1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:08,039 --> 00:00:09,760 Speaker 2: This is Bloomberg Law. 3 00:00:09,840 --> 00:00:12,920 Speaker 3: Employers frequently exploit the weaknesses. 4 00:00:12,360 --> 00:00:13,880 Speaker 4: In the law. Of course, are going to be asking 5 00:00:13,960 --> 00:00:15,880 Speaker 4: questions about separation of powers. 6 00:00:15,960 --> 00:00:18,920 Speaker 2: One by one, Google settled with all of these other plaintiffs. 7 00:00:18,920 --> 00:00:22,240 Speaker 2: Interviews with prominent attorneys and Bloomberg legal experts. 8 00:00:22,280 --> 00:00:25,720 Speaker 4: Joining me is immigration law expertly on Fresco, First Amendment 9 00:00:25,800 --> 00:00:27,720 Speaker 4: law expert Caroline Malick. 10 00:00:27,440 --> 00:00:32,000 Speaker 2: Corbin, and analysis of important legal issues, cases and headlines. 11 00:00:31,560 --> 00:00:34,360 Speaker 1: That Trilie Judge may well want to hold a hearing. 12 00:00:34,520 --> 00:00:36,360 Speaker 4: They have never said this case. 13 00:00:36,120 --> 00:00:38,080 Speaker 3: Should never have been brought in the first place. 14 00:00:38,159 --> 00:00:42,599 Speaker 2: Bloomberg Law with June Grosso from Bloomberg Radio. 15 00:00:45,960 --> 00:00:49,120 Speaker 5: Welcome to the weekend edition of Bloomberg Law. I'm Amy 16 00:00:49,200 --> 00:00:50,640 Speaker 5: Morris in for June Grosso. 17 00:00:50,760 --> 00:00:51,720 Speaker 1: June's off this week. 18 00:00:52,159 --> 00:00:54,400 Speaker 5: Coming up this hour, we'll be focusing on a couple 19 00:00:54,400 --> 00:00:58,080 Speaker 5: of major antitrust cases. Will break down the Justice Department's 20 00:00:58,080 --> 00:01:01,360 Speaker 5: case against Live Nation as that trial gets underway. We'll 21 00:01:01,400 --> 00:01:05,280 Speaker 5: take a deep dive on baseball is exempt from antitrust laws. 22 00:01:05,640 --> 00:01:07,760 Speaker 5: All of that is on the way on Bloomberg Law 23 00:01:07,959 --> 00:01:11,520 Speaker 5: just ahead, But first let's begin with Elon Musk's Big 24 00:01:11,800 --> 00:01:16,080 Speaker 5: Securities fraud class action case. The billionaire took the stand 25 00:01:16,120 --> 00:01:19,200 Speaker 5: in federal court in San Francisco to defend himself against 26 00:01:19,240 --> 00:01:23,319 Speaker 5: claims that he deliberately drove down Twitter's stock price before 27 00:01:23,319 --> 00:01:26,920 Speaker 5: he bought it by tweeting Bloomberg's Jeff Eely is in 28 00:01:27,000 --> 00:01:29,640 Speaker 5: San Francisco. He's been following this case and joins us 29 00:01:29,640 --> 00:01:32,680 Speaker 5: now to bring us up to speed. First of all, Jeff, 30 00:01:32,840 --> 00:01:35,240 Speaker 5: the tweet that is at the center of this case, 31 00:01:35,319 --> 00:01:36,800 Speaker 5: what did that tweet say? 32 00:01:36,800 --> 00:01:37,600 Speaker 1: What was it about? 33 00:01:38,319 --> 00:01:41,480 Speaker 4: It was a tweet in May of twenty twenty two 34 00:01:41,680 --> 00:01:46,920 Speaker 4: in which mister Musk, who was frustrated by Twitter's foot 35 00:01:47,040 --> 00:01:52,320 Speaker 4: dragging on handing over information that he wanted to tie 36 00:01:52,360 --> 00:01:57,280 Speaker 4: to the deal. He basically tweeted out that he was 37 00:01:57,320 --> 00:02:01,800 Speaker 4: putting the deal on hold temporarily until they could give 38 00:02:01,920 --> 00:02:08,360 Speaker 4: him the material he sought. That same day that he 39 00:02:08,440 --> 00:02:11,840 Speaker 4: issued that tweet, he also issued a tweet saying he 40 00:02:11,960 --> 00:02:16,920 Speaker 4: was still committed to the deal. So, you know, he 41 00:02:17,000 --> 00:02:20,000 Speaker 4: claims that it was frustration. The investors who are suing 42 00:02:20,080 --> 00:02:23,320 Speaker 4: him claim instead that it was really part of a 43 00:02:23,560 --> 00:02:27,119 Speaker 4: campaign to drive down Twitter's share price so he could 44 00:02:27,120 --> 00:02:28,120 Speaker 4: buy it on the cheap. 45 00:02:29,280 --> 00:02:30,200 Speaker 1: Let's talk about that. 46 00:02:30,400 --> 00:02:33,440 Speaker 5: Your story on the Bloomberg terminal says that this trial 47 00:02:33,520 --> 00:02:35,320 Speaker 5: is going to take a closer look at that six 48 00:02:35,440 --> 00:02:38,359 Speaker 5: month window when Musk was going to take over Twitter, 49 00:02:38,440 --> 00:02:41,240 Speaker 5: then tried to withdraw the offer and then went through 50 00:02:41,320 --> 00:02:44,840 Speaker 5: with the deal because the company sued him. What's the 51 00:02:45,000 --> 00:02:48,360 Speaker 5: line that may be crossed here between someone having second 52 00:02:48,360 --> 00:02:50,840 Speaker 5: thoughts about a deal or just being flaky about a 53 00:02:50,880 --> 00:02:54,600 Speaker 5: deal versus someone deliberately trying to manipulate a deal. 54 00:02:54,680 --> 00:02:57,480 Speaker 1: Is that what they're trying to prove, right. 55 00:02:57,400 --> 00:03:01,959 Speaker 4: That's exactly what they're trying to prove. In M and 56 00:03:02,040 --> 00:03:05,320 Speaker 4: A litigation, which we cover a lot of in Delaware, 57 00:03:06,120 --> 00:03:09,280 Speaker 4: you're always going to get allegations of buyer's remorse. 58 00:03:10,440 --> 00:03:10,640 Speaker 6: You know. 59 00:03:11,000 --> 00:03:14,720 Speaker 4: M and A situations are always tied to the market. 60 00:03:15,320 --> 00:03:22,200 Speaker 4: Market fluctuates, the bases for deals can be affected. Here, 61 00:03:22,400 --> 00:03:26,480 Speaker 4: the investors contend that it was not fluctuations in the 62 00:03:26,520 --> 00:03:31,160 Speaker 4: market that really drove Elon to start thinking about trying 63 00:03:31,240 --> 00:03:35,520 Speaker 4: to reprice the deal. It was really the fluctuations in 64 00:03:35,600 --> 00:03:39,360 Speaker 4: the Tesla stock price. He was using Tesla shares to 65 00:03:39,440 --> 00:03:43,320 Speaker 4: both generate cash for the deal and secure loans, and 66 00:03:43,360 --> 00:03:46,720 Speaker 4: they took a dive during that period, and that made 67 00:03:46,760 --> 00:03:49,800 Speaker 4: it made the deal much more expensive for mister Musk. 68 00:03:50,440 --> 00:03:54,520 Speaker 4: So the investors contend that he launched an organized campaign 69 00:03:55,120 --> 00:04:00,240 Speaker 4: to attack Twitter to in hopes in hopes of drying 70 00:04:00,360 --> 00:04:03,680 Speaker 4: down the stock price so he wouldn't have to pay 71 00:04:03,720 --> 00:04:04,760 Speaker 4: as much for the company. 72 00:04:05,360 --> 00:04:09,320 Speaker 5: Now, he did wind up paying forty four billion for Twitter, 73 00:04:10,440 --> 00:04:13,120 Speaker 5: that's right. Did they intend for him to pay more 74 00:04:13,240 --> 00:04:15,440 Speaker 5: or is there a share price that should have been 75 00:04:15,520 --> 00:04:18,560 Speaker 5: up instead of down or where's the discrepancy? 76 00:04:20,160 --> 00:04:25,080 Speaker 4: Well, the discrepancy here is the deal of the timeline 77 00:04:25,200 --> 00:04:31,919 Speaker 4: is mister Musk makes an offer, Tesla shares crash, Mister 78 00:04:32,000 --> 00:04:38,320 Speaker 4: Musk attempts to renege on the deal, Twitter sues, Mister 79 00:04:38,440 --> 00:04:44,080 Speaker 4: Musks counter sues, and then after some pre trial rulings 80 00:04:44,360 --> 00:04:46,760 Speaker 4: from the judge in Delaware that were not favorable to 81 00:04:46,800 --> 00:04:50,640 Speaker 4: mister Musk, he decided to wave the white flag and 82 00:04:50,760 --> 00:04:55,039 Speaker 4: pay the full fifty four point twenty per share that 83 00:04:55,120 --> 00:05:00,479 Speaker 4: he had originally offered. So you know, it was this 84 00:05:00,640 --> 00:05:04,920 Speaker 4: is a you always have two versions of reality and 85 00:05:05,400 --> 00:05:09,960 Speaker 4: legal disputes, and this jury's going to decide which one 86 00:05:10,040 --> 00:05:13,080 Speaker 4: of the views of reality. 87 00:05:14,080 --> 00:05:15,479 Speaker 6: Sound more plausible to them. 88 00:05:16,160 --> 00:05:18,760 Speaker 5: So then what do the investors want if they ultimately 89 00:05:18,800 --> 00:05:20,760 Speaker 5: got the money that he had promised? 90 00:05:22,160 --> 00:05:23,240 Speaker 1: What are the other things? 91 00:05:23,279 --> 00:05:27,560 Speaker 4: Are some Yeah, these are some investors who, when mister 92 00:05:27,680 --> 00:05:32,919 Speaker 4: Musk issued his May thirteen tweet, decided or figured that 93 00:05:33,000 --> 00:05:35,200 Speaker 4: he had, you know, he was pulling out of the deal, 94 00:05:35,240 --> 00:05:41,040 Speaker 4: and they sold their shares in the thirties rather than 95 00:05:41,080 --> 00:05:45,440 Speaker 4: getting fifty four to twenty per share in October when 96 00:05:45,440 --> 00:05:46,279 Speaker 4: the deal closed. 97 00:05:47,240 --> 00:05:51,320 Speaker 5: I see, So it's about them having sold their shares 98 00:05:51,520 --> 00:05:53,719 Speaker 5: based on the idea that he's backing out. 99 00:05:54,839 --> 00:05:59,440 Speaker 4: That's right, And under securities fraud, you are bored in 100 00:05:59,480 --> 00:06:03,039 Speaker 4: an m and a situation from making a false or 101 00:06:03,080 --> 00:06:07,760 Speaker 4: misleading statement that would affect you know, the market, and 102 00:06:07,920 --> 00:06:12,160 Speaker 4: the investors can tend that that's what this temper deal 103 00:06:12,240 --> 00:06:14,800 Speaker 4: placed on temporary hold was. It was a false or 104 00:06:14,880 --> 00:06:15,880 Speaker 4: misleading statement. 105 00:06:16,760 --> 00:06:17,600 Speaker 1: Isn't that interesting? 106 00:06:17,640 --> 00:06:20,680 Speaker 5: I was thinking about how this is basically all based 107 00:06:20,760 --> 00:06:23,880 Speaker 5: on a tweet, and how unusual that is because there's 108 00:06:23,920 --> 00:06:27,360 Speaker 5: no documentation, there's nothing signed. He could probably argue that 109 00:06:27,400 --> 00:06:29,760 Speaker 5: it was just something he thought that he just tossed 110 00:06:29,760 --> 00:06:30,200 Speaker 5: out there, and. 111 00:06:30,480 --> 00:06:32,040 Speaker 4: That's exactly what he's arguing. 112 00:06:32,080 --> 00:06:33,440 Speaker 1: By the way, I nailed it. 113 00:06:33,720 --> 00:06:37,520 Speaker 5: So there's no documentation there, there's nothing signed. He could 114 00:06:37,640 --> 00:06:39,559 Speaker 5: argue that it was just a thought that he tossed 115 00:06:39,560 --> 00:06:43,320 Speaker 5: out there, which is what he did. How would this 116 00:06:43,480 --> 00:06:47,120 Speaker 5: change how future securities fraud suits might be handled? Social 117 00:06:47,200 --> 00:06:50,120 Speaker 5: media may be changing how the courts are looking at this, 118 00:06:50,160 --> 00:06:51,400 Speaker 5: how juries are looking at this. 119 00:06:51,800 --> 00:06:53,279 Speaker 1: Is that actually a factor? Now? 120 00:06:55,480 --> 00:06:59,880 Speaker 4: You know, I'm not sure you might argue that you're 121 00:06:59,880 --> 00:07:03,719 Speaker 4: going to have more security fraud because people, you know, 122 00:07:03,880 --> 00:07:10,120 Speaker 4: are availing themselves of public platforms like Twitter, which is 123 00:07:10,120 --> 00:07:14,600 Speaker 4: of course now called X. I think this is pretty much, 124 00:07:15,160 --> 00:07:19,200 Speaker 4: you know, your garden variety secure federal security fraud. It's 125 00:07:19,240 --> 00:07:21,720 Speaker 4: being tried in federal court San Francisco, by the way, 126 00:07:22,240 --> 00:07:26,400 Speaker 4: and I don't you know, it's all going to come 127 00:07:26,440 --> 00:07:30,360 Speaker 4: down to whether the jury believes that mister Musk had 128 00:07:30,560 --> 00:07:34,200 Speaker 4: intent to drive the stock price down. And that's very 129 00:07:34,240 --> 00:07:39,480 Speaker 4: hard to prove. Okay, so you know, nobody's This is 130 00:07:39,520 --> 00:07:42,360 Speaker 4: no slam dunk by any stretch of the imagination. 131 00:07:43,120 --> 00:07:46,920 Speaker 5: For the those who are suing for the investors, correct, 132 00:07:47,680 --> 00:07:49,400 Speaker 5: because they have to show intent. 133 00:07:50,000 --> 00:07:53,040 Speaker 4: That's right. And you know, in a criminal case, as 134 00:07:53,080 --> 00:07:55,440 Speaker 4: you know, intent is inferred if you point a gun 135 00:07:55,480 --> 00:07:59,200 Speaker 4: at someone, and a gun goes off. You are you know, 136 00:07:59,360 --> 00:08:03,400 Speaker 4: the law basically infers that you intended to kill that person. 137 00:08:03,880 --> 00:08:07,680 Speaker 4: Civil court completely different. You don't have that, you know, 138 00:08:08,400 --> 00:08:11,200 Speaker 4: beyond a reasonable doubt burden that you have to meet. 139 00:08:11,400 --> 00:08:14,640 Speaker 4: You know, you have to somehow get you know, persuade 140 00:08:15,200 --> 00:08:19,680 Speaker 4: the jurors that fifty one percent of the scale tips 141 00:08:19,680 --> 00:08:23,120 Speaker 4: in your favor when it comes to intent. But it's 142 00:08:23,200 --> 00:08:24,880 Speaker 4: just very difficult to prove. 143 00:08:25,480 --> 00:08:27,320 Speaker 1: How long would a case like this last. 144 00:08:28,800 --> 00:08:31,320 Speaker 4: They're thinking this is going to take roughly two weeks 145 00:08:31,360 --> 00:08:31,840 Speaker 4: to try. 146 00:08:33,040 --> 00:08:36,120 Speaker 1: Well, that seems pretty quick for a securities broadcase. 147 00:08:37,480 --> 00:08:40,400 Speaker 4: Well, you basically given each side a week, right, and 148 00:08:40,480 --> 00:08:44,120 Speaker 4: it's it's you can do it in that. Again, there's 149 00:08:44,160 --> 00:08:48,160 Speaker 4: not a lot of ground to cover here, you know, 150 00:08:48,600 --> 00:08:52,360 Speaker 4: two or three tweets and a podcast that's the summoned 151 00:08:52,360 --> 00:08:57,880 Speaker 4: substance of the allegations that were allowed to go to trial. 152 00:08:58,040 --> 00:09:00,000 Speaker 4: The judge knocked out other allegations. 153 00:09:00,679 --> 00:09:03,160 Speaker 5: Okay, Jeff Pheely, thank you so much for joining us 154 00:09:03,160 --> 00:09:05,400 Speaker 5: with this. We do appreciate your insights and your time. 155 00:09:05,880 --> 00:09:09,160 Speaker 5: Thank you so much, sure, Amy, and our thanks to Bloomberg' 156 00:09:09,200 --> 00:09:11,800 Speaker 5: Jeff Feely for joining us. Now let's turn to the 157 00:09:11,960 --> 00:09:17,080 Speaker 5: entertainment space in a highly anticipated antitrust case involving Live Nation. 158 00:09:17,440 --> 00:09:20,600 Speaker 5: It is a massive entertainment company and they're in court 159 00:09:20,640 --> 00:09:23,600 Speaker 5: to defend themselves against claims from the Department of Justice 160 00:09:23,600 --> 00:09:27,000 Speaker 5: that it monopolized the live music market, acting as the 161 00:09:27,000 --> 00:09:30,480 Speaker 5: biggest ticket seller while also running and in a lot 162 00:09:30,480 --> 00:09:33,679 Speaker 5: of cases, owning some of the nation's biggest concert venues. 163 00:09:34,040 --> 00:09:36,840 Speaker 5: The trial just got underway in New York. Joining us 164 00:09:36,840 --> 00:09:39,440 Speaker 5: now to talk about what comes next. Bloomberg News anti 165 00:09:39,480 --> 00:09:42,120 Speaker 5: trust reporter leon Elan Lea. Thank you for taking the 166 00:09:42,160 --> 00:09:44,959 Speaker 5: time with us, Thanks for having me so for years. 167 00:09:45,400 --> 00:09:47,320 Speaker 5: Let me just come at it from a fan point 168 00:09:47,320 --> 00:09:50,079 Speaker 5: of view. For years, those of us who've attended concerts 169 00:09:50,080 --> 00:09:53,000 Speaker 5: and bought tickets through ticket Master, which is owned by 170 00:09:53,040 --> 00:09:57,240 Speaker 5: Life Nation, have complained about the cost, complained about the monopoly. 171 00:09:57,760 --> 00:09:58,880 Speaker 1: And those are just the fans. 172 00:09:58,880 --> 00:10:02,040 Speaker 5: That's not even the venue and the concert promoters and 173 00:10:02,120 --> 00:10:04,200 Speaker 5: the agents and those who have also had to deal 174 00:10:04,240 --> 00:10:05,080 Speaker 5: with Live Nation. 175 00:10:05,240 --> 00:10:07,240 Speaker 1: Bring us up to speed. How we got here. 176 00:10:08,040 --> 00:10:12,160 Speaker 7: Yeah, so Live Nation bought Ticketmaster. They used to be 177 00:10:12,240 --> 00:10:15,840 Speaker 7: separate companies back in twenty ten. At the time, this 178 00:10:15,960 --> 00:10:18,720 Speaker 7: was during the Obama administration. There was an any Trust 179 00:10:18,760 --> 00:10:22,000 Speaker 7: review of the deal, and they were concerned because Live 180 00:10:22,120 --> 00:10:26,040 Speaker 7: Nation is what's known as a concert promoter, so they 181 00:10:26,160 --> 00:10:28,840 Speaker 7: own both a bunch of concert venues, but they also 182 00:10:29,520 --> 00:10:34,400 Speaker 7: help promote concerts, so they have people who help artists 183 00:10:34,480 --> 00:10:36,840 Speaker 7: sort of pick out which venues that they're going to 184 00:10:37,520 --> 00:10:40,000 Speaker 7: perform at and then arrange all of the details of 185 00:10:40,040 --> 00:10:43,120 Speaker 7: a tour. And they wanted to buy Ticketmaster, at the time, 186 00:10:43,160 --> 00:10:46,960 Speaker 7: the largest ticketing company. The Justice Department decided to allow 187 00:10:47,040 --> 00:10:49,880 Speaker 7: this to go through, but with some conditions, and the 188 00:10:49,920 --> 00:10:54,560 Speaker 7: conditions were that Live Nation could not retaliate against any 189 00:10:54,640 --> 00:10:59,120 Speaker 7: venues that wanted to use other concert promoters or other 190 00:10:59,200 --> 00:11:00,000 Speaker 7: ticketing services. 191 00:11:01,440 --> 00:11:01,760 Speaker 5: So the. 192 00:11:04,320 --> 00:11:05,520 Speaker 1: Merger was allowed to go through. 193 00:11:05,679 --> 00:11:11,880 Speaker 7: Everything went along, but the Justice Department alleges that Live 194 00:11:11,960 --> 00:11:14,880 Speaker 7: Nation repeatedly sort of violated a lot of these orders. 195 00:11:15,920 --> 00:11:19,680 Speaker 7: There were allegations that they were threatening venues to sort 196 00:11:19,679 --> 00:11:24,160 Speaker 7: of make them use Ticketmaster, which is why something like 197 00:11:24,200 --> 00:11:27,000 Speaker 7: eighty seven percent of venues across the United States used 198 00:11:27,000 --> 00:11:31,280 Speaker 7: Ticketmaster instead of other ticketing options. So the Justice Department 199 00:11:31,320 --> 00:11:34,960 Speaker 7: went back to court changed its sort of agreement with 200 00:11:35,000 --> 00:11:37,800 Speaker 7: Ticketmaster to one in which it had a monitor and 201 00:11:38,640 --> 00:11:42,760 Speaker 7: it had a lot more obligations and they feel that 202 00:11:42,760 --> 00:11:46,000 Speaker 7: that didn't work either. This sort of bad conduct continued, 203 00:11:46,080 --> 00:11:50,440 Speaker 7: so the Justice Department under the Biden administration started a 204 00:11:50,480 --> 00:11:53,800 Speaker 7: new investigation, and in twenty twenty four they assued Ticketmaster 205 00:11:53,960 --> 00:11:57,640 Speaker 7: for being a monopoly in multiple markets. Now, some of 206 00:11:57,679 --> 00:11:59,840 Speaker 7: the case ended up getting thrown out before trial, but 207 00:12:00,600 --> 00:12:03,560 Speaker 7: on Monday, I guess it went before a jury in 208 00:12:03,559 --> 00:12:06,360 Speaker 7: New York. The case is supposed to take several weeks. 209 00:12:06,800 --> 00:12:09,480 Speaker 7: We're thinking probably five to six weeks, and it's going 210 00:12:09,520 --> 00:12:14,280 Speaker 7: to feature testimony from people all across the live music industry. 211 00:12:14,360 --> 00:12:17,160 Speaker 7: So there'll be people from various venues. There'll be people 212 00:12:17,200 --> 00:12:21,040 Speaker 7: from ticket Master, there will be music artists. Kid Rock 213 00:12:21,080 --> 00:12:23,720 Speaker 7: and someone from Mumford and Sons are both supposed to testify, 214 00:12:24,480 --> 00:12:28,280 Speaker 7: as well as just some regular fans about how Ticketmaster 215 00:12:28,440 --> 00:12:31,559 Speaker 7: controlling so much of the industry has sort of impacted things. 216 00:12:32,440 --> 00:12:34,600 Speaker 5: Okay, Leah, let's hold it there for just a moment. 217 00:12:34,640 --> 00:12:37,480 Speaker 5: We are talking with Bloomberg News anti trust reporter Leah 218 00:12:37,440 --> 00:12:40,040 Speaker 5: and Eylan. We'll have more with Leah about the big 219 00:12:40,080 --> 00:12:42,480 Speaker 5: Live Nation antitrust case that's just ahead. 220 00:12:42,679 --> 00:12:44,400 Speaker 1: I may mean more as in for June Grasso. 221 00:12:44,720 --> 00:12:48,800 Speaker 5: You're listening to the weekend edition of Bloomberg Law. 222 00:13:00,000 --> 00:13:04,080 Speaker 2: Listening to Bloomberg Law with June Grosso from Bloomberg Radio. 223 00:13:04,640 --> 00:13:07,160 Speaker 5: Thanks for listening to the weekend edition of Bloomberg Law. 224 00:13:07,240 --> 00:13:10,000 Speaker 5: I'm Amy Morris in for June Grosso, and we've been 225 00:13:10,040 --> 00:13:13,560 Speaker 5: talking about the Department of Justice antitrust trial against the 226 00:13:13,600 --> 00:13:17,640 Speaker 5: live entertainment giant Live Nation. Bloomberg News anti trust reporter 227 00:13:17,720 --> 00:13:20,760 Speaker 5: Leah Island is with us. The crux of the DOJ's 228 00:13:20,760 --> 00:13:23,240 Speaker 5: case against Live Nation, Lea, is that it has a 229 00:13:23,240 --> 00:13:26,840 Speaker 5: monopoly on live entertainment because it owns ticket Master, which 230 00:13:26,880 --> 00:13:30,240 Speaker 5: is the nation's largest ticket seller in the nation. And Leah, 231 00:13:30,240 --> 00:13:32,400 Speaker 5: one of the things you mentioned is that at the 232 00:13:32,520 --> 00:13:34,679 Speaker 5: very beginning of this, back in twenty ten, when the 233 00:13:34,760 --> 00:13:37,839 Speaker 5: judge allowed for this merger in the first place, even 234 00:13:37,920 --> 00:13:42,000 Speaker 5: then the judge said, don't threaten concert venues. If they 235 00:13:42,000 --> 00:13:44,640 Speaker 5: don't want to use your services, you can't intimidate them. 236 00:13:45,200 --> 00:13:47,800 Speaker 5: The judge said that from the beginning, So is that 237 00:13:47,840 --> 00:13:49,360 Speaker 5: what they're accused of doing. 238 00:13:49,880 --> 00:13:52,000 Speaker 7: So that is one of the allegations that the Justice 239 00:13:52,000 --> 00:13:54,840 Speaker 7: Department is seeking to prove. The very first witness, in fact, 240 00:13:55,000 --> 00:13:57,520 Speaker 7: was the CEO from the Barclay Center, which is a 241 00:13:57,640 --> 00:14:02,560 Speaker 7: large concert venue in Brooklyn, New York. And they are 242 00:14:02,880 --> 00:14:04,880 Speaker 7: one of the venues that alleged that they were sort 243 00:14:04,880 --> 00:14:10,480 Speaker 7: of threatened by Ticketmaster Ticketmaster. They had wanted to switch 244 00:14:10,520 --> 00:14:13,480 Speaker 7: their ticketing provider away from Ticketmaster to sea geek, which 245 00:14:13,520 --> 00:14:17,520 Speaker 7: is another ticketing provider that it primarily does a lot 246 00:14:17,559 --> 00:14:20,680 Speaker 7: of uh sports related. 247 00:14:20,560 --> 00:14:22,000 Speaker 1: Events events, thank you. 248 00:14:23,240 --> 00:14:25,280 Speaker 7: Uh, sea gek primarily does a lot of sports related 249 00:14:25,320 --> 00:14:30,400 Speaker 7: events and uh so Barclays agreed to switch to sea 250 00:14:30,440 --> 00:14:33,840 Speaker 7: geek and uh they played a phone call in court 251 00:14:34,080 --> 00:14:37,040 Speaker 7: uh with the CEO of Barclays and the CEO of 252 00:14:37,080 --> 00:14:39,800 Speaker 7: Live Nation, and the CEO of Live Nation said, if 253 00:14:39,840 --> 00:14:41,440 Speaker 7: you switch away, it's going to be hard for us 254 00:14:41,440 --> 00:14:45,760 Speaker 7: to keep sending you concerts. And then after they switched 255 00:14:45,760 --> 00:14:50,040 Speaker 7: to sea Geek, the allegation is Live Nation started moving 256 00:14:50,120 --> 00:14:54,000 Speaker 7: concerts popular concerts to another concert venue in Queen's instead 257 00:14:54,040 --> 00:14:58,080 Speaker 7: of this one in Brooklyn. And so there was some 258 00:14:58,120 --> 00:15:00,520 Speaker 7: talk about a Billie Eilish concert that has been booked 259 00:15:00,520 --> 00:15:02,400 Speaker 7: at the Barclays Center, and all of a sudden it 260 00:15:02,440 --> 00:15:04,040 Speaker 7: got moved to this other venue. 261 00:15:04,520 --> 00:15:09,360 Speaker 5: So they're not just switching venues, they're actually moving acts 262 00:15:09,400 --> 00:15:12,680 Speaker 5: from a venue that was already booked to a different 263 00:15:12,760 --> 00:15:14,800 Speaker 5: venue that uses Ticketmaster. 264 00:15:15,000 --> 00:15:17,920 Speaker 7: Yes, and that is the allegation that the Justice Department 265 00:15:18,040 --> 00:15:20,680 Speaker 7: was focusing on. Live Nation maintains that this was at 266 00:15:20,680 --> 00:15:24,440 Speaker 7: the choice of Billie Eilish's team, Barclay's, you know, the 267 00:15:24,440 --> 00:15:27,000 Speaker 7: Barclays CEO said, you know, they had somebody check it out, 268 00:15:27,000 --> 00:15:30,440 Speaker 7: and Billie Eilish's team said that this was in fact request. 269 00:15:30,040 --> 00:15:33,280 Speaker 1: By ticket or by Live Nation. So it is a 270 00:15:33,280 --> 00:15:34,080 Speaker 1: little bit disuited. 271 00:15:34,120 --> 00:15:36,760 Speaker 7: But the Justice Department is planning to put on a 272 00:15:36,840 --> 00:15:39,720 Speaker 7: number of other venues who allege this happened to them. 273 00:15:40,040 --> 00:15:43,440 Speaker 7: They would look at switching to a different ticketing provider, 274 00:15:43,480 --> 00:15:46,000 Speaker 7: and Live Nation would say, well, if you switch to 275 00:15:46,040 --> 00:15:48,280 Speaker 7: somebody else, we're not going to be able to bring 276 00:15:48,320 --> 00:15:51,880 Speaker 7: you the same tickets. Live Nation has argued all along 277 00:15:51,920 --> 00:15:54,400 Speaker 7: that it's sort of under no legal obligation to do 278 00:15:54,480 --> 00:15:58,520 Speaker 7: business elsewhere that you know, the it makes most sense 279 00:15:58,760 --> 00:16:04,440 Speaker 7: for them, like business wise to put concerts at either 280 00:16:04,600 --> 00:16:08,040 Speaker 7: venues it owns or venues that are using Ticketmaster, because 281 00:16:08,400 --> 00:16:10,680 Speaker 7: you know, when it's a vertically in a graded company, 282 00:16:10,680 --> 00:16:13,560 Speaker 7: it's cheaper for them. And so that's actually one of 283 00:16:13,600 --> 00:16:17,200 Speaker 7: the major issues in the trial is is this like 284 00:16:17,520 --> 00:16:20,800 Speaker 7: a legitimate business practice or is this sort of unfair coercion? 285 00:16:21,640 --> 00:16:25,680 Speaker 7: Does this practice of them trying to tie their contracts 286 00:16:25,680 --> 00:16:28,840 Speaker 7: in this way make it illegal and sort of force 287 00:16:29,400 --> 00:16:33,080 Speaker 7: pressure on these venues to use Ticketmaster instead of other options. 288 00:16:34,160 --> 00:16:36,240 Speaker 7: The other interesting thing here is that the case is 289 00:16:36,280 --> 00:16:38,640 Speaker 7: being brought not just by the Justice Department, but by 290 00:16:38,760 --> 00:16:41,960 Speaker 7: a number of state attorneys general. And state attorneys general 291 00:16:42,000 --> 00:16:45,840 Speaker 7: do have the right to sort of seek damages on 292 00:16:45,880 --> 00:16:50,160 Speaker 7: behalf of their citizens. So there are twenty five states 293 00:16:50,480 --> 00:16:53,280 Speaker 7: twenty four and DC depending on how you count it, 294 00:16:53,600 --> 00:16:57,200 Speaker 7: that are seeking damages from Ticketmaster on behalf of concert goers. 295 00:16:58,080 --> 00:17:02,800 Speaker 7: They say that because of Ticketmaster's monopoly, ticket prices were 296 00:17:02,840 --> 00:17:06,040 Speaker 7: increased by at least about two dollars per ticket. So 297 00:17:06,359 --> 00:17:09,400 Speaker 7: obviously two dollars a ticket is not that much, you know, 298 00:17:09,680 --> 00:17:12,359 Speaker 7: for individual ticket, but we're talking about something in excess 299 00:17:12,400 --> 00:17:15,720 Speaker 7: of like twenty thousand concerts at thousands of concert venues 300 00:17:15,720 --> 00:17:17,800 Speaker 7: across the country. So if you add that all up, 301 00:17:17,880 --> 00:17:20,879 Speaker 7: we're talking about damages and the potential millions or billions 302 00:17:20,880 --> 00:17:23,160 Speaker 7: of dollars, depending on what the jury finds. 303 00:17:23,840 --> 00:17:28,000 Speaker 5: You cover anti trust cases a lotea. This is your jam. 304 00:17:28,440 --> 00:17:31,639 Speaker 5: So what criteria then do they have to meet to 305 00:17:31,760 --> 00:17:33,800 Speaker 5: show that yes, they violated this. 306 00:17:34,200 --> 00:17:37,880 Speaker 7: So first the jury has to find that they're a monopoly. 307 00:17:38,560 --> 00:17:42,960 Speaker 7: That's not really that can test. There is a little 308 00:17:43,000 --> 00:17:47,520 Speaker 7: bit of contention here about whether they're a monopoly. It 309 00:17:47,640 --> 00:17:50,040 Speaker 7: depends on what venues you considered to be in the 310 00:17:50,040 --> 00:17:53,360 Speaker 7: market versus not in the market, because the government first 311 00:17:53,400 --> 00:17:56,040 Speaker 7: has to show that they have the power to sort 312 00:17:56,080 --> 00:18:02,000 Speaker 7: of exert undue influence. The government says that Ticketmaster controls 313 00:18:02,280 --> 00:18:05,560 Speaker 7: ticketing at about eighty seven percent of what they're calling 314 00:18:05,600 --> 00:18:09,800 Speaker 7: major concert venues. So these are the venues that generally like, 315 00:18:09,840 --> 00:18:13,000 Speaker 7: the thing that they do the most is hold music concerts. Sure, 316 00:18:13,640 --> 00:18:18,000 Speaker 7: Ticketmaster says that that's not really the appropriate market. That 317 00:18:18,080 --> 00:18:22,840 Speaker 7: it should include sort of all spaces that could potentially 318 00:18:23,240 --> 00:18:26,920 Speaker 7: host a concert. So in addition to like something that 319 00:18:27,000 --> 00:18:29,320 Speaker 7: would like an amphitheater or an arena, it should also 320 00:18:29,320 --> 00:18:33,359 Speaker 7: include a stadium. And so if you consider all of 321 00:18:33,400 --> 00:18:37,040 Speaker 7: those things stadiums, amphitheaters, arenas, their market share is a 322 00:18:37,080 --> 00:18:39,800 Speaker 7: little bit smaller. It would be only about forty percent, 323 00:18:39,880 --> 00:18:42,679 Speaker 7: which there isn't like a legal definition of what a 324 00:18:42,720 --> 00:18:44,920 Speaker 7: monopoly is. But generally it's considered to be at least 325 00:18:44,920 --> 00:18:47,480 Speaker 7: fifty to sixty percent. So that's one of the things 326 00:18:47,560 --> 00:18:50,680 Speaker 7: the jury will have to decide. Should they be considering 327 00:18:50,800 --> 00:18:53,439 Speaker 7: every single place that a concert should take place or 328 00:18:53,520 --> 00:18:57,399 Speaker 7: just sort of major concert venues. The Justice Department argues that, 329 00:18:57,440 --> 00:18:59,159 Speaker 7: you know, there are only certain artists who are going 330 00:18:59,200 --> 00:19:02,240 Speaker 7: to be able to fill stadium, someone like Beyonce. So 331 00:19:02,440 --> 00:19:05,040 Speaker 7: if you are you know, up and coming artist, you're 332 00:19:05,040 --> 00:19:06,639 Speaker 7: not really going to be playing a stadium. You're going 333 00:19:06,680 --> 00:19:09,320 Speaker 7: to be playing some of these smaller places. And those 334 00:19:09,400 --> 00:19:12,480 Speaker 7: are the places where Ticketmaster has a little bit more 335 00:19:12,520 --> 00:19:15,960 Speaker 7: power because most of the business they're doing is music concerts. 336 00:19:17,000 --> 00:19:19,399 Speaker 1: So we'd also including night clubs in this. 337 00:19:19,720 --> 00:19:23,440 Speaker 7: Yeah, so they sort of start They have a bunch 338 00:19:23,440 --> 00:19:26,199 Speaker 7: of people from sort of the music industry who are 339 00:19:26,240 --> 00:19:28,040 Speaker 7: taking the stand in sort of talking about this. When 340 00:19:28,080 --> 00:19:29,879 Speaker 7: an artist starts, you know, they tend to start in 341 00:19:30,280 --> 00:19:33,960 Speaker 7: smaller venues like clubs, and then they move up to amphitheaters, 342 00:19:34,240 --> 00:19:36,119 Speaker 7: and then they move up to arenas, and then if 343 00:19:36,160 --> 00:19:38,280 Speaker 7: you're very, very popular, you move up to a stadium. 344 00:19:38,960 --> 00:19:41,439 Speaker 7: So the Justice Department's case is sort of focused on 345 00:19:41,480 --> 00:19:45,840 Speaker 7: those slightly smaller ones. The clubs, the amphitheaters, the arenas. 346 00:19:46,400 --> 00:19:49,440 Speaker 7: These are like places that have maybe like a thousand 347 00:19:49,480 --> 00:19:52,399 Speaker 7: to maybe twenty thousand seats, whereas a stadium is going 348 00:19:52,440 --> 00:19:56,320 Speaker 7: to have like forty to fifty thousand seats. So it's 349 00:19:56,359 --> 00:19:59,720 Speaker 7: focused mostly on those, So we're not going to be 350 00:19:59,760 --> 00:20:03,439 Speaker 7: here from people like you know, Beyonce or Taylor Swift, 351 00:20:03,520 --> 00:20:09,800 Speaker 7: although Taylor Swift's concert agent is supposed to testify. It's 352 00:20:09,800 --> 00:20:12,959 Speaker 7: mostly focused on like mid level artists. So the people 353 00:20:13,000 --> 00:20:16,120 Speaker 7: who are definitely testifying are Kid Rock, who has been 354 00:20:16,280 --> 00:20:19,080 Speaker 7: very interested in this case and is close friends with 355 00:20:19,119 --> 00:20:23,040 Speaker 7: President Trump, and then also one of the members of 356 00:20:23,040 --> 00:20:26,439 Speaker 7: the Mumford and Sons band is expected to testify. So 357 00:20:27,359 --> 00:20:31,000 Speaker 7: like artists along that sort of caliber who do a 358 00:20:31,040 --> 00:20:33,399 Speaker 7: lot of shows and can talk a little bit about 359 00:20:33,440 --> 00:20:39,120 Speaker 7: how you know, Live nations control over concert promotion has 360 00:20:39,160 --> 00:20:42,119 Speaker 7: really impacted where they end up performing. 361 00:20:42,320 --> 00:20:44,680 Speaker 1: So what is the court then being asked to decide here? 362 00:20:45,000 --> 00:20:47,879 Speaker 7: So there is a jury for this portion, and the 363 00:20:47,960 --> 00:20:50,400 Speaker 7: jury is being asked to descide first whether Live Nation 364 00:20:50,760 --> 00:20:53,959 Speaker 7: is a monopoly okay, and then second what if they 365 00:20:53,960 --> 00:20:56,919 Speaker 7: are a monopoly, what the damage amount per ticket is. 366 00:20:57,400 --> 00:20:59,720 Speaker 7: So there will be some testimony from all of these 367 00:20:59,720 --> 00:21:02,280 Speaker 7: people about Live Nation's conduct, and then there will be 368 00:21:02,359 --> 00:21:07,960 Speaker 7: some testimony from experts about how Live Nations conduct impacted 369 00:21:07,960 --> 00:21:11,359 Speaker 7: the price of tickets. Once the jury decides that, and 370 00:21:11,440 --> 00:21:13,840 Speaker 7: if they decide in favor of the government, the judge 371 00:21:13,840 --> 00:21:17,080 Speaker 7: would then take the jury's damage number and sort of 372 00:21:17,119 --> 00:21:21,040 Speaker 7: decide the overall damage number. So they're deciding per ticket, 373 00:21:21,080 --> 00:21:24,080 Speaker 7: he's deciding the overall number, and then he will also 374 00:21:24,119 --> 00:21:27,200 Speaker 7: decide whether there are any additional remedies needed. So that's 375 00:21:27,240 --> 00:21:29,919 Speaker 7: where the potential for a breakup comes in, because the 376 00:21:29,960 --> 00:21:32,359 Speaker 7: government has said, you know, we allowed this merger to 377 00:21:32,359 --> 00:21:35,320 Speaker 7: take place in twenty ten on the condition that Live 378 00:21:35,400 --> 00:21:38,159 Speaker 7: Nations sort of not engage in bad conduct, and they 379 00:21:38,200 --> 00:21:40,520 Speaker 7: have been doing that the whole time, and so really, 380 00:21:40,560 --> 00:21:43,440 Speaker 7: you know, we tried to allow this to go through. 381 00:21:44,359 --> 00:21:46,720 Speaker 7: It hasn't worked, and so what we really need now 382 00:21:46,800 --> 00:21:48,639 Speaker 7: is to break up this company. 383 00:21:48,760 --> 00:21:51,840 Speaker 5: So this might seem like an out of the left 384 00:21:51,840 --> 00:21:56,080 Speaker 5: field question, but I wonder how resaler ticket resalers like 385 00:21:56,080 --> 00:21:58,560 Speaker 5: stub Hub would somehow be involved with this. Are they 386 00:21:58,600 --> 00:22:01,520 Speaker 5: completely left out of this because that the damage was 387 00:22:01,560 --> 00:22:03,520 Speaker 5: already done by the person who originally bought the ticket 388 00:22:03,520 --> 00:22:04,240 Speaker 5: through Ticketmaster. 389 00:22:04,480 --> 00:22:07,600 Speaker 7: So most of the yes is focused primarily on what 390 00:22:07,640 --> 00:22:10,280 Speaker 7: we call the primary ticket market, so that's the very 391 00:22:10,359 --> 00:22:13,879 Speaker 7: first sale of the ticket, because the venue itself generally 392 00:22:13,920 --> 00:22:16,520 Speaker 7: picks the primary ticketer i e. Who is the first 393 00:22:16,520 --> 00:22:18,560 Speaker 7: person selling the tickets, But they don't have a lot 394 00:22:18,600 --> 00:22:21,040 Speaker 7: of control over what we call the secondary ticketing market, 395 00:22:21,080 --> 00:22:24,320 Speaker 7: i e. When you're reselling where you decide to do that, 396 00:22:24,760 --> 00:22:29,880 Speaker 7: the venue doesn't itself usually get involved. So there are 397 00:22:30,040 --> 00:22:33,159 Speaker 7: a bunch of concerns about the secondary market. There's some 398 00:22:33,320 --> 00:22:36,760 Speaker 7: legislation pending in Congress that's focused on that, but this 399 00:22:36,840 --> 00:22:39,560 Speaker 7: case is primarily about the primary ticket. 400 00:22:39,560 --> 00:22:45,439 Speaker 5: How how difficult will it be for the prosecution to 401 00:22:45,480 --> 00:22:46,560 Speaker 5: prove its case? 402 00:22:47,680 --> 00:22:49,960 Speaker 7: So I mean the standard is a preponderance of the 403 00:22:50,000 --> 00:22:54,800 Speaker 7: evidence because this is a civil case, right, But it's interesting, 404 00:22:54,920 --> 00:22:57,919 Speaker 7: like anti trust case, is by the time they get 405 00:22:57,960 --> 00:23:01,439 Speaker 7: to this point with the Justice Department bringing it to trial, 406 00:23:01,840 --> 00:23:08,800 Speaker 7: very often the Justice Department wins. They there's a pretty 407 00:23:08,840 --> 00:23:11,760 Speaker 7: high bar for the Justice Department to file a monopolization 408 00:23:11,880 --> 00:23:13,800 Speaker 7: case in the first place, and then you know, it 409 00:23:13,880 --> 00:23:16,280 Speaker 7: has to get past the motion to dismiss, it has 410 00:23:16,320 --> 00:23:19,280 Speaker 7: to get past summary judgment. This one is pretty interesting 411 00:23:19,320 --> 00:23:22,479 Speaker 7: because it's pretty rare actually for anyst cases to go 412 00:23:22,480 --> 00:23:26,399 Speaker 7: before a jury. The only reason it's actually before a 413 00:23:26,480 --> 00:23:29,320 Speaker 7: jury is because of the damage's portion. But you know, 414 00:23:29,480 --> 00:23:32,120 Speaker 7: the Justice Department was very interested in getting this before 415 00:23:32,119 --> 00:23:35,639 Speaker 7: a jury because these are the people allegedly who have 416 00:23:35,720 --> 00:23:38,560 Speaker 7: been harmed by this conduct, right, the peers that they are, Yeah, 417 00:23:38,560 --> 00:23:40,800 Speaker 7: they are like the people who might have actually gone 418 00:23:40,800 --> 00:23:43,760 Speaker 7: to a concert. Live Nation a little bit earlier last 419 00:23:43,760 --> 00:23:47,080 Speaker 7: week actually tried to insist that if you had ever 420 00:23:47,160 --> 00:23:50,000 Speaker 7: bought a ticket through ticket Master, you were ineligible to 421 00:23:50,000 --> 00:23:52,800 Speaker 7: be on the jury, and the judge actually throughout that 422 00:23:52,880 --> 00:23:55,560 Speaker 7: request because he felt that they would have been impossible 423 00:23:55,600 --> 00:23:56,840 Speaker 7: to actually seat a jury. 424 00:23:57,520 --> 00:23:59,600 Speaker 1: Yeah, if one of the requirements was that you had 425 00:23:59,600 --> 00:24:00,080 Speaker 1: never bought. 426 00:24:00,040 --> 00:24:04,520 Speaker 7: A concert ticket online. Yeah, so it's entirely possible that 427 00:24:04,560 --> 00:24:09,119 Speaker 7: these people have used Ticketmaster's product before. But you know, 428 00:24:09,480 --> 00:24:11,080 Speaker 7: in order to be seated on the jury, they had 429 00:24:11,080 --> 00:24:13,720 Speaker 7: to insist that they could be impartial and fair, and so, 430 00:24:14,520 --> 00:24:18,000 Speaker 7: you know, we'll see what they say. You know, juries 431 00:24:18,480 --> 00:24:22,520 Speaker 7: juries much more frequently find for anti trust plaintiffs. So 432 00:24:23,119 --> 00:24:26,080 Speaker 7: it's interesting that Live Nation wanted to take this gamble. 433 00:24:27,240 --> 00:24:28,080 Speaker 1: It really is. 434 00:24:28,160 --> 00:24:31,240 Speaker 5: And at some point there is going to be let's say, 435 00:24:31,280 --> 00:24:34,640 Speaker 5: if they find in favor of the Department of Justice 436 00:24:34,920 --> 00:24:37,240 Speaker 5: there is a chance that Live Nation. 437 00:24:37,160 --> 00:24:39,320 Speaker 1: Might have to be broken up. What would that even 438 00:24:39,440 --> 00:24:39,879 Speaker 1: look like? 439 00:24:41,040 --> 00:24:43,800 Speaker 7: So the Justice Department and the state ags say that 440 00:24:44,000 --> 00:24:45,679 Speaker 7: in this case, they don't think it would be that 441 00:24:45,800 --> 00:24:49,960 Speaker 7: hard because these used to be separate companies, and in 442 00:24:50,000 --> 00:24:53,400 Speaker 7: their view, you know, this is now a vertically integrated company. 443 00:24:53,440 --> 00:24:57,560 Speaker 7: Live Nation does the concert promotions, that is, the all 444 00:24:57,600 --> 00:25:01,760 Speaker 7: of the logistics behind having a live music event, whereas 445 00:25:01,840 --> 00:25:05,000 Speaker 7: Ticketmaster is a ticketing service. It is you know, like 446 00:25:05,520 --> 00:25:09,359 Speaker 7: primarily a website that integrates with like websites of venues. 447 00:25:09,440 --> 00:25:13,159 Speaker 7: So these two things don't have to go together, and 448 00:25:13,359 --> 00:25:16,840 Speaker 7: therefore it would not, in their view, be necessarily that 449 00:25:16,960 --> 00:25:18,119 Speaker 7: difficult to separate them. 450 00:25:18,240 --> 00:25:20,439 Speaker 5: So it would just go back to what it was 451 00:25:20,480 --> 00:25:24,040 Speaker 5: before twenty ten. Live Nation and Ticketmaster. Here's your tickets 452 00:25:24,040 --> 00:25:24,959 Speaker 5: and here's your venue. 453 00:25:25,160 --> 00:25:27,520 Speaker 7: Yes, that's the idea of the Jasice Department. It would 454 00:25:27,560 --> 00:25:30,240 Speaker 7: separate these two things into two companies and they would 455 00:25:30,440 --> 00:25:31,760 Speaker 7: just go back to the way that they had done 456 00:25:31,800 --> 00:25:32,440 Speaker 7: business before. 457 00:25:32,560 --> 00:25:34,600 Speaker 5: Okay, we're going to watch and see how this develops. 458 00:25:34,760 --> 00:25:36,639 Speaker 5: Right along with you, Liah Thank you so much for 459 00:25:36,680 --> 00:25:37,119 Speaker 5: talking to it. 460 00:25:37,200 --> 00:25:38,080 Speaker 7: Thank you for having me. 461 00:25:38,400 --> 00:25:41,760 Speaker 5: Bloomberg News anti trust reporter Leah Eylan. And just ahead, 462 00:25:41,760 --> 00:25:44,280 Speaker 5: we're going to take a look at one major business 463 00:25:44,359 --> 00:25:46,800 Speaker 5: they haven't had to worry about anti trust issues at all. 464 00:25:46,960 --> 00:25:50,879 Speaker 5: That's the great American pastime of baseball. How did they 465 00:25:50,880 --> 00:25:53,800 Speaker 5: get past that? I'm Ami Morris in for Jin Grosso, 466 00:25:53,880 --> 00:25:54,919 Speaker 5: and this is Bloomberg. 467 00:26:01,720 --> 00:26:06,280 Speaker 2: You're listening to Bloomberg Law with June GROSSEO from Bloomberg Radio. 468 00:26:07,200 --> 00:26:07,879 Speaker 1: You're listening to. 469 00:26:07,880 --> 00:26:10,960 Speaker 5: The weekend edition of Bloomberg Law. I'm Amy Morris filling 470 00:26:10,960 --> 00:26:13,880 Speaker 5: in for June Grosso. June is off this week. Major 471 00:26:13,960 --> 00:26:18,000 Speaker 5: League Baseball is a massive organization and is exempt from 472 00:26:18,119 --> 00:26:21,800 Speaker 5: federal antitrust law. Now this week, the Supreme Court refused 473 00:26:21,800 --> 00:26:24,880 Speaker 5: to hear an appeal to challenge this long standing exemption. 474 00:26:25,440 --> 00:26:28,719 Speaker 5: Why the MLB Players Association is fighting to change it. 475 00:26:28,920 --> 00:26:30,600 Speaker 5: We get more on the history of this and why 476 00:26:30,600 --> 00:26:33,560 Speaker 5: the MLB Players Association is fighting to change it with 477 00:26:33,640 --> 00:26:37,120 Speaker 5: Martini Dell, co chair of Golston and Stores, Sports law 478 00:26:37,160 --> 00:26:41,560 Speaker 5: practice and adjunct professor at Columbia Law School. Okay, Martin, 479 00:26:41,560 --> 00:26:43,119 Speaker 5: thank you so much for joining us today. 480 00:26:43,840 --> 00:26:45,480 Speaker 6: Amy, thank you so much for having me. 481 00:26:46,119 --> 00:26:50,919 Speaker 5: The High Court called this exemption and aberration. It's clearly unusual. 482 00:26:51,520 --> 00:26:53,160 Speaker 5: Why is baseball so special? 483 00:26:54,440 --> 00:27:01,560 Speaker 3: Well, but spaceball is magical in many ways because it 484 00:27:01,680 --> 00:27:08,640 Speaker 3: stirs everyone's imagination. People from the farmlands joined baseball when 485 00:27:08,680 --> 00:27:12,320 Speaker 3: it first started. It became a path for immigrants to 486 00:27:13,040 --> 00:27:19,080 Speaker 3: become part of American society, and it's easy to understand 487 00:27:19,119 --> 00:27:22,880 Speaker 3: the basics, not the real strategy, but the basics. So 488 00:27:23,080 --> 00:27:27,000 Speaker 3: it tends to appeal to everyone. And in that way, 489 00:27:27,119 --> 00:27:32,200 Speaker 3: it is different than many sports, but the same as 490 00:27:32,240 --> 00:27:37,199 Speaker 3: many other sports, at least economically and perhaps legally, except 491 00:27:37,200 --> 00:27:38,400 Speaker 3: as we're about to get into. 492 00:27:38,640 --> 00:27:42,120 Speaker 5: Okay, let's talk about that. Why was this exemption created 493 00:27:42,240 --> 00:27:44,080 Speaker 5: for baseball in the first place. 494 00:27:44,440 --> 00:27:47,120 Speaker 3: You have to go back to nineteen twenty two when 495 00:27:47,160 --> 00:27:51,960 Speaker 3: the Supreme Court US Supreme Court first looked at baseball 496 00:27:52,040 --> 00:27:56,040 Speaker 3: and whether it was subject to the antitrust laws. Now 497 00:27:56,600 --> 00:28:00,600 Speaker 3: put yourself in the timeframe. In nineteen twenty two, the 498 00:28:00,720 --> 00:28:03,919 Speaker 3: GIS had just come back from World War One and 499 00:28:04,040 --> 00:28:08,400 Speaker 3: had lots of cash to spend, particularly on leisure topics. 500 00:28:09,359 --> 00:28:13,080 Speaker 3: You had a Supreme Court which had a very cramped 501 00:28:13,280 --> 00:28:19,760 Speaker 3: view of the Commerce clause, tending to restrict its availability, 502 00:28:20,920 --> 00:28:25,240 Speaker 3: and you had the Black Sox scandal by nineteen twenty two. 503 00:28:26,040 --> 00:28:29,920 Speaker 3: So you put these three things together. And the Supreme 504 00:28:29,960 --> 00:28:32,800 Speaker 3: Court looks at baseball in nineteen twenty two, and it 505 00:28:32,880 --> 00:28:37,080 Speaker 3: dealt with an ownership dispute at the time, and an 506 00:28:37,119 --> 00:28:40,640 Speaker 3: opinion written by none other than Oliver Wendell Holmes, one 507 00:28:40,680 --> 00:28:44,760 Speaker 3: of the great jurists on the Supreme Court, he decided 508 00:28:44,800 --> 00:28:48,240 Speaker 3: that baseball for the Court. He decided baseball was an 509 00:28:48,280 --> 00:28:53,480 Speaker 3: exhibition that was not involved in interstate commerce and therefore 510 00:28:53,760 --> 00:28:58,240 Speaker 3: was exempt from the antitrust laws because, as we know, 511 00:28:58,840 --> 00:29:03,240 Speaker 3: Congress gets its power to regulate from Article one, Section eight, 512 00:29:03,320 --> 00:29:07,040 Speaker 3: the Commerce clause. If you're not in commerce, Congress can't 513 00:29:07,120 --> 00:29:11,080 Speaker 3: regulate that type of activity. So that was the start 514 00:29:11,240 --> 00:29:15,880 Speaker 3: of the baseball exemption. I must say it made little 515 00:29:15,920 --> 00:29:18,560 Speaker 3: sense in nineteen twenty two, and as I'm sure we'll 516 00:29:18,560 --> 00:29:20,640 Speaker 3: get into, it makes even less sense one hundred and 517 00:29:20,680 --> 00:29:21,480 Speaker 3: four years later. 518 00:29:21,640 --> 00:29:24,000 Speaker 5: Well, I was going to say, maybe in nineteen twenty 519 00:29:24,000 --> 00:29:28,560 Speaker 5: two it wasn't interstate commerce, but today it's worldwide. It's 520 00:29:28,640 --> 00:29:34,520 Speaker 5: America's pastime. So how has it managed to survive any 521 00:29:34,600 --> 00:29:36,000 Speaker 5: challenges for these changes? 522 00:29:36,880 --> 00:29:39,360 Speaker 3: So what we've had is the Supreme Court has looked 523 00:29:39,360 --> 00:29:43,280 Speaker 3: at the baseball exemption two more times after nineteen twenty two, 524 00:29:43,760 --> 00:29:46,680 Speaker 3: once in nineteen fifty three in a case called Tulsen 525 00:29:46,720 --> 00:29:52,320 Speaker 3: against the New York Yankees, where mister Toulson was claiming 526 00:29:52,400 --> 00:29:56,240 Speaker 3: that something called the Baseball Reserve Clause was an anti 527 00:29:56,320 --> 00:30:01,160 Speaker 3: trust violation. It restricted players to particular teams and didn't 528 00:30:01,160 --> 00:30:03,840 Speaker 3: give them any mobility to move to another team, such 529 00:30:03,880 --> 00:30:07,600 Speaker 3: as we now see in free agency. And the Supreme 530 00:30:07,600 --> 00:30:12,920 Speaker 3: Court looked at this case six sentence decision. It was 531 00:30:12,960 --> 00:30:15,200 Speaker 3: called per cureum because it was by the Court no 532 00:30:15,320 --> 00:30:19,600 Speaker 3: individual author and in six sentences the Supreme Court said, 533 00:30:20,320 --> 00:30:25,560 Speaker 3: star a decisives, we had decided this thirty one years ago, 534 00:30:25,720 --> 00:30:28,800 Speaker 3: and therefore there's no reason to change. Congress could have 535 00:30:28,920 --> 00:30:34,080 Speaker 3: acted to eliminate the baseball exemption and did not do so. 536 00:30:34,080 --> 00:30:37,880 Speaker 3: So that's the end of it. Then in nineteen seventy 537 00:30:37,880 --> 00:30:40,520 Speaker 3: two we have Supreme Court looking at it again in 538 00:30:40,560 --> 00:30:44,200 Speaker 3: a case called Flood against Qune. This is sometimes referred 539 00:30:44,200 --> 00:30:47,840 Speaker 3: to as the Kurt Flood case. And what happened there 540 00:30:47,880 --> 00:30:50,920 Speaker 3: you now had a five to three decision by the 541 00:30:50,960 --> 00:30:56,920 Speaker 3: Supreme Court. The major decision was written by Justice Blackman. 542 00:30:57,760 --> 00:31:01,680 Speaker 3: For those who like elegance of language. The first third 543 00:31:01,720 --> 00:31:04,560 Speaker 3: of his decision is this great elegy to the game 544 00:31:04,600 --> 00:31:08,320 Speaker 3: of baseball. The second third of his decision is based 545 00:31:08,360 --> 00:31:12,640 Speaker 3: on Kurt Flood's outstanding statistics as a as the premier 546 00:31:12,760 --> 00:31:16,680 Speaker 3: center fielder of his time, and the third third of 547 00:31:16,760 --> 00:31:21,160 Speaker 3: his decision was, Hey, this is an aberration, but it's 548 00:31:21,240 --> 00:31:26,280 Speaker 3: our aberration. And while there's something to be said for consistency, 549 00:31:26,480 --> 00:31:31,880 Speaker 3: even when it's layered in inconsistencies, we're going to uphold 550 00:31:32,240 --> 00:31:37,360 Speaker 3: the baseball exemption. Congress hasn't stepped in. There's been what 551 00:31:37,400 --> 00:31:43,880 Speaker 3: the Court called positive inaction, and therefore baseball exemption stands 552 00:31:44,160 --> 00:31:48,280 Speaker 3: sounds quite Ralph Waldo Emersonian in its scope. 553 00:31:49,400 --> 00:31:52,840 Speaker 5: So it sounds like also because the Supreme Court opted 554 00:31:52,960 --> 00:31:55,440 Speaker 5: not to take up this case, that what did you 555 00:31:55,480 --> 00:32:01,000 Speaker 5: call it? The at the inaction positive inaction. Positive inaction 556 00:32:01,200 --> 00:32:03,280 Speaker 5: remains correct. 557 00:32:04,080 --> 00:32:07,440 Speaker 3: And since nineteen seventy two, we've seen a whole bunch 558 00:32:07,600 --> 00:32:12,440 Speaker 3: of developments. We've had on the congressional front. Congress in 559 00:32:12,600 --> 00:32:16,000 Speaker 3: nineteen because it's nineteen ninety seven or nineteen ninety eight, 560 00:32:16,480 --> 00:32:20,760 Speaker 3: passed something called the Kurt Flood Act. Unfortunately, Kurt Flood 561 00:32:20,800 --> 00:32:24,280 Speaker 3: had passed away before Congress enacted this and President Clinton 562 00:32:24,320 --> 00:32:30,160 Speaker 3: signed it into law that said that baseball players for 563 00:32:30,440 --> 00:32:34,320 Speaker 3: Major League Baseball had the right to sue under the 564 00:32:34,360 --> 00:32:37,760 Speaker 3: anti trust laws. Of course, by that time it didn't 565 00:32:37,800 --> 00:32:42,600 Speaker 3: matter much because baseball had developed a union, the Major 566 00:32:42,680 --> 00:32:46,680 Speaker 3: League Baseball Players Union and the Major League Baseball players 567 00:32:47,320 --> 00:32:51,760 Speaker 3: major League Baseball owners had negotiated a collective bargaining agreement. 568 00:32:52,320 --> 00:32:54,160 Speaker 6: Where you have a collective. 569 00:32:53,680 --> 00:32:57,080 Speaker 3: Bargaining agreement, the labor law takes precedence over the anti 570 00:32:57,160 --> 00:33:00,960 Speaker 3: trust laws, and so there is no such thing as 571 00:33:01,000 --> 00:33:05,760 Speaker 3: an antitrust violation for player disputes as long as there 572 00:33:05,840 --> 00:33:10,040 Speaker 3: is a collective bargaining relationship. So it was a stop 573 00:33:10,760 --> 00:33:16,840 Speaker 3: to unfortunately at that time the deceased mister Flood. But 574 00:33:17,000 --> 00:33:19,640 Speaker 3: it didn't matter much. You had a whole bunch of 575 00:33:20,040 --> 00:33:23,960 Speaker 3: lower court cases coming up challenging the scope of the 576 00:33:24,000 --> 00:33:28,640 Speaker 3: baseball exemption. Why, because this exemption did not apply to 577 00:33:28,760 --> 00:33:32,920 Speaker 3: any other sport. The Supreme Court and all lower courts 578 00:33:32,960 --> 00:33:39,320 Speaker 3: it held foot professional football, professional hockey, professional basketball, theatrical 579 00:33:39,520 --> 00:33:45,120 Speaker 3: exhibitions you named the type of entertainment form the Supreme 580 00:33:45,160 --> 00:33:47,800 Speaker 3: Court and the lower courts have held their subject to 581 00:33:47,840 --> 00:33:51,440 Speaker 3: the antitrust laws, not so for the great game of baseball. 582 00:33:51,480 --> 00:33:56,880 Speaker 3: So lower courts tried to limit the scope, and ultimately 583 00:33:57,040 --> 00:34:01,760 Speaker 3: they found that the circuit courts of a peaces did 584 00:34:01,800 --> 00:34:06,360 Speaker 3: not agree and held that baseball is subject to the 585 00:34:06,480 --> 00:34:09,800 Speaker 3: antitrust is not subject to the anti trust laws because 586 00:34:09,800 --> 00:34:10,480 Speaker 3: of the exemption. 587 00:34:11,200 --> 00:34:14,759 Speaker 5: So in this case, if this appeal had been successful, 588 00:34:15,040 --> 00:34:19,360 Speaker 5: how would that change major League Baseball, how we experience 589 00:34:19,440 --> 00:34:22,840 Speaker 5: it as fans, how it actually is run as an organization. 590 00:34:24,880 --> 00:34:28,560 Speaker 3: I think the answer is not much. So what we're 591 00:34:28,560 --> 00:34:32,360 Speaker 3: talking about is the Congray Harrow's decision that where the 592 00:34:32,360 --> 00:34:35,760 Speaker 3: Supreme Court last week last week earlier this week sorry 593 00:34:36,480 --> 00:34:40,680 Speaker 3: denied a petition for rid of cerchiary. What that affects 594 00:34:40,920 --> 00:34:45,120 Speaker 3: is not major League Baseball, but the minor leagues. This 595 00:34:45,200 --> 00:34:50,160 Speaker 3: involved Puerto Rican baseball leagues and were they subject to 596 00:34:50,200 --> 00:34:53,760 Speaker 3: the same baseball exemption where the players they are subject 597 00:34:53,840 --> 00:34:57,120 Speaker 3: to the same baseball exemption. The first Circuit Court of 598 00:34:57,160 --> 00:35:01,720 Speaker 3: Appeals held the baseball exemption apply and therefore it seemed 599 00:35:01,760 --> 00:35:05,320 Speaker 3: to expand it beyond the scope of what the Supreme 600 00:35:05,360 --> 00:35:09,520 Speaker 3: Court had held three times applied to Major League baseball, 601 00:35:09,600 --> 00:35:15,200 Speaker 3: So the effects would be two minor leagues, non sanctioned leagues. 602 00:35:16,000 --> 00:35:18,400 Speaker 3: And as I'm sure you're going to ask me, the 603 00:35:18,560 --> 00:35:20,560 Speaker 3: NCAA right exactly. 604 00:35:20,600 --> 00:35:23,640 Speaker 5: I was stopping other organizations like the NCAA because I 605 00:35:23,800 --> 00:35:27,759 Speaker 5: keep thinking about things like name and image and likeness 606 00:35:27,800 --> 00:35:30,840 Speaker 5: and the portal and how students are now able to 607 00:35:30,960 --> 00:35:34,480 Speaker 5: lobby for more money, which was unheard of back in 608 00:35:34,600 --> 00:35:38,120 Speaker 5: my day. So what's stopping other organizations like the NCAA 609 00:35:38,200 --> 00:35:40,280 Speaker 5: from lobbying for this type of an exemption? 610 00:35:41,280 --> 00:35:43,920 Speaker 6: So great question, and the answer is they are lobbying 611 00:35:44,400 --> 00:35:45,360 Speaker 6: for exemption. 612 00:35:47,200 --> 00:35:51,040 Speaker 3: I can't tell you every day, but the NCAA has 613 00:35:51,160 --> 00:35:54,640 Speaker 3: lobbyists who are going to Congress on a regular basis 614 00:35:55,160 --> 00:35:59,040 Speaker 3: and claiming that the NCAA should be exempt, at least 615 00:35:59,080 --> 00:36:01,719 Speaker 3: in some of its activities from the scope of the 616 00:36:01,760 --> 00:36:06,359 Speaker 3: anti trust laws. The principal reasons given by the NCAA 617 00:36:06,480 --> 00:36:11,759 Speaker 3: are one money and two money. And the reason for 618 00:36:11,840 --> 00:36:15,840 Speaker 3: this is anti trust laws are so anti trust lawsuits 619 00:36:15,880 --> 00:36:19,120 Speaker 3: are so expensive and take so much time and divert 620 00:36:19,280 --> 00:36:24,240 Speaker 3: energy that they in fact divert attention from the scope 621 00:36:24,280 --> 00:36:27,960 Speaker 3: of the activities that the parties want to engage in 622 00:36:28,560 --> 00:36:30,200 Speaker 3: and take on a life of their own. 623 00:36:31,600 --> 00:36:33,120 Speaker 1: How does that not apply to baseball? 624 00:36:33,120 --> 00:36:37,920 Speaker 6: Though it would but for these three Supreme Court. 625 00:36:37,719 --> 00:36:40,240 Speaker 1: Cans Okay, okay, okay. 626 00:36:40,280 --> 00:36:44,480 Speaker 5: So what happens now there have been challenges, they get 627 00:36:44,520 --> 00:36:47,880 Speaker 5: shot down, or they're not hurt at all. Is this 628 00:36:48,160 --> 00:36:52,360 Speaker 5: just the way it is? Baseball has this antitrust exemption. 629 00:36:53,520 --> 00:36:54,920 Speaker 6: So the answer is. 630 00:36:56,760 --> 00:37:03,399 Speaker 3: Yes and no. That's my legal and lawyerly type answer. Yes, 631 00:37:03,600 --> 00:37:06,920 Speaker 3: because we have three Supreme Court cases which uphold the 632 00:37:06,960 --> 00:37:11,560 Speaker 3: baseball exemption. Lower courts can't change that. What can change 633 00:37:11,600 --> 00:37:15,760 Speaker 3: that is Congress. If Congress wanted to jump into the fray, 634 00:37:16,000 --> 00:37:18,920 Speaker 3: and that's in effect why the NCAA is lobby in 635 00:37:18,960 --> 00:37:24,040 Speaker 3: Congress now it can create exemptions to the anti trust laws. 636 00:37:24,440 --> 00:37:29,520 Speaker 3: The antitrust laws are congressional laws, they're not constitutional laws, 637 00:37:29,640 --> 00:37:33,600 Speaker 3: and they can be changed by Congress or modified by Congress. 638 00:37:34,360 --> 00:37:38,880 Speaker 3: So that's one avenue. Another avenue would be if the 639 00:37:38,920 --> 00:37:40,920 Speaker 3: Supreme Court weighed. 640 00:37:40,719 --> 00:37:42,760 Speaker 6: In again, which doesn't look likely. 641 00:37:44,120 --> 00:37:49,080 Speaker 3: It's had ample opportunity over the last fifty four years 642 00:37:49,160 --> 00:37:52,759 Speaker 3: since the floodcase was decided and it's chosen not to 643 00:37:52,800 --> 00:37:56,800 Speaker 3: do so. So those are the two areas. A third 644 00:37:56,880 --> 00:38:02,960 Speaker 3: area may be private parties. If, for instance, Congrey Harrows 645 00:38:03,640 --> 00:38:09,640 Speaker 3: decided to develop a collective bargaining relationship with its players 646 00:38:10,480 --> 00:38:13,520 Speaker 3: and the players would unionize and then perhaps be subject 647 00:38:13,560 --> 00:38:17,080 Speaker 3: to the scope of the National Labor Relations Act, they 648 00:38:17,080 --> 00:38:20,840 Speaker 3: could then bargain without the sort of damocles of an 649 00:38:20,840 --> 00:38:24,040 Speaker 3: antitrust suit hanging over their heads because the anti trust 650 00:38:24,120 --> 00:38:27,520 Speaker 3: laws would be superseded by the collective bargaining relationship. 651 00:38:28,600 --> 00:38:30,239 Speaker 1: Marty, we're going to leave it there. Thank you so 652 00:38:30,320 --> 00:38:33,440 Speaker 1: much for taking the time with us. This is fascinating, Amy. 653 00:38:33,239 --> 00:38:36,120 Speaker 6: Thank you so much for having me. I've really enjoyed myself. 654 00:38:36,640 --> 00:38:39,360 Speaker 5: Marty Adell is co chair of Gulston and Stores Sports 655 00:38:39,440 --> 00:38:42,080 Speaker 5: Law Practice. And that does it for this edition of 656 00:38:42,120 --> 00:38:46,080 Speaker 5: Bloomberg Law. Subscribed to the Bloomberg Law podcast on Apple, Spotify, 657 00:38:46,320 --> 00:38:48,839 Speaker 5: or wherever you get your podcasts so you never miss 658 00:38:48,880 --> 00:38:52,000 Speaker 5: an episode. I'm Amy Morris in for June Grosso. This 659 00:38:52,200 --> 00:38:53,520 Speaker 5: is Bloomberg. Stay with us. 660 00:38:53,640 --> 00:38:55,320 Speaker 1: Today's top stories and global 661 00:38:55,320 --> 00:39:00,759 Speaker 5: Business headlines are coming up right now.