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Speaker 1: This is Bloomberg Law with June Brussel from Bloomberg Radio.

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Speaker 1: The Supreme Court is becoming a daunting obstacle for President

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Speaker 1: Biden's agenda. Without a working majority in a deeply divided Congress,

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Speaker 1: Biden has had to rely on administrative agencies to implement

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Speaker 1: his policy goals, and the conservative justices on the Court

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Speaker 1: are embracing a judge made Major Questions doctrine that signals

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Speaker 1: trouble ahead for broad assertions of agency power, including efforts

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Speaker 1: to address climate change. Joining me is Pat Parento, a

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Speaker 1: professor at the Vermont Law School. Is this court taking

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Speaker 1: aim at what's called the administrative state? Yes, that's what

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Speaker 1: the Major Questions doctrine that they've been invoking lately, like

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Speaker 1: in the Ocean case, is really all about. It's curtailing

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Speaker 1: the power of administrative agencies that the conservative justices are

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Speaker 1: at least skeptical of, if not outright hostile to. What

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Speaker 1: is the Major Questions doctrine? And when did it become doctrine?

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Speaker 1: Nobody knows exactly what the contours of the doctrine is.

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Speaker 1: The Court has actually never explained what it is, what

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Speaker 1: are its boundaries? Where it came from? You know. It

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Speaker 1: starts with the separation of powers concepts, where Congress is

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Speaker 1: the body that creates law, the agencies implement the law,

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Speaker 1: the courts say what the law is. That's the simplistic

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Speaker 1: sort of structure of our government. And the Conservative justices

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Speaker 1: are constantly limiting the power of agencies to act as

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Speaker 1: legislatures and sort of create law in their own rights.

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Speaker 1: That's what the concern is, the philosophical concern is, and

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Speaker 1: it manifests itself in this doctrine that they've created or

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Speaker 1: fiction really of the major question, which is any decision

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Speaker 1: or rule that has major economic and social consequences, whatever

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Speaker 1: that means, it should be subject to stricter scrutiny. And

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Speaker 1: the Court is saying, we want to see explicitly from

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Speaker 1: Congress a delegation of authority with limitations what they call

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Speaker 1: the limiting principles when they delegate authority to agencies. And

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Speaker 1: unless these Conservative justices are are satisfied that Congress has

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Speaker 1: deliberately intentionally given the agencies this much power and put

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Speaker 1: some limits on that power, then the courts are going

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Speaker 1: to step in and say the agencies do not have

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Speaker 1: that kind of authority. It's particularly true in cases like

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Speaker 1: this recent OSHA case, where you have an agency issuing

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Speaker 1: rules unlike rules they've issued in the past. So in

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Speaker 1: the Ocean case, of course, we're talking about COVID exposure

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Speaker 1: in the workplace. And even though no clearly COVID is

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Speaker 1: a danger in the workplace when people are closely packed together,

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Speaker 1: the conservative members of the Court said, yes, that's true,

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Speaker 1: but it's not limited to the workplace. It's general, it's

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Speaker 1: in the whole public, it's in all kinds of public spaces.

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Speaker 1: So we don't think Congress contemplated giving Ocean the power

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Speaker 1: to regulate a broad public health problem like the COVID

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Speaker 1: pandemic in the workplace. So that's an example, I guess

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Speaker 1: of where the conservative members of the Court are looking

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Speaker 1: for opportunities to rein in, as they see it, overreach

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Speaker 1: by the agencies. If you subscribe to that doctrine, does

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Speaker 1: that mean you believe that Congress is so smart and

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Speaker 1: intuitive that when they passed the laws they can anticipate

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Speaker 1: all the different problems that may come up, for example, COVID.

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Speaker 1: That is exactly the right question. It's totally unrealistic to

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Speaker 1: think that Congress could anticipate every permutation of a social issue,

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Speaker 1: a public health issue like COVID, or a public health

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Speaker 1: and safety issue like for example, climate change, which is

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Speaker 1: an impact on everything, and when Congress legislates, it does

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Speaker 1: so at a moment in time based on the information

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Speaker 1: that it has, trying to anticipate where things may go

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Speaker 1: and try to get ahead of problems that are affecting

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Speaker 1: public health and safety. But they can't possibly know all

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Speaker 1: the contours in different situations that may arise, or how

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Speaker 1: science may evolve to identify new threats. For example, we've

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Speaker 1: now discovered that these so called forever chemicals like PFAS

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Speaker 1: and pe FOA and probably hundreds more like them, pose

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Speaker 1: actual serious public health threats to people, even though these

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Speaker 1: chemicals are found in everyday products including pizza boxes and

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Speaker 1: of course firefighting FALM catalon uh in your kitchen. And

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Speaker 1: now we understand that at very low levels in the

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Speaker 1: parts per trillion, these kinds of chemicals, which are very persistent,

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Speaker 1: don't break down and can cause different kinds of health effects,

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Speaker 1: including cancer for some of them. Now we find after

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Speaker 1: the fact that they're a real serious problem. They're contaminating

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Speaker 1: water supplies around the country, and so now e p

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Speaker 1: A of course, is beginning to address that. But that's

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Speaker 1: something that Congress couldn't have foreseen when it was passing

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Speaker 1: laws in the nineteen seventies dealing with toxic substances. They

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Speaker 1: have to give these expert agencies the discretion and the

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Speaker 1: authority to go out and investigate problems and when they

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Speaker 1: find them, deal with them. You can't be running back

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Speaker 1: to Congress every single time you find a new chemical

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Speaker 1: on the market that poses a threat. That would cause

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Speaker 1: the whole process to break down. So this Major Questions

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Speaker 1: doctrine is built on a false premise that Congress could

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Speaker 1: in fact understand what the threats are and specifically identify

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Speaker 1: them when they give the agency's power to address them.

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Speaker 1: Pat Even with the second vaccine mandate that the Supreme

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Speaker 1: Court considered, where it was a healthcare vaccination rule issued

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Speaker 1: by the centers from Medicare and Medicaid Services to protect

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Speaker 1: the health and safety of Medicaid and Medicare recipients, even there,

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Speaker 1: four justices thought that that agency didn't have the power

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Speaker 1: to protect those patients, right, And that's very true of

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Speaker 1: ep A. You know, EPA has this incredible array of

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Speaker 1: statutory authority in in mandates, really to address these problems.

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Speaker 1: And so you know e p A over now going

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Speaker 1: on fifty years um has um excuse me, accumulated um

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Speaker 1: expertise um to address these these issues. And you know

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Speaker 1: the fact that that the fine grain details of which

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Speaker 1: type of regulation should be used to address which kind

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Speaker 1: of problem. Again, that that is really not something that

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Speaker 1: members of Congress who are generalists, they're not experts. I mean,

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Speaker 1: they may have some specific expertise in certain areas, but

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Speaker 1: they certainly don't have the kind of expertise that an

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Speaker 1: agency like e p A has accumulated with seventeen thousand

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Speaker 1: people on the payroll and twenty tho contractors that they

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Speaker 1: do a contract with to do investigation. You know, that

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Speaker 1: kind of capacity institutional ability to deal with these issues

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Speaker 1: and design regulations appropriately to to address them in the

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Speaker 1: probably in the most efficient and cost effective way you can.

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Speaker 1: You know, again, that's not something Congress is even capable

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Speaker 1: of doing. So there has to be some level of

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Speaker 1: trust that when Congress authorizes agencies to act, the agents

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Speaker 1: these will act in an appropriate way. And of course

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Speaker 1: the courts are always there to police what the agencies

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Speaker 1: are doing, and if they find that an agency has

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Speaker 1: really gone, uh, you know, in an unreasonable way. Um,

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Speaker 1: they can correct that. So that's the way the system

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Speaker 1: really was designed, with checks and balances. It's worked pretty well.

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Speaker 1: And you know, the Supreme Court to arrogate to itself

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Speaker 1: the decision about what how a statute should be interpreted,

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Speaker 1: and and and whether Congress has been clear enough in

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Speaker 1: its directions to the agency. There's some room for the

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Speaker 1: Court to to you know, look at those questions, but

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Speaker 1: to arrogate to themselves the decision that no OSHA does

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Speaker 1: not have the authority to address a public health crisis

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Speaker 1: that is unmistakable across the country. You know, that's going

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Speaker 1: too far. I think that's the Court becoming an activist

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Speaker 1: court and a court of you know, not last resort,

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Speaker 1: but first resort, saying we're going to decide how much

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Speaker 1: power these agencies have. So tell us about the case

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Speaker 1: of West Virginia v. E. P A. That's coming up

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Speaker 1: next month, right, So this is the case involving regulation

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Speaker 1: of carbon dioxide and other greenhouse gas emissions from power plants,

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Speaker 1: primarily of course, coal fired power plants. Gas fired plants

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Speaker 1: don't have nearly the same problem as coal fired plants

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Speaker 1: at least at the combustion stage of greenhouse gas emissions. So,

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Speaker 1: you know, coal fired power plants are the single largest

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Speaker 1: industrial source of these emissions that we have to bring

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Speaker 1: under control if we're going to deal with the climate crisis.

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Speaker 1: And UM, it's been a subject of course of of

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Speaker 1: of vigorous debate and controversy. The state of West Virginia

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Speaker 1: and their Attorney General, Trick Morrissey, you know, has been

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Speaker 1: the has spearhead of the effort to prevent e p

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Speaker 1: A from requiring sort of more I guess it's say

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Speaker 1: aggressive measures to reduce emissions from these plants, including switching

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Speaker 1: from coal to gas or switching from gas or coal

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Speaker 1: to renewables. UM. And in e p A's Clean Power

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Speaker 1: Plant Under the Obama administration, it did propose a rule

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Speaker 1: it's called guidance, but it has the force of a

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Speaker 1: rule UM that would would gave gave the states some

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Speaker 1: flexibility in bringing these emissions down. But it clearly identified

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Speaker 1: what we call generation shifting as a major strategy. And

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Speaker 1: it's that generation shifting approach to reducing emissions that West

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Speaker 1: Virginia and many other states who happened to be Republican

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Speaker 1: dominated controlled states are bringing to the super in court.

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Speaker 1: So it comes down to this question again, did Congress

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Speaker 1: in the Clean Air Act specifically authorized e p A

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Speaker 1: to use these these more novel or there's not so

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Speaker 1: much novel, but more aggressive measures to reduce emissions from

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Speaker 1: power plants, not just generation shifting, but also things like

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Speaker 1: emissions trading, which, of course we have used for years

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Speaker 1: to address things like acid rain, which is a long

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Speaker 1: range transport problem you know, comes from far away sources

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Speaker 1: and causes problems to forests and and and lakes and

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Speaker 1: streams um from power plants located far from the places

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Speaker 1: where they're impacting those resources. And e p A for

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Speaker 1: a long time has designed in a variety of ways.

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Speaker 1: Small is another one where you have ozone pollution, small

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Speaker 1: pollution that travels across many state lines. E PA came

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Speaker 1: up with an emiss trading program to cost effectively reduce

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Speaker 1: these emissions by saying, will over control emissions at one

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Speaker 1: source to allow another source to continue to admit, and

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Speaker 1: by doing that, we'll find the most cost effective or

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Speaker 1: cheapest way to reduce those emissions. And they've been very

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Speaker 1: successful with that kind of an approach. So the West

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Speaker 1: Virginia case is now asked the Supreme Court to rule

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Speaker 1: those kinds of approaches out to say that e p

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Speaker 1: A doesn't have the authority to consider generation shifting from

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Speaker 1: calls to cleaner sources of energy, doesn't have the authority

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Speaker 1: to use cap and trade mechanisms to you to look

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Speaker 1: at an entire region, let's say, of the country and

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Speaker 1: find the most cost effective ways to reduce emissions. West

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Speaker 1: Virginia is arguing the only authority e p A has

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Speaker 1: is to regulate at the source or as they put it,

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Speaker 1: within the fence line of the individual facilities, and that

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Speaker 1: will greatly constrain e PAS ability to make a meaningful

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Speaker 1: reduction in these emissions if the Court were to accept that. So,

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Speaker 1: if the Court follows the same reasoning that it did

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Speaker 1: in the Osha case, is it likely to rule against

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Speaker 1: the e p A. Then a lot of commentators believe

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Speaker 1: that is the case. I think that Osha case is

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Speaker 1: distinguishable primarily because e p A has historically regulated power

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Speaker 1: plants from day one the Clean Air Act was passed

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Speaker 1: in e p A has been regulating these plants for

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Speaker 1: all kinds of emissions for fifty years, and they've done it,

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Speaker 1: as I say, with a variety of tools. Sometimes it's

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Speaker 1: what we call end of stack or top of stack

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Speaker 1: controls like scrubbers. Sometimes it's with emissions trading and cap

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Speaker 1: and trade. Sometimes it's with efficiency measures they've used, in

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Speaker 1: other words, all the tools in the toolbox. But they've

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Speaker 1: been regular lading power plants forever and and and this

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Speaker 1: is a category of industries is probably the most heavily

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Speaker 1: regulated industry in the country. So it's not like OCEHA,

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Speaker 1: you know, importing let's say a new concern about a

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Speaker 1: general public health threat like the COVID pandemic into the workplace.

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Speaker 1: It's quite the contract cut. To the contrary, this is

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Speaker 1: e p A, you know, regulating an industrial source. That's

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Speaker 1: that it's always regulated, and that it's always regulated in

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Speaker 1: different ways. Whether that will persuade the conservative members of

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Speaker 1: the court is not only an open question, it's probably

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Speaker 1: a hard sell because there's no way that this the

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Speaker 1: Court took this case with the idea that they were

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Speaker 1: going to validate the approach that the Obama administration was

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Speaker 1: taking with the Clean power plant. That seems pretty clear

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Speaker 1: the Clean Power Plan would never survive scrutiny by this court.

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Speaker 1: But the interesting thing about the West Virginia cases. Of course,

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Speaker 1: the court is that getting ahead of the agency. E

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Speaker 1: p A hasn't proposed any rule for how they're going

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Speaker 1: to regulate power plants. They've expressly said they are not

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Speaker 1: going to reinstitute the Clean Power Plan, but they haven't

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Speaker 1: said what they are what e p A is going

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Speaker 1: to do. So you have the court getting out in

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Speaker 1: front of the agency in this case, which is highly unusual, um,

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Speaker 1: I would say unprecedented in fact um. Usually the court

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Speaker 1: is supposed to be reviewing final agency actions. There is

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Speaker 1: no final agency action to review here, which leads everyone

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Speaker 1: to believe that the court must be contemplating an interpretation

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Speaker 1: of the Clean Air Act that's designed to pre empt

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Speaker 1: e p A thinking or discretion to frame a new rule.

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Speaker 1: That very unusual, and it will be something to see

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Speaker 1: if the Court actually does something like that. In other words,

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Speaker 1: says e p A, as you're engaging in this rulemaking,

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Speaker 1: here are the boundaries that we will allow you to consider.

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Speaker 1: That that's really unprecedented in our jurisprudence. We'll find out

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Speaker 1: more next month when the justices here arguments in that case.

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Speaker 1: Thanks so much, Pat, that's Professor Pat Parento of the

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Speaker 1: Vermont Law School. President Joe Biden's anti trust regime is

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Speaker 1: facing its first big test of the year. Microsoft six

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Speaker 1: billion dollar all cash take over of Activision Blizzard brings

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Speaker 1: together two major gaming platforms in a deal that directly

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Speaker 1: affects consumers. The agreement is likely to get an extensive

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Speaker 1: review by the FTC or the Justice Department. The two

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Speaker 1: anti trust regulators that have announced they're ready to increase

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Speaker 1: their scrutiny of deals in general. Joining me is Jennifer

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Speaker 1: Ree Bloomberg Intelligence, senior litigation analysts US anti trust enforcers

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Speaker 1: announced an effort to toughen merger review. Was this expected?

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Speaker 1: Oh yes, I think that this has been a long

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Speaker 1: time coming. Um, you know, there's just been chattering the

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Speaker 1: industry for for several years now. And when I say

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Speaker 1: the industry, I mean like academics and economists and stakeholders

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Speaker 1: in the anti trust world that anti trust enforcement over

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Speaker 1: time has become too lax. Now now that's not you know,

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Speaker 1: the majority of you necessarily, but there's a strong view

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Speaker 1: out there in the industry that for whatever reason, you know,

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Speaker 1: whether it's been a failure of enforcement by the Department

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Speaker 1: of Justice or FTC, or whether it's been difficulty in

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Speaker 1: the courts to get those decisions and set you know,

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Speaker 1: precedent that's helpful for future cases that for whatever reason,

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Speaker 1: enforcement has become two lax. And I think one of

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Speaker 1: the missions of President Biden when he came in and

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Speaker 1: the anti trust enforcers said he has appointed, has been

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Speaker 1: to deal with this and to figure out whether in

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Speaker 1: fact it has and two lacks and what needs to

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Speaker 1: be done about it and to try to tighten it up.

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Speaker 1: So they had this press conference. Did they explain what

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Speaker 1: they're looking to do? They did so. The press conference

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Speaker 1: was targeted to what are called the Horizontal Murder Guidelines.

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Speaker 1: Now there are two different guidelines called the Horizontal Murder

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Speaker 1: Guidelines and the Vertical Murder Guidelines, and they are used

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Speaker 1: by the agencies to give them sort of a step

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Speaker 1: by step framework by which to analyze the deals that

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Speaker 1: come before them and get reviewed. You know, they basically say,

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Speaker 1: you know, here's what you should be looking for or

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Speaker 1: how you should be conducting a review of these deals

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Speaker 1: to determine whether they may harm competition and and essentially

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Speaker 1: create a monopoly or violate the law. So it's these

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Speaker 1: guidelines that have been followed now for several years. The

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Speaker 1: horizontal guidelines were last updated in two thousand ten. The

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Speaker 1: vertical guidelines were actually updated not very long ago during

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Speaker 1: the Trump administration, but that update was then rescinded by

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Speaker 1: the current Federal Trade Commission, which now is has no

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Speaker 1: vertical guidelines. The Department of Justice still has the old ones.

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Speaker 1: And essentially what they're asking is whether or not it's

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Speaker 1: time to update both sets of guidelines. And when I

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Speaker 1: say horizontal and vertical, horizontal meaning they provide a framework

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Speaker 1: for assessing deals where the companies are direct horizontal competitors,

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Speaker 1: they both basically compete to offer the same product or service.

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Speaker 1: The vertical guidelines are targeted to mergers that result in

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Speaker 1: vertical integration. So in other words, like a distributor buying

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Speaker 1: a supplier UM or a manufacturer buying a distribute or

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Speaker 1: something like that, they're operating at different levels of the

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Speaker 1: supply chain in the same industry UM and that these

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Speaker 1: deals tend to tend to be different and they're analyzed differently.

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Speaker 1: So we've had these two sets of guidelines UM and

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Speaker 1: what they're asking is whether they should be put together. Uh.

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Speaker 1: In in the press conference, they said, you know, maybe

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Speaker 1: one option would be putting vertical and horizontal merger guidelines

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Speaker 1: together and just having a set of merger guide ns

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Speaker 1: UM and whether or not they all need to be

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Speaker 1: updated to better reflect you know, the current economy, you know,

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Speaker 1: the digital markets that we live with today. Um, you know,

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Speaker 1: how we assess these deals and whether we're appropriately catching

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Speaker 1: the deals that we should that potentially violate the antitrust laws.

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Speaker 1: Are the tech giants at risk? Is one particular sector

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Speaker 1: more at risk than others? I think probably big tech,

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Speaker 1: I'll say, is slightly more at risk, although because some

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Speaker 1: of the changes that they're thinking about are looking at

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Speaker 1: are directed toward elements of the economy that really only

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Speaker 1: applied to big tech, like data aggregation or uh the

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Speaker 1: acquisition of a nascent startup competitor. But these are guidelines

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Speaker 1: that apply to all mergers across the board, you know,

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Speaker 1: So whatever the new guidelines are, they'll apply to every

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Speaker 1: deal that's out there. So I wouldn't say that it's

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Speaker 1: particularly you know, targeted toward big tech, But I do

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Speaker 1: think that some of the concepts that they're thinking about

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Speaker 1: in rewriting these are focused on looking at the power

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Speaker 1: that's been amassed by big tech and asking how did

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Speaker 1: they get there? So how long would it take to

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Speaker 1: revamp the rules and go through the approval process, the

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Speaker 1: comment period, Yeah, it takes a long time. Now they're

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Speaker 1: targeting to have new guidelines released before the end of

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Speaker 1: two thousand twenty two. I don't know if they'll make it.

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Speaker 1: I think they could though. Um. They first have put

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Speaker 1: out what's called a request for information, where they're asking anybody,

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Speaker 1: you know, economists, academics and lawyers, farmers, ranchers, consumers, anybody

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Speaker 1: to provide any input that they want to in response

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Speaker 1: to this request for information. They've kind of laid out

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Speaker 1: a list of questions and things they're thinking about and

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Speaker 1: in areas where they'd like input, and they'll collect all

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Speaker 1: of those up through March. Uh. They'll review all those

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Speaker 1: and based on that review in their own internal studies,

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Speaker 1: they'll put together sort of a draft set, and then

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Speaker 1: that draft set will go out to the public and

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Speaker 1: that will probably be quite a few months after they've

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Speaker 1: collected those comments, and then there's a new comment period

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Speaker 1: that opens where people, consumers, anybody out there can then

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Speaker 1: provide comments to the draft set, and based on those comments,

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Speaker 1: that draft gets tweaked and then you have a final

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Speaker 1: and that's what they're targeting to have out by the

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Speaker 1: end of the year. So in the midst of this

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Speaker 1: comes Microsoft billion dollar all cash takeover of Activision. Blizzard

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Speaker 1: tell us about that deal. Yeah, you know, it's it's

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Speaker 1: a sad thing for Microsoft as the deal was announced

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Speaker 1: and simultaneously they've heard that the rules of the road

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Speaker 1: are getting changed. So you know, I would say about

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Speaker 1: that deal that in the olden days, maybe five years ago,

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Speaker 1: it's one of those deals that we wouldn't even really blink.

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Speaker 1: We'd say, this really isn't a problematic deal. Um, it

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Speaker 1: has both horizontal and vertical aspects. We they do compete

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Speaker 1: both companies in developing and publishing games, and then Micro

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Speaker 1: offt also compete further downstream from that in the distribution

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Speaker 1: of games and operating a storefront on its Xbox, which

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Speaker 1: is a console to play digital games. So it has

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Speaker 1: that vertical aspect. Also, the horizontal aspect is really not problematic.

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Speaker 1: You know, Microsoft is very small in the scheme of

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Speaker 1: things in a pretty fragmented in competitive market for game development,

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Speaker 1: and Activision actually is too. You know, we don't know

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Speaker 1: what the market shairs are combined in just the US market,

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Speaker 1: but globally combined, they'd have about ten or eleven percent,

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Speaker 1: which is just not usually, you know, a level of

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Speaker 1: market share that raises concerns. On the vertical side, I'll

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Speaker 1: say ordinarily years ago we wouldn't have had concerns either.

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Speaker 1: But that's where I think things are changing and where

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Speaker 1: these rules of the road may change. There has been

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Speaker 1: really a lot of changes with the way we think

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Speaker 1: about the potential harm that can be caused by vertical

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Speaker 1: integration in the last couple of years. And these agencies

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Speaker 1: are particularly cognizant of those sorts of the So they

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Speaker 1: will be looking at whether or not there could be

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Speaker 1: harm from the market caused by Microsoft foreclosing its rivals

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Speaker 1: in the distribution in that console world of games, by

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Speaker 1: keeping the popular activision games or all the activision games

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Speaker 1: from its rivals in order to harm its rivals and

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Speaker 1: boost its own business. And and they'll be looking at that,

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Speaker 1: and they'll have to determine whether Microsoft has the incentive

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Speaker 1: and the ability to do that economic intentive does it

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Speaker 1: doesn't make sense for Microsoft ultimately to do that in

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Speaker 1: an economic sense. Now, now those of that's the way

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Speaker 1: it would be looked at today. We don't know how

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Speaker 1: those rules are going to change. So with these new guidelines,

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Speaker 1: there might be something that UH impacts this deal more

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Speaker 1: so than we understand it to be impacted today. Normally

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Speaker 1: you'd ask in a vertical deal whether there's market power

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Speaker 1: upstream or downstream, And in this case, I don't think

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Speaker 1: there's market power either in the distribution and or in

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Speaker 1: the development and publication end of games. But and ordinarily

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Speaker 1: that probably wouldn't have succeeded in the court challenge. But

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Speaker 1: we don't know how these guidelines might change, and we

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Speaker 1: don't know how that might influence a judge down the

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Speaker 1: road if a challenge were to be brought. So I

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Speaker 1: think it's an interesting time from Microsoft UM, and I

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Speaker 1: think that they're going to get in depth scrutiny of

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Speaker 1: this deal, and I think it's even possible they could

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Speaker 1: face the challenge at the end of that road. UM.

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Speaker 1: As things stand today, I wouldn't see that challenge having

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Speaker 1: a great chance of success in court. But as I said,

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Speaker 1: things could change, The rules of the road could change,

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Speaker 1: and the judge could take that into account. And these

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Speaker 1: guidelines are not binding on the court They're just meant

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Speaker 1: to be guidelines, but they are often cited as persuasive.

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Speaker 1: They are often followed by judges. So it would remain

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Speaker 1: to be seen how a judge would treat the situation

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Speaker 1: where they might have a new set of guidelines that

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Speaker 1: say something different than the old ones, but precedent that

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Speaker 1: that have you know, Struck granted clearance for similar deals

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Speaker 1: in the past, I say, like a T and T

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Speaker 1: time warner, which probably would be a kind of a

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Speaker 1: similar case in court. Has Microsoft drawn less scrutiny than

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Speaker 1: the other tech giants since it was sued by the

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Speaker 1: Justice Department two decades ago? You don't hear about Microsoft

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Speaker 1: as much. You don't, and I definitely think if it

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Speaker 1: hasn't been the focus, it hasn't been talked about or

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Speaker 1: as much of a focus of criticism for antitrust conduct

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Speaker 1: as much as Google, Amazon, Apple and Facebook has. But

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Speaker 1: remember that, you know, as you pointed out, Microsoft got

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Speaker 1: in a lot of trouble years ago, went through a long,

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Speaker 1: long period of scrutiny, you know, a court battle that

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Speaker 1: they essentially lost, even though they ultimately weren't broken up,

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Speaker 1: and they had to be that they were operating under

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Speaker 1: constraints for many years after that, because they entered a

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Speaker 1: consent agreement agreeing to behave in certain ways. So they

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Speaker 1: were operating under that content agreement for many years, which

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Speaker 1: basically prevented them from an engaging in the kind of

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Speaker 1: anti competitive conducts some of these other platforms are now

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Speaker 1: accused of engaging it. So they really had to mind

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Speaker 1: their peace and cues, and they did, and and that

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Speaker 1: kind of kept them out of the spotlight, the antitrust spotlight.

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Speaker 1: But there is there a chance that other countries, the

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Speaker 1: EU or China will be reviewing this deal as well. Yeah,

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Speaker 1: I am fairly certain the EU will be. I haven't

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Speaker 1: looked at the at the UM data yet to understand

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Speaker 1: whether there would be a review in China, although I

435
00:27:30,880 --> 00:27:33,399
Speaker 1: think that there probably could be. I don't think that

436
00:27:33,520 --> 00:27:37,719
Speaker 1: there would be as much concern coming out of EU

437
00:27:37,960 --> 00:27:40,800
Speaker 1: or China on this deal. You know, the EU recently

438
00:27:40,840 --> 00:27:46,320
Speaker 1: cleared microsoft acquisition of another game company called Xenomax, which,

439
00:27:46,560 --> 00:27:50,280
Speaker 1: like Activision, smaller than Activision, but like Activision, also developed

440
00:27:50,320 --> 00:27:53,720
Speaker 1: and published games, and the European Commission published a pretty

441
00:27:53,760 --> 00:27:57,399
Speaker 1: lengthy opinion on you know, how they cleared that and

442
00:27:57,440 --> 00:27:59,480
Speaker 1: decided it what wouldn't cost harm, and a lot of

443
00:27:59,480 --> 00:28:02,080
Speaker 1: the principle that they talked about in that decision would

444
00:28:02,119 --> 00:28:05,119
Speaker 1: apply to this matter as well. Although I'll say that

445
00:28:05,200 --> 00:28:08,439
Speaker 1: the European Commission and the current antitrust agencies in the

446
00:28:08,560 --> 00:28:12,879
Speaker 1: US have been very aligned communicating a lot cooperating a

447
00:28:12,880 --> 00:28:16,000
Speaker 1: lot in the last year UH, and they probably aligned

448
00:28:16,000 --> 00:28:20,040
Speaker 1: on this deal to share information, share analysis, discussed the

449
00:28:20,080 --> 00:28:24,280
Speaker 1: deal and probably beyond the same page and activision has

450
00:28:24,359 --> 00:28:29,200
Speaker 1: been shrouded in controversy since last July after a California

451
00:28:29,280 --> 00:28:34,119
Speaker 1: state agency filed UH sexual bias lawsuit against it. Microsoft

452
00:28:34,160 --> 00:28:39,120
Speaker 1: will be taking over all those lawsuits, I assume, you know,

453
00:28:39,200 --> 00:28:45,160
Speaker 1: probably it's these contingencies like that legal overhangs that that

454
00:28:45,200 --> 00:28:47,960
Speaker 1: an acquired company has at the time of acquisition. Is

455
00:28:48,000 --> 00:28:51,160
Speaker 1: the separate negotiation between them, and you know, either the

456
00:28:51,200 --> 00:28:53,520
Speaker 1: buyer takes on the liability for that or they don't.

457
00:28:53,560 --> 00:28:56,840
Speaker 1: I think in this case, Microsoft probably agreed to take

458
00:28:56,920 --> 00:28:59,920
Speaker 1: on those legal legal problems. Do we know if the

459
00:29:00,240 --> 00:29:02,120
Speaker 1: FTC or the Justice Department who is going to do

460
00:29:02,160 --> 00:29:05,960
Speaker 1: the inquiry? You know, we don't, And there's a possibility

461
00:29:05,960 --> 00:29:08,040
Speaker 1: there could be a turf war on this one. You know,

462
00:29:08,120 --> 00:29:12,080
Speaker 1: there's no clear reviewer, and they both may be interested.

463
00:29:12,240 --> 00:29:16,440
Speaker 1: The d J obviously usually tends to take on matters

464
00:29:16,480 --> 00:29:21,120
Speaker 1: that concern Microsoft. They also tend to have industry expertise

465
00:29:21,320 --> 00:29:24,280
Speaker 1: for deals that are in the Internet industry or in software.

466
00:29:24,600 --> 00:29:27,760
Speaker 1: But the FTC, on the other hand, generally has industry

467
00:29:27,880 --> 00:29:31,720
Speaker 1: expertise in hardware matters. UM may be very interested in

468
00:29:31,760 --> 00:29:34,120
Speaker 1: this case. So it's going to be a situation where

469
00:29:34,120 --> 00:29:35,680
Speaker 1: they're going to have to discuss it. I mean, that's

470
00:29:35,720 --> 00:29:38,640
Speaker 1: what they do when there's kind of no clear UM

471
00:29:38,840 --> 00:29:41,479
Speaker 1: agency to take on responsibility for a deal, they just

472
00:29:41,480 --> 00:29:44,320
Speaker 1: communicate with one another and flip a coin at the

473
00:29:44,360 --> 00:29:46,640
Speaker 1: end of the day if they have to. Thanks jen

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00:29:47,120 --> 00:29:51,520
Speaker 1: that's Bloomberg Intelligence Senior litigation analyst, Jennifer Ree. And that's

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00:29:51,560 --> 00:29:54,200
Speaker 1: it for this edition of The Bloomberg Law Show. Remember

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00:29:54,240 --> 00:29:56,280
Speaker 1: you can always get the latest legal news on our

477
00:29:56,320 --> 00:30:00,440
Speaker 1: Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,

478
00:30:00,680 --> 00:30:05,680
Speaker 1: and at www dot Bloomberg dot com, slash podcast Slash Law,

479
00:30:06,120 --> 00:30:08,719
Speaker 1: and remember to tune into The Bloomberg Law Show every

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00:30:08,760 --> 00:30:12,200
Speaker 1: week night at ten pm Wall Street Time. I'm June

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00:30:12,200 --> 00:30:14,400
Speaker 1: Grosso and you're listening to Bloomberg,