Yeah, the business to business products, it's 0:03:43.480 --> 0:03:45.800 a whole world and we're not always familiar with those. 0:03:45.880 --> 0:03:48.280 But really, at the end of the day, it doesn't 0:03:48.320 --> 0:03:51.480 resolve the overlap that caused concerns. You still have this 0:03:51.600 --> 0:03:56.680 problematic competitive overlap between MYST and Aruba. So now here's 0:03:56.720 --> 0:03:59.520 the thing that after this very odd settlement that surprised 0:03:59.520 --> 0:04:01.200 most of us, I mean I was getting ready to 0:04:01.200 --> 0:04:04.640 go to travel to this trial to listen, in all 0:04:04.640 --> 0:04:08.000 of a sudden we see news reports. So it's news reports. 0:04:08.040 --> 0:04:10.960 I can't confirm this, but what these reports have said 0:04:11.000 --> 0:04:14.240 is that Hewlett Packard hired these lobbyists very close to 0:04:14.280 --> 0:04:17.279 the president, and that these settlements were pushed on the 0:04:17.320 --> 0:04:20.880 DOJ anti trust staff very much against their will. So 0:04:21.120 --> 0:04:23.400 what you have then is a decision that's not based 0:04:23.400 --> 0:04:26.520 on anti trust expertise, but based on influence and sort 0:04:26.560 --> 0:04:29.120 of the transactional nature of this administration. And that's not 0:04:29.120 --> 0:04:30.920 the way it's supposed to be right. 0:04:31.080 --> 0:04:33.279 Hearing a lot about things like that, as I've laid 0:04:33.279 --> 0:04:35.760 out of DC for sure, right right. 0:04:35.800 --> 0:04:39.240 And so we know that Gail Slater, who is the 0:04:39.360 --> 0:04:42.039 Assistant Attorney General in charge of anti trust at the DJ, 0:04:42.200 --> 0:04:45.560 that would be the leading person for decision maker for 0:04:45.600 --> 0:04:49.240 anti trust at the DJ, pushback, but she was overruled 0:04:49.279 --> 0:04:52.159 by those senior to her, including Pambondi, who are not 0:04:52.279 --> 0:04:55.440 anti trust experts. And then two of her deputies, who 0:04:55.480 --> 0:04:59.480 also apparently objected to the settlement, were fired. And what 0:04:59.600 --> 0:05:02.920 was report is that HPE had hired non the antitrust 0:05:02.960 --> 0:05:06.599 but very politically connected lawyers to negotiate the settlement. These 0:05:06.640 --> 0:05:08.960 are people who are close to Trump or have worked 0:05:09.000 --> 0:05:11.320 for them in the past. And the Wall Street Journal 0:05:11.320 --> 0:05:13.360 even just reported, by the way that one of these 0:05:13.400 --> 0:05:16.280 politically connected lawyers appeared to take it on as a 0:05:16.320 --> 0:05:19.559 personal challenge to get this settlement done after the anti 0:05:19.560 --> 0:05:22.080 trust enforcers questioned his role in the process. 0:05:22.600 --> 0:05:23.880 Oh boy. 0:05:23.960 --> 0:05:26.680 Yeah. So this is a real divergence from how things 0:05:26.680 --> 0:05:28.479 have been done in the M and A anti trust 0:05:28.480 --> 0:05:31.800 world essentially since the Nixon administration, and it's not good 0:05:31.839 --> 0:05:34.000 news for enforcement, our consumers. 0:05:33.560 --> 0:05:36.320 Yeah, Yeah, that sounds like a pretty complicated situation there. 0:05:36.600 --> 0:05:38.720 You know, hard to read the tea leaves too, obviously 0:05:38.760 --> 0:05:41.719 when we're talking about news reports, and not necessarily a 0:05:41.760 --> 0:05:44.760 confirmation about how things have necessarily rolled out by the 0:05:44.800 --> 0:05:48.240 actual folks at the DOJ either. But I guess you know, 0:05:48.320 --> 0:05:50.880 is there any recourse for this? I mean, the deals closed, 0:05:51.360 --> 0:05:52.239 what happens now? 0:05:52.920 --> 0:05:55.039 Well, so what happens now is that it has to 0:05:55.040 --> 0:05:58.320 go through what's called a Tunny Act procedure. That's a 0:05:58.360 --> 0:06:01.640 little bit of a safeguard for this kind of political influence, 0:06:01.680 --> 0:06:04.760 but really, honestly, it's very limited. And what that means 0:06:04.800 --> 0:06:07.000 is that the settlement isn't final until a judge has 0:06:07.040 --> 0:06:09.880 reviewed it and signed off. And this happens, by the way, 0:06:09.920 --> 0:06:13.040 for all Department of Justice anti trust settlements and not 0:06:13.080 --> 0:06:15.760 for the FTC. And the reason, by the way, it 0:06:15.800 --> 0:06:19.680 was because it was passed during the Nixon administration and 0:06:19.839 --> 0:06:23.919 after allegations that ITT, a company that had been sued 0:06:24.279 --> 0:06:27.040 under anti trust by the anti trust enforcers at that time, 0:06:27.600 --> 0:06:30.159 basically got their case dropped by paying a lot of 0:06:30.240 --> 0:06:33.880 money to the nineteen seventy two Republican National Convention and 0:06:33.920 --> 0:06:37.320 then Congress, which actually got things done in a bipartisan manner. 0:06:37.360 --> 0:06:41.960 BacT passed the Tunny Act, and that says that judges 0:06:42.000 --> 0:06:44.760 are supposed to ask whether a DOJ anti trust settlement 0:06:44.839 --> 0:06:48.760 is in the public interest. But I said it's limited right. 0:06:49.640 --> 0:06:52.360 The judges are supposed to give deference to the DOJ's 0:06:52.440 --> 0:06:57.960 expertise and can't really unwinded merger. The judge can approve, reject, 0:06:58.080 --> 0:07:02.320 or require modifications to the settlement. The courts can solicit 0:07:02.360 --> 0:07:05.400 public comments, they can hold hearings, they can require the 0:07:05.480 --> 0:07:09.360 DOJ to respond to criticisms. But I would say in 0:07:09.440 --> 0:07:11.880 ninety nine percent of the cases the judge just sign off. 0:07:11.880 --> 0:07:14.560 It's kind of pro forma. And in a very very 0:07:14.600 --> 0:07:17.320 few rare circumstances, settlements have been sent back to the 0:07:17.360 --> 0:07:21.480 DOJ to supplement them or to revise them. But the 0:07:21.520 --> 0:07:24.200 thing is justin it's a little bit backwards because if 0:07:24.200 --> 0:07:26.400 the judge doesn't like the settlement and the companies in 0:07:26.440 --> 0:07:28.840 the DJ can't agree to a new one, there's not 0:07:28.920 --> 0:07:31.280 that much that can be done because then the companies, 0:07:32.200 --> 0:07:34.160 because the companies, as soon as they settle with the 0:07:34.200 --> 0:07:37.120 DOJ are allowed to close and integrate. So if these companies, 0:07:37.280 --> 0:07:40.920 HPNG know, we are already closed, they're already integrating before 0:07:40.960 --> 0:07:43.280 the tiny A procedure's done. So if you end up 0:07:43.320 --> 0:07:45.679 with a scenario where there's no settlement because the judge 0:07:45.680 --> 0:07:47.520 is sent it back but they can't agree to a 0:07:47.560 --> 0:07:50.240 new one, and now all you have is litigation. Now 0:07:50.240 --> 0:07:53.280 the case has to be tried, it's extremely highly unlikely 0:07:53.360 --> 0:07:55.640 that any judge is going to unwind a finished deal. 0:07:56.160 --> 0:08:00.520 So it's not really it's very messy, right, So that's 0:08:00.560 --> 0:08:02.720 what we're where we are now in this case. We're 0:08:02.920 --> 0:08:04.440 we're going to wait and a lot of people are 0:08:04.440 --> 0:08:08.440 pushing this judge to really give this a solid review 0:08:08.520 --> 0:08:09.400 under the tiny Act. 0:08:09.840 --> 0:08:12.080 Got it, got it? So you know, you know, we 0:08:12.080 --> 0:08:14.840 were saying too just with what's happening at DOJ, you 0:08:14.840 --> 0:08:17.240 know a lot of what we're we're depending on our 0:08:17.280 --> 0:08:20.120 news reports right about how things are actually rolling out, right, 0:08:20.160 --> 0:08:22.840 And we've seen a few companies under a scrutiny by 0:08:22.840 --> 0:08:26.240 antitrust enforcers these days, right, whether it be from the 0:08:26.280 --> 0:08:29.320 previous administration or companies you know that were looked at 0:08:29.400 --> 0:08:32.920 under the Biden DJ that maybe we're continuing an investigation 0:08:33.000 --> 0:08:36.120 into today, right, You know, but you know, actions to 0:08:36.280 --> 0:08:40.120 kind of you know, sport those investigations or cases, you know, 0:08:40.160 --> 0:08:43.800 whether it be hiring lobbyists, making payments to Trump causes. 0:08:43.880 --> 0:08:46.600 You know, dropping DEI programs has been a big one too, 0:08:47.040 --> 0:08:49.840 you know, investment development in the US. All these different 0:08:49.880 --> 0:08:53.000 ways it seems like to create favor with the administration. 0:08:53.840 --> 0:08:55.080 I mean, what do you think, Jen, do you think 0:08:55.120 --> 0:08:57.520 the new approach really is just to transact with the 0:08:57.559 --> 0:09:00.480 president rather to you know, mount an actual a trust 0:09:00.520 --> 0:09:03.160 defense or to actually explain, you know, your business practices 0:09:03.200 --> 0:09:05.000 to the authorities. What do you think about all that? 0:09:05.679 --> 0:09:08.160 Well, you know, we have this Hewlett Packard example, but 0:09:08.200 --> 0:09:11.120 I think based on news reports that a pattern actually 0:09:11.160 --> 0:09:15.040 really is emerging because you know, another sort of oddity 0:09:15.120 --> 0:09:17.360 that happened in the M and A world, The DOJ 0:09:17.480 --> 0:09:20.840 had sued in January twenty twenty five to block a 0:09:20.880 --> 0:09:24.360 deal between American Express Global Business Travel and Carson Wagon 0:09:24.400 --> 0:09:27.600 lit Travel. Right, right, that case, very recently and without 0:09:27.640 --> 0:09:30.720 any explanation, was dropped. Now there was no settlement here, 0:09:30.760 --> 0:09:33.000 it was just dropped so doesn't go through a tiny 0:09:33.040 --> 0:09:37.600 AC procedure. And then it was reported that AMX GBT, 0:09:37.600 --> 0:09:40.960 the Global Business Travel had hired a guy called Brian Ballard, 0:09:41.400 --> 0:09:44.120 a longtime Trump becker who had raised fifty million in 0:09:44.160 --> 0:09:49.320 his twenty twenty four election. So we see that, and 0:09:49.360 --> 0:09:51.840 then I read, which is no surprise to me, that 0:09:51.920 --> 0:09:56.520 antitrust lawyers are basically advising clients now that maybe an 0:09:56.640 --> 0:09:59.400 M and A or maybe facing monopolization charges to find 0:09:59.440 --> 0:10:02.200 lawyers or obvious that are close to Trump. So we 0:10:02.400 --> 0:10:05.760 are moving toward this sort of position of defending deals 0:10:07.200 --> 0:10:10.600 as an influence maneuver and as a transactional thing, rather 0:10:10.679 --> 0:10:14.960 than and resolving the antitrust problems and getting real deal resolutions. 0:10:15.480 --> 0:10:18.400 God, what definitely a headache, I would say, And you know, 0:10:18.480 --> 0:10:21.160 I mean, I don't know if that makes the whole 0:10:21.200 --> 0:10:24.360 situation easier to comprehend what's going to happen for a client, 0:10:24.440 --> 0:10:26.840 or make some more difficult. I mean, it's really hard 0:10:27.040 --> 0:10:29.640 to say. But you know, I guess, you know, trying 0:10:29.640 --> 0:10:31.400 to apply this to what we could what else we 0:10:31.440 --> 0:10:33.160 could be seeing, you know, for the second half of 0:10:33.200 --> 0:10:33.560 the year. 0:10:34.000 --> 0:10:35.000 What other deals are. 0:10:34.840 --> 0:10:37.840 Pending right now at DOJ R FTC that still need clearance? 0:10:38.600 --> 0:10:40.000 You know, there are quite a few. Because all of 0:10:40.040 --> 0:10:43.520 a sudden, we had a little bit of as pause 0:10:43.600 --> 0:10:45.800 in the market with deal making, but now things are 0:10:45.840 --> 0:10:48.800 kind of flowing, and we do have some pretty big 0:10:48.840 --> 0:10:52.200 pending deals. Google's trying to buy Whiz Charters trying to 0:10:52.200 --> 0:10:54.800 buy cocks. You have Baker Hughes buying a company called 0:10:54.880 --> 0:10:58.760 Chart Industries, and of course probably everyone's right about Dixon Footlocker. 0:10:58.840 --> 0:11:02.280 Those are products we all understand, and you know, justin 0:11:02.360 --> 0:11:04.440 and you know this because you're covering some of these cases. 0:11:04.480 --> 0:11:10.400 They are also a whole bunch of pending monopolization suits. Absolutely, yeah, Google, Meta, Amazon, Apple, 0:11:10.520 --> 0:11:13.199 Live Nation. I mean, if they're a big, huge platform, 0:11:13.280 --> 0:11:17.360 they've probably been sou so you know, and I read 0:11:17.520 --> 0:11:20.720 read that recently Live Nation put a Trump loyalist on 0:11:20.760 --> 0:11:25.760 its board, and also that Apple has announced just the 0:11:25.840 --> 0:11:29.320 other day a major investment in US manufacturing one hundred billion. 0:11:29.559 --> 0:11:31.679 So I think we're beginning to see all sorts of 0:11:31.720 --> 0:11:35.360 movements sort of in this influence peddling area, and we'll 0:11:35.360 --> 0:11:37.240 have to see what happens because we know before the 0:11:37.240 --> 0:11:40.320 election that some of the CEOs of these big tech 0:11:40.320 --> 0:11:45.840 companies like Mark Zuckerberg, we're donating money to Republican causes. 0:11:45.880 --> 0:11:48.360 We're there with Trump at the inauguration, and it hasn't 0:11:48.400 --> 0:11:50.760 really seemed to help them yet. But maybe the tide 0:11:50.800 --> 0:11:52.360 is turning now justin sure. 0:11:52.520 --> 0:11:55.240 Sure, I mean it's you know, some days it seems 0:11:55.280 --> 0:11:57.400 that way, Jen, in another days it doesn't, right, And 0:11:57.440 --> 0:11:59.040 I think maybe we can touch upon this a little 0:11:59.040 --> 0:12:01.320 bit later with Holly. But you know, even think about 0:12:01.360 --> 0:12:04.320 companies like Nvidia, right, and you know, there were news 0:12:04.320 --> 0:12:07.320 reports last year of that that investigations had started at 0:12:07.360 --> 0:12:09.760 DOJ related to anti trust issues, you know. And then 0:12:09.800 --> 0:12:12.880 you know, just two weeks ago, we have President Trump saying, 0:12:13.080 --> 0:12:16.440 you know, quite quite frankly, at at at an event 0:12:16.559 --> 0:12:19.000 that you know, we considered breaking up the company and 0:12:19.000 --> 0:12:21.120 opted against it once he you know, found out how 0:12:21.120 --> 0:12:24.280 difficult that would be to do. Then yesterday we see 0:12:24.320 --> 0:12:26.400 tariffs of maybe one hundred percent on chips that are 0:12:26.400 --> 0:12:29.559 imported into the United States. Right, So that it seems 0:12:29.600 --> 0:12:32.760 like things are making some movements in one direction. Then 0:12:32.840 --> 0:12:34.960 you know, a week goes by and perhaps things move 0:12:35.280 --> 0:12:36.120 backward to another. 0:12:36.240 --> 0:12:37.839 But I think you're right. 0:12:37.880 --> 0:12:40.000 I think we're definitely seeing this interplay between folks in 0:12:40.040 --> 0:12:42.960 the White House that that certainly seems to be a 0:12:43.000 --> 0:12:45.680 growing trend. There's there's no doubt about that, right. 0:12:45.640 --> 0:12:49.160 Right exactly, and it's it's it's going to be interesting 0:12:49.200 --> 0:12:52.360 to see the next three and a half years here. 0:12:52.400 --> 0:12:54.959 But you know, I have been saying for quite a 0:12:55.040 --> 0:12:57.599 long time about the Google Search case that if a 0:12:57.720 --> 0:13:00.240 remedy comes down, which we expect any day, which is 0:13:00.240 --> 0:13:02.840 that Google has to sell Chrome, I don't think that's 0:13:02.880 --> 0:13:04.520 what's going to be in the remedy, but let's just 0:13:04.520 --> 0:13:07.559 say it is. There is a chance, about a forty 0:13:07.600 --> 0:13:09.800 percent chance I think that that could be in the remedy. 0:13:10.120 --> 0:13:13.480 And then Google appeals that the Trump administration then settles 0:13:13.480 --> 0:13:17.440 the case with Google for something less, and we'll we'll 0:13:17.480 --> 0:13:19.480 have to see because that would be sort of history 0:13:19.559 --> 0:13:21.680 replaying itself, because that's kind of what happened with the 0:13:21.720 --> 0:13:24.719 Microsoft situation. But I could talk about this all day. 0:13:24.800 --> 0:13:25.320 Let's move on. 0:13:25.559 --> 0:13:27.400 Let's move on to some of the anti trust topics. 0:13:27.400 --> 0:13:32.160 Sticking with antitrust, let's move on topics you're covering and 0:13:32.520 --> 0:13:34.600 it so that you don't have to talk to yourself 0:13:34.720 --> 0:13:38.040 and ask yourself questions. I'll take over here, perfume many. 0:13:38.120 --> 0:13:40.480 I appreciate that any help I can get as well 0:13:40.520 --> 0:13:41.840 as much appreciated Jed. 0:13:42.360 --> 0:13:45.280 So, justin let's move on to other anti trust matters 0:13:45.280 --> 0:13:48.480 that you're covering, since we've kind of split stuff up here, 0:13:48.520 --> 0:13:50.880 since there's so much going on in PBMs, that's a 0:13:50.920 --> 0:13:54.040 really big area that's been a focus all over the place. 0:13:54.120 --> 0:13:59.000 These are pharmacy benefit managers, and you've been covering the 0:13:59.040 --> 0:14:04.680 litigation been ongoing against these middlemen in the pharmaceutical area. 0:14:05.160 --> 0:14:07.640 So we have a case at the FTC that's in 0:14:07.760 --> 0:14:10.840 what's called a Part three which is litigation but different 0:14:10.880 --> 0:14:13.160 than in the federal courts. Why don't you explain all 0:14:13.160 --> 0:14:13.679 that to us? 0:14:14.320 --> 0:14:17.080 Yeah, definitely, J. And So this one really started bubbling 0:14:17.120 --> 0:14:19.680 up last fall. I think it's probably the last real 0:14:19.760 --> 0:14:23.320 significant Part three enforcement action outside of a merger context 0:14:23.400 --> 0:14:25.760 that we have kind of as a hangover, if you will, 0:14:25.800 --> 0:14:30.520 from the con FTC right before the Trump administration in January. 0:14:30.760 --> 0:14:33.640 But what the case is is really built upon these 0:14:33.680 --> 0:14:37.600 reports and investigations that were conducted at the FTC, and 0:14:37.640 --> 0:14:40.640 it basically alleges that these middlemen, these drug middlemen, if 0:14:40.680 --> 0:14:43.200 you will, the pharmacy benefit managers that sit between the 0:14:43.200 --> 0:14:47.800 pharmaceutical companies, the insurance companies and consumers, really what they 0:14:47.840 --> 0:14:51.040 have done is in order to place a particular drug 0:14:51.120 --> 0:14:54.000 on a formula ay at an insurance company. It's alleged 0:14:54.040 --> 0:14:57.760 that they demand these high rebates from the drug manufacturers 0:14:57.760 --> 0:15:00.600 in order to do so. The alligation is that they 0:15:00.680 --> 0:15:03.560 might pocket those rebates not pass them onto consumers, and 0:15:03.840 --> 0:15:06.720 as a result, the list prices for drugs that are 0:15:06.760 --> 0:15:10.600 paid by folks who are uninsured are perhaps underinsured, are 0:15:10.640 --> 0:15:13.680 astronomically high, way higher than they need to be. That 0:15:13.800 --> 0:15:16.560 is the chief allegation of the case is that drug 0:15:16.680 --> 0:15:20.920 prices are driven up by the practices of these PBMs 0:15:20.920 --> 0:15:23.920 who sit in the middle of the chain. So what 0:15:24.000 --> 0:15:26.640 happened though, the case was brought, as you said, internally 0:15:26.680 --> 0:15:29.960 as a part three preceding case at the internal Tribunal 0:15:30.000 --> 0:15:32.680 over at the FTC and not in a federal court. 0:15:33.120 --> 0:15:35.880 And right now, you know, it seems like all roads 0:15:35.920 --> 0:15:38.480 eventually lead to a federal court on this one, and 0:15:38.760 --> 0:15:41.280 there are a few reasons why. But you know, Jen, 0:15:41.360 --> 0:15:43.480 I know we've talked about this before, but it seems 0:15:43.520 --> 0:15:47.680 like every last kind of constitutional issue or you know, 0:15:48.560 --> 0:15:51.400 new way of thinking I would say about the FTC's 0:15:51.520 --> 0:15:55.000 scope of power and how broad it should be really 0:15:55.080 --> 0:15:59.000 seems to be triggered by this litigation. And right now 0:15:59.040 --> 0:16:01.320 the reason why I'm this up today is that there's 0:16:01.320 --> 0:16:03.560 been a motion to lift a stay of the case. 0:16:04.960 --> 0:16:07.840 Chair Ferguson at the FTC and Commissioner Mater had proved, 0:16:07.880 --> 0:16:09.920 you know, Chair Ferguson had been recused from the case. 0:16:10.160 --> 0:16:13.120 We now have Commissioner Major in at the FTC. There 0:16:13.120 --> 0:16:16.800 are two FTC commissioners who are now available to participate 0:16:16.880 --> 0:16:19.520 in the litigation. There were none before. That's why this 0:16:19.600 --> 0:16:22.760 day was issued. So the reason for issuing that sday 0:16:22.840 --> 0:16:25.240 is now gone. I think for that reason, the state 0:16:25.360 --> 0:16:29.880 probably becomes lifted. But the PBMs have indicated they're going 0:16:29.920 --> 0:16:32.640 to file a motion to dismiss very shortly at the 0:16:32.680 --> 0:16:35.520 FTC in this tribunal, and I think the effect of 0:16:35.560 --> 0:16:38.280 that is to push the case up to Chair Ferguson 0:16:38.320 --> 0:16:40.960 and up to Commissioner Mater. It frankly give them some 0:16:41.040 --> 0:16:43.680 kind of an opportunity to say whether bringing this case 0:16:43.800 --> 0:16:46.400 in a part three was really the way to proceed 0:16:46.440 --> 0:16:48.120 in the first place. I think we're going to have 0:16:48.200 --> 0:16:51.080 to see that some decision making made around that concept. 0:16:51.360 --> 0:16:54.680 Does it get refiled in federal court maybe, does it 0:16:54.760 --> 0:16:57.160 have different claims than those assert it. Maybe it does 0:16:57.200 --> 0:17:00.480 to Both Chair Ferguson and Commissioner Mater have been somewhat 0:17:00.520 --> 0:17:03.720 critical of this expansive view of Section five of the 0:17:03.760 --> 0:17:06.800 FTC Act, which is the actual way the claims are structured. 0:17:06.800 --> 0:17:09.360 Here there could be some changes made to how they're 0:17:09.359 --> 0:17:11.480 actually pursuing this from an anti trust perspective. 0:17:11.880 --> 0:17:15.480 Okay, so remains to be seen then, whether this continues 0:17:15.520 --> 0:17:18.080 on as a Part three, whether it gets moved to 0:17:18.119 --> 0:17:20.160 Federal Quarter, whether it continues at all. 0:17:20.240 --> 0:17:22.960 Right, yeah, I think that's right, you know. But even 0:17:23.000 --> 0:17:26.080 if it continues as a Part three. You know, there 0:17:26.119 --> 0:17:29.480 are our broader problems, I would say, with the litigation 0:17:29.560 --> 0:17:32.520 outside of the claims itself, and those really lie in 0:17:32.600 --> 0:17:35.719 the area of some Supreme Court precedent that's been handed 0:17:35.760 --> 0:17:38.440 down the last couple of years. In the first case, 0:17:39.000 --> 0:17:42.240 there is the Darquesy decision from last year that took 0:17:42.280 --> 0:17:45.760 issue with the litigation of private rights right in an 0:17:45.800 --> 0:17:49.480 actual internal preceding itself. And that's a pretty complicated concept, 0:17:49.520 --> 0:17:52.080 I'd say. But the argument basically is, look, there are 0:17:52.119 --> 0:17:56.159 too many big things, big ticket items being litigated as 0:17:56.240 --> 0:17:59.080 part of this case for it to be litigated at 0:17:59.119 --> 0:18:02.000 the agency belong in a federal court. That's the really 0:18:02.040 --> 0:18:04.400 basic way to kind of paint the picture around that. 0:18:04.880 --> 0:18:07.600 And the other issue is this whole discussion we've seen 0:18:07.640 --> 0:18:10.919 about whether or not the president can remove FTC commissioners 0:18:10.960 --> 0:18:13.760 and thereby the judges that sit under them. Is there 0:18:14.160 --> 0:18:17.280 if the removal is not allowed, can this court then 0:18:17.359 --> 0:18:20.359 be hearing Is it constitutional for this internal court to 0:18:20.400 --> 0:18:23.200 be hearing the case? Those are some really big questions. 0:18:23.440 --> 0:18:26.240 They're currently on appeal to the Eighth Circuit in this case, 0:18:27.400 --> 0:18:29.680 and we'll probably have a hearing on that this fall, 0:18:29.720 --> 0:18:32.280 and that could also be determinative of whether or not 0:18:32.320 --> 0:18:35.280 the litigation can continue as a Part three even if 0:18:35.320 --> 0:18:37.640 the commissioners do you want it to continue it that way? 0:18:38.600 --> 0:18:40.359 So what about some of the other cases I know 0:18:40.440 --> 0:18:43.000 that you were following, starting kind of late in the 0:18:43.000 --> 0:18:46.040 Biden administration when we still had Lena Khan as the 0:18:46.160 --> 0:18:49.000 chair of the FTC. I know that they brought some unusual, 0:18:49.200 --> 0:18:53.840 somewhat novel cases against Pepsiico and also Deer I know 0:18:53.920 --> 0:18:55.760 as John Deere, but I think they go by Deer 0:18:55.760 --> 0:18:58.480 in company they do. Yeah, those Part threees are what's 0:18:58.520 --> 0:18:59.600 going on? With those cases. 0:19:00.240 --> 0:19:02.959 Yeah, So interestingly enough, neither of those were brought as 0:19:03.000 --> 0:19:05.119 a Part three But you know, we've already kind of 0:19:05.160 --> 0:19:09.840 seen these these developments and changes the cases, frankly along 0:19:09.880 --> 0:19:13.560 with the changes in ideology that we have running the Commission. Right, 0:19:13.600 --> 0:19:17.800 So the PEPSI case, Commissioners Ferguson and Holyoak were really 0:19:17.800 --> 0:19:20.400 critical of that litigation when it was filed. The case 0:19:20.400 --> 0:19:24.399 has been since dismissed. The FTC which volunteerily withdrew that matter. 0:19:24.440 --> 0:19:26.919 They're not pursuing it anymore. It was a Robinson Patment 0:19:27.000 --> 0:19:30.200 Act case, right, which we could see it's complicated statute 0:19:30.280 --> 0:19:32.720 for sure, but we could see more attempts to bring 0:19:32.720 --> 0:19:35.000 a case under that law in the future. And the 0:19:35.040 --> 0:19:37.399 deer case that's continuing on as part of a multi 0:19:37.440 --> 0:19:41.919 district litigation and federal court in Illinois so alive and well, 0:19:41.960 --> 0:19:44.520 probably see a settlement there later on. But you know, 0:19:44.760 --> 0:19:47.560 to your point, we haven't seen a new Part three 0:19:47.640 --> 0:19:51.080 action from an enforcement perspective outside of mergers with this 0:19:51.160 --> 0:19:53.719 new commission, and I think there really is there are 0:19:53.760 --> 0:19:55.800 a lot of valid questions to be asked as to 0:19:55.840 --> 0:19:59.720 whether the current makeup of the Commission is really interested 0:19:59.720 --> 0:20:02.960 in you using that tool for an enforcement matter outside 0:20:02.960 --> 0:20:04.240 of merger clearance. 0:20:04.680 --> 0:20:06.600 Well, you know, justin I know, you and I could 0:20:06.600 --> 0:20:08.720 sit around and talk for like the next two hours 0:20:08.760 --> 0:20:13.080 just about anti rust matter and everything that's happening in 0:20:13.080 --> 0:20:15.199 the antrust world because it's so interesting to us. But 0:20:15.280 --> 0:20:17.200 maybe it's time to move on to some other legal 0:20:17.200 --> 0:20:19.000 subjects and policy subjects. 0:20:19.000 --> 0:20:20.560 Our listeners might appreciate that. 0:20:20.720 --> 0:20:23.639 I might appreciate that, and our colleagues that are waiting 0:20:23.640 --> 0:20:26.520 patiently might also. So I'm going to turn the moderator 0:20:26.600 --> 0:20:28.480 roll back to you and you can move on to 0:20:28.520 --> 0:20:29.600