WEBVTT - Will Music Streaming be the Next Anti-Trust Battle

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcast. Anti trust law

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<v Speaker 1>seems to be all the rage lately, from Senator Elizabeth

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<v Speaker 1>Warren suggesting a breakup of the tech giants to the

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<v Speaker 1>aggressive move by the European Union's anti competition Authority, and

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<v Speaker 1>we'll muse e streaming be the next high profile anti

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<v Speaker 1>trust battle. Here to tell us all, and I'm going

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<v Speaker 1>to call this an antitrust roundup. Is Bloomberg Intelligence Senior

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<v Speaker 1>litigation analyst Jennifer ree So Jen. This week, EU Competition

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<v Speaker 1>Commissioner margrethe f Sayer played down reports that they're poised

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<v Speaker 1>to open a formal investigation into Apple. Tell us about

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<v Speaker 1>what's happening. Well, you know, I think before they make

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<v Speaker 1>an official announcement, she has to do that right because

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<v Speaker 1>what they're doing, in what they plan on doing, is confidential.

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<v Speaker 1>But if they do open a formal investigation, she will

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<v Speaker 1>say something or the commission will say something. Spotify has

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<v Speaker 1>complained to them. They did this in March. And what

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<v Speaker 1>they really object to is that they call Apple a

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<v Speaker 1>player and a referee, and they say it's not fair.

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<v Speaker 1>They have market power, they claim, in the app Store,

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<v Speaker 1>and they participate in the App Store and in particular

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<v Speaker 1>competing with Spotify with streaming music. Right, you can have

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<v Speaker 1>a subscription to Spotify to stream music. You can have

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<v Speaker 1>a subscription to Apple Music to stream music. And what

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<v Speaker 1>Spotify says is since they started that business, they have

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<v Speaker 1>been taking measures to disadvantage Spotify and discriminate against Spotify

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<v Speaker 1>to their own benefit. And that's what they object to.

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<v Speaker 1>And does it seem as if the EU is going

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<v Speaker 1>to look into it? I would suspect they will. And

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<v Speaker 1>I say, you know, this is very much like the

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<v Speaker 1>Amazon shopping case. They find Amazon a few years I'm

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<v Speaker 1>sorry Google, What am I saying? Amazon's next? That's coming

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<v Speaker 1>the Google? When they find Google because they were moving

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<v Speaker 1>their own shopping comparison services up in a in a

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<v Speaker 1>search above their competitors, and Google that in trouble for

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<v Speaker 1>that they find them a few years ago. This is

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<v Speaker 1>very similar, right, where a company is providing the platform

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<v Speaker 1>and then also participating in that platform against its rivals

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<v Speaker 1>and disadvantaging its rivals. So I think they will have

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<v Speaker 1>a lot of interest in looking into this and a

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<v Speaker 1>very serious in the EU, and she is very serious,

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<v Speaker 1>she is. So Now, from music to pharmacy is not

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<v Speaker 1>a great segue, but the Justice Department had agreed to

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<v Speaker 1>approve the merger of CVS, one of the nation's largest

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<v Speaker 1>pharmacy service providers, and health insurance giant Etna, and the

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<v Speaker 1>deal closed in November. It was approved by Justice. That's right.

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<v Speaker 1>So what's happening now? You know, this in the antitrust

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<v Speaker 1>world has so much buzz because what is happening is

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<v Speaker 1>so odd and unprecedented. When the Department of Justice settles

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<v Speaker 1>a merger investigation like they did with CVS Etna, which

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<v Speaker 1>was requiring the companies to divest a Medicare part D

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<v Speaker 1>business of Etna because they had an overlap of horizontal

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<v Speaker 1>overlap there, they sign what's called the consent order, and

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<v Speaker 1>that consent order, by law, needs to be signed off

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<v Speaker 1>on by a judge. It's called a Tunny Act procedure.

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<v Speaker 1>And in the past this has really been kind of

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<v Speaker 1>proform of the judge takes it. They may ask some

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<v Speaker 1>questions about the settlement, about whether the remedy will fix

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<v Speaker 1>the harm that the DJ is alleged could have occurred,

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<v Speaker 1>and then they sign off will Lo and beholder before

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<v Speaker 1>Judge Leon, the same judge that oversaw the A. T

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<v Speaker 1>and T Time Warner merger trial, and he said, well,

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<v Speaker 1>hold on a minute, now, I'm not just signing this.

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<v Speaker 1>I'm not just signing on the dotted line. My job

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<v Speaker 1>is to look at this and make sure that this

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<v Speaker 1>is appropriate. Now that's where the disagreement lies. The d

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<v Speaker 1>o J would say, yes, you're just meant to look

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<v Speaker 1>at it and ask whether our settlement fixes the harm

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<v Speaker 1>we allege and our complaint. And he's kind of second

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<v Speaker 1>second guessing the whole entire thing, whether the determination of

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<v Speaker 1>harm was the proper determination to begin with, and whether

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<v Speaker 1>or not they ignored other harms that might occur from

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<v Speaker 1>this deal. So it's unusual. And the d o J

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<v Speaker 1>also says that having this kind of testimony from different

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<v Speaker 1>people before the judge could hurt its ability to settle

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<v Speaker 1>future cases, because who is going to believe, oh, this

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<v Speaker 1>is done. No, maybe a judge might intervene in this. Well,

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<v Speaker 1>that's exactly right. He's going to have hearing and he

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<v Speaker 1>maybe there's some you know, it's not clear yet hearing

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<v Speaker 1>testimony about this deal from outside from interested parties in

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<v Speaker 1>the American Medal Association, American Interest Institute. And that's the point.

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<v Speaker 1>Why are these parties going to enter into these settlements

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<v Speaker 1>with the d o J after a year a year

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<v Speaker 1>and a half of investigation and then close a deal.

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<v Speaker 1>If a judge can just come along and second guess

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<v Speaker 1>that have an entire new hearing on the concepts and

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<v Speaker 1>on the harm and and pull apart the deal, how

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<v Speaker 1>would they undo that deal at this point? Well, this

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<v Speaker 1>is what happened. They did close, but ETNA agreed, CBS

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<v Speaker 1>agreed to hold those assets separate, so they're operating independently.

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<v Speaker 1>If they had to put unwind they would. I don't

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<v Speaker 1>think ultimately that's what's going to happen here, but you know,

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<v Speaker 1>it remains to be seen what this judge tries to

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<v Speaker 1>do and whether they have to go into an appellate route.

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<v Speaker 1>Now another unusual, perhaps unprecedented move, this time by the

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<v Speaker 1>d o J. It's shall we say, it's buddying into

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<v Speaker 1>an FTC case over qualcom. Yes, it's another thing that

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<v Speaker 1>has the antitrust community. Really, you know, kind of very

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<v Speaker 1>exciting years, very exciting with Elizabeth Warren and everything else.

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<v Speaker 1>You know, what we have as a Federal Trade Commission

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<v Speaker 1>lawsuit alleging that a company attempted to monopolize a market,

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<v Speaker 1>that they violated our monopolization laws, actually section five of

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<v Speaker 1>the FTC Act. They had a trial, they did, I

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<v Speaker 1>think very well, and now they're waiting for the judge's decision.

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<v Speaker 1>This is Judge Lucy co in the Northern District of California.

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<v Speaker 1>And what has happened is that Qualcom has tried to

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<v Speaker 1>settle this case and they haven't been able to settle it.

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<v Speaker 1>They need a majority vote of the FTC Commissioners. They

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<v Speaker 1>only have four because Joe Simons, the chairperson, has refused himself.

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<v Speaker 1>And it could be that what they have as a

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<v Speaker 1>partisan block. There two Democrats and two Republicans, and when

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<v Speaker 1>they tie, there will be no settlement. When there's a tie,

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<v Speaker 1>they need the four to one. So what has happened

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<v Speaker 1>is the Department of Justice has come in and weighed

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<v Speaker 1>in with a motion to the judge asking for a

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<v Speaker 1>separate hearing on remedy if she decides against qualk m

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<v Speaker 1>and if so, essentially to go easy on them. It's

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<v Speaker 1>how I'm trying to think, how would a judge react

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<v Speaker 1>to that, because in one sense, they're saying, you know,

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<v Speaker 1>you shouldn't do this because and she might feel, Hey,

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<v Speaker 1>I heard the case. I know what I'm doing here.

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<v Speaker 1>I think that's exactly right. I heard the witnesses. I'm

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<v Speaker 1>the trier of the fact. I'm the one who saw

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<v Speaker 1>this and was in the position to wage the credibility

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<v Speaker 1>of the documents of the testimony, went through this long

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<v Speaker 1>trial and has sorted through all of the exhibits that

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<v Speaker 1>have been put in. This is my decision, and so

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<v Speaker 1>I'm not really so sure it will sway the judge

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<v Speaker 1>very much in what she does here. But it really

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<v Speaker 1>is kind of an interesting quirk only about sixty seconds here.

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<v Speaker 1>But Qualcom has benefited from the Trump administration prior for this. Yes,

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<v Speaker 1>at one time, Broadcom tried to acquire the company, and

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<v Speaker 1>under the Committee on Foreign Investment in the US, our

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<v Speaker 1>Executive Office weighed in and said, no, we think that

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<v Speaker 1>there's a national security problem here. Now they are allowed

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<v Speaker 1>to do that. The President has the last say on

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<v Speaker 1>syphia's decisions, and when a non US entity is going

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<v Speaker 1>to acquire us asset. Syphias has the right to investigate

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<v Speaker 1>and to determine whether they want to block that. And

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<v Speaker 1>that is what has happened, what happened previously. Always a pleasure, Jen,

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<v Speaker 1>You make antitrust law fun. All right? That's Bloomberg Intelligence

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<v Speaker 1>Senior Litigation analyst, Jennifer. Where you can get more of

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<v Speaker 1>Jen's analysis by going to be I go on the

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<v Speaker 1>Bloomberg Terminal. Thanks for listening to the Bloomberg Law podcast.

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<v Speaker 1>You can subscribe and listen to the show on Apple Podcasts, SoundCloud,

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<v Speaker 1>and on Bloomberg dot com slash podcast. I'm June Brosso.

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<v Speaker 1>This is Bloomberg