WEBVTT - Arm, Bayer, Google, Kroger, Novo, TikTok 0:00:13.360 --> 0:00:16.599 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:16.600 --> 0:00:20.720 by the litigation and policy team at Bloomberg Intelligence, the 0:00:20.800 --> 0:00:27.000 investment research platform of Bloomberg LP. Bloomberg Intelligence has five 0:00:27.080 --> 0:00:30.680 hundred analysts and strategists working across the globe and has 0:00:30.720 --> 0:00:33.959 focused on all major markets. Our coverage includes over two 0:00:34.000 --> 0:00:37.319 thousand equities and credits, and we have outlooks on more 0:00:37.320 --> 0:00:42.320 than ninety industries and one hundred market industries, currencies and commodities. 0:00:43.159 --> 0:00:47.960 This podcast series examines the intersection of business policy and law, 0:00:48.520 --> 0:00:51.560 and today we'll be looking at the litigation and policy 0:00:51.640 --> 0:00:55.680 catalysts that we're watching in December twenty twenty four and 0:00:55.720 --> 0:00:58.160 that we think will impact companies across a number of 0:00:58.200 --> 0:01:01.800 different sectors. My name is Elliot Stein. I'm a senior 0:01:01.840 --> 0:01:06.120 litigation analyst covering litigation in the financials sector, and I'll 0:01:06.120 --> 0:01:10.960 be your host for today, December two, twenty twenty four. 0:01:11.720 --> 0:01:14.360 If you have any questions about any of the matters 0:01:14.400 --> 0:01:17.640 that we'll be discussing on today's episode, please don't hesitate 0:01:17.680 --> 0:01:20.800 to reach out to us at your convenience with questions. 0:01:22.160 --> 0:01:25.520 So we'll be discussing a handful of sectors today. First, 0:01:25.600 --> 0:01:30.320 Matt Chuttenhelm, who covers TMT policy and litigation, will discuss 0:01:30.360 --> 0:01:34.280 in anticipated court ruling in TikTok's fight against the US 0:01:34.360 --> 0:01:39.360 government's sale or band law targeting the platform. After that, 0:01:39.400 --> 0:01:42.920 we'll discuss a trial that starts December sixteenth in arms 0:01:43.000 --> 0:01:48.800 case against Qualcomm over chip licenseing. After that, Holly from 0:01:48.840 --> 0:01:53.440 who covers consumer and industrials litigation and policy, will discuss 0:01:53.480 --> 0:01:57.200 a key appeals court argument also on December sixteenth, in 0:01:57.240 --> 0:02:00.960 a two point four billion dollar case by Canadian Pacific 0:02:01.080 --> 0:02:05.720 bondholders over redemption rights. Holly will also talk about a 0:02:05.800 --> 0:02:08.919 verdict that she expects in a seven hundred and fifty 0:02:08.960 --> 0:02:14.720 million dollar PCB contamination trial against Bayern Monsanto, and Holly 0:02:14.800 --> 0:02:17.960 will also walk us through some of her research on 0:02:18.000 --> 0:02:22.520 the legality and process for some of Trump's threatened tariffs. 0:02:23.400 --> 0:02:25.560 After that, we'll talk anti trust and we'll bring in 0:02:25.639 --> 0:02:27.600 Jen Ree to tell us about a verdict that she 0:02:27.760 --> 0:02:32.280 expects in the FTC's challenge to the Kroger Albertson's deal 0:02:32.960 --> 0:02:36.720 and sticking with anti trust, Justin Teresi, we'll discuss what 0:02:37.200 --> 0:02:40.600 he expects in the DOJ's case against Google over the 0:02:40.600 --> 0:02:44.760 company's two hundred billion dollar ad tech Steck. We'll then 0:02:44.840 --> 0:02:47.839 move to healthcare and Dwayne Wright, who covers health care 0:02:47.880 --> 0:02:51.280 policy out of Washington, DC for US. We'll update us 0:02:51.280 --> 0:02:54.800 on President Biden's plan to cover anti obesity drugs under 0:02:54.880 --> 0:02:58.600 Medicare and Medicaid, and then we'll move on to financials 0:02:58.639 --> 0:03:02.000 and bring in Nathan Dean, our financials policy analyst also 0:03:02.040 --> 0:03:05.720 in Washington, to talk about deregulation in the financial sector 0:03:06.000 --> 0:03:09.079 and why crypto is poised to do well with Trump's victory. 0:03:09.440 --> 0:03:11.679 And then I'll wrap up with previews of a few 0:03:11.680 --> 0:03:15.800 things that I'm watching for in December, including in anticipated 0:03:15.880 --> 0:03:18.880 ruling in a coin base lawsuit seeking to force the 0:03:19.080 --> 0:03:23.280 SEC to engage in crypto rulemaking. I'll also talk about 0:03:23.280 --> 0:03:27.600 Turkish bank Hawkbanks petition for further review of a ruling 0:03:27.720 --> 0:03:31.760 denying it's immunity defense in a US criminal sanctions case. 0:03:32.360 --> 0:03:35.000 And I'll also briefly talk about a ruling in a 0:03:35.080 --> 0:03:38.800 lawsuit by banks that are challenging in Illinois state law 0:03:38.840 --> 0:03:43.360 that would ban interchange fees on taxes and tips. As always, 0:03:43.440 --> 0:03:46.520 all of our research is available on the Bloomberg terminal 0:03:46.600 --> 0:03:50.480 at bi go. And with all that out of the way. 0:03:50.560 --> 0:03:54.440 Let's get started with the content. Matt Shettanhelm, Let's bring 0:03:54.480 --> 0:03:58.760 you in. Let's talk a little TikTok. The US government 0:03:59.400 --> 0:04:01.880 past the law that would force TikTok to be banned 0:04:02.160 --> 0:04:05.200 in the US unless its owner Bitte Dan sells it. 0:04:05.240 --> 0:04:08.120 There was a key hearing in September. It sounds like 0:04:08.160 --> 0:04:11.280 you expect a decision by December sixth. Why don't you 0:04:11.440 --> 0:04:14.400 come in tell us more about the case, about the timing, 0:04:15.520 --> 0:04:18.360 and then if you could also talk about the ARM 0:04:18.440 --> 0:04:21.240 versus Qualcom case, which I know you're not covering. Our 0:04:21.279 --> 0:04:24.640 colleague Tamlin Basin is covering. He couldn't make today's call, 0:04:24.680 --> 0:04:27.120 but he did relay the relevant information to you. So 0:04:27.120 --> 0:04:28.920 why don't you come in and tell us about both 0:04:28.920 --> 0:04:29.560 these cases? 0:04:29.920 --> 0:04:31.159 Yeah, absolutely, Elliott. 0:04:31.160 --> 0:04:35.360 So first on TikTok, Yes, we are expecting that decision imminently. 0:04:36.000 --> 0:04:40.400 The parties asked the court to expedite. 0:04:39.880 --> 0:04:43.239 The case and to issue a decision by December sixth, 0:04:43.520 --> 0:04:46.640 which is Friday, and I expect the court is going 0:04:46.680 --> 0:04:50.320 to try to honor that request if it cans. And 0:04:50.480 --> 0:04:53.359 since the d C Circuit issues decisions on the mornings 0:04:53.400 --> 0:04:58.000 of Tuesdays or Fridays. I think that makes it very 0:04:58.080 --> 0:05:02.760 likely that we see a decision tomorrow, Tuesday, December third, 0:05:03.640 --> 0:05:07.400 or December sixth Friday from the court. 0:05:07.440 --> 0:05:10.839 And why does this matter, Congress? 0:05:10.839 --> 0:05:15.400 As you said, Elliot effectively bans TikTok on January nineteenth 0:05:15.880 --> 0:05:19.160 of next year, so in less than fifty days unless 0:05:19.240 --> 0:05:23.360 byte Dance sells the company to a different company outside 0:05:23.360 --> 0:05:25.560 of China, and Byte Dance and said, look, we're not 0:05:25.600 --> 0:05:28.920 going to do that, and so that effectively means the 0:05:28.960 --> 0:05:34.039 only way to dodge an effective ban by January nineteenth 0:05:34.160 --> 0:05:37.239 is for TikTok to win this case. And of course, 0:05:37.560 --> 0:05:40.279 if the ban remains in effect, that's great news for 0:05:40.560 --> 0:05:45.840 TikTok's leading social media competitors like Alphabet, like Meta. 0:05:46.440 --> 0:05:47.920 So how do we think it will go. 0:05:48.680 --> 0:05:51.479 We give it a thirty percent chance that TikTok can 0:05:51.600 --> 0:05:55.800 win this case and stop the ban. As you mentioned 0:05:55.839 --> 0:05:59.640 that that September sixteenth hearing that what was really the 0:05:59.680 --> 0:06:02.080 best chance to take a look at how the three 0:06:02.160 --> 0:06:04.800 judges are thinking about this case, and it went very 0:06:04.839 --> 0:06:08.560 poorly for TikTok. It looked very doubtful that any of 0:06:08.600 --> 0:06:12.880 those three would rule for the company. Now, could those 0:06:12.960 --> 0:06:17.080 views softened because President Trump has since won the White 0:06:17.080 --> 0:06:20.680 House and has said TikTok shouldn't be manned. I guess 0:06:20.720 --> 0:06:23.359 it's possible. Two of those three judges at the Court 0:06:23.440 --> 0:06:27.920 were nominated by Republicans, one was appointed by Trump, so 0:06:27.960 --> 0:06:31.080 we can't rule out the possibility that their views have 0:06:31.600 --> 0:06:33.760 eased a little bit and they might want to create 0:06:34.160 --> 0:06:37.680 a path for Trump to block it. It's probably not 0:06:37.839 --> 0:06:39.599 likely that he would go back to Congress and have 0:06:39.680 --> 0:06:42.480 Congress perverse itself with a new law. But if TikTok 0:06:42.520 --> 0:06:47.160 wins this case, suddenly Trump has a much more significant 0:06:47.240 --> 0:06:52.839 say in the matter. But if TikTok loses, has really 0:06:52.880 --> 0:06:55.760 felt like it was most likely coming out of that hearing, 0:06:55.800 --> 0:06:57.800 it's going to be panic time. I think for the company, 0:06:58.160 --> 0:07:00.960 its next move will be running to the US Supreme 0:07:01.000 --> 0:07:05.160 Court and pleeing for a stay of that January nineteenth date, 0:07:06.200 --> 0:07:08.400 so the court, the Supreme Court could take up the 0:07:08.440 --> 0:07:11.400 full case. I think that would have a chance, but 0:07:11.640 --> 0:07:15.800 I'd view TikTok TikTok as as the underdog in that matter. 0:07:16.000 --> 0:07:20.280 So definitely something to watch in the immediate days ahead. 0:07:20.520 --> 0:07:26.040 Turning to Tamlin Basin's research on ARM Qualcom. So yeah, 0:07:26.120 --> 0:07:30.160 A trial is set to start in December December sixteenth 0:07:30.240 --> 0:07:33.880 in Delaware Federal Court in a trademark infringement and breach 0:07:33.920 --> 0:07:39.920 of contract dispute between ARM and arm's largest client, Qualcom. Now, 0:07:39.960 --> 0:07:43.440 the trademark claims are really just window dressing the relate 0:07:43.480 --> 0:07:46.720 to whether Qualcomm is allowed to continue using ARMS marks, 0:07:47.080 --> 0:07:50.480 But this is fundamentally a contract dispute that has its 0:07:50.560 --> 0:07:54.040 roots in Qualcomm's decision to acquire Nuvia for one point 0:07:54.080 --> 0:07:58.480 four billion dollars in early twenty twenty one. Nuvia at 0:07:58.520 --> 0:08:01.000 the time also had a life since with ARM that 0:08:01.120 --> 0:08:03.800 Nuvia was using to try to design chips for use 0:08:03.880 --> 0:08:08.280 in servers and PCs. And just for background, Qualcom has 0:08:08.320 --> 0:08:11.800 primarily made chips for smartphones and so the Nuvia acquisition 0:08:12.080 --> 0:08:17.600 broadened its addressable market. ARM wasn't happy with Qualcomm's apposite 0:08:17.920 --> 0:08:22.840 acquisition and responded by terminating Nuvia's license. So the legal 0:08:22.880 --> 0:08:26.200 dispute is really over whether the termination of that Nuvia 0:08:26.280 --> 0:08:31.480 license blocked Qualcom from continuing to develop the technology it acquired. 0:08:32.160 --> 0:08:35.360 Qualcom has maintained that its own license with ARM allowed 0:08:35.360 --> 0:08:38.360 it to continue that work, and ARM, of course views 0:08:38.400 --> 0:08:42.280 it it differently. We do think there's a strong likelihood 0:08:42.320 --> 0:08:47.320 that this case settles, likely before or during trial. As 0:08:47.360 --> 0:08:50.520 I said, it's set to start in December mid December, 0:08:50.559 --> 0:08:54.800 December sixteenth. This is fairly high stakes litigation for both parties. 0:08:54.800 --> 0:08:59.440 But again, Qualcom is arm's largest single customer, accounting for 0:08:59.480 --> 0:09:02.800 about ten percent of total sales last year. ARM is 0:09:02.800 --> 0:09:06.160 seeking a new license agreement that pays a higher rate 0:09:06.360 --> 0:09:08.920 than the new VA agreement, and Qualcom is looking to 0:09:08.960 --> 0:09:12.439 expand outside of the handset market, and it's going to 0:09:12.480 --> 0:09:15.200 be in both parties interest to put this behind them 0:09:15.280 --> 0:09:19.320 as soon as possible. And so Tamlin's conclusion is that 0:09:19.400 --> 0:09:22.880 it's unlikely ever to get to a verdict in this case. 0:09:23.600 --> 0:09:26.120 So with that, let me toss it back to you. Elliott, Great, 0:09:26.160 --> 0:09:26.920 thanks a lot, Matt. 0:09:27.440 --> 0:09:31.120 All right, Holly, let's bring you in. You're watching several 0:09:31.200 --> 0:09:34.640 things on the litigation front. You'll be watching in a 0:09:34.720 --> 0:09:38.240 pellet hearing in a two point four billion dollar Canadian 0:09:38.280 --> 0:09:42.120 Pacific bondholder suit over redemption rights. You're also waiting for 0:09:42.160 --> 0:09:44.680 a trial verdict in a seven hundred and fifty million 0:09:44.720 --> 0:09:49.400 dollar PCB contamination suit against Bayern Monsanto, and on the 0:09:49.440 --> 0:09:52.600 policy front. You've done some really interesting work on the 0:09:52.679 --> 0:09:57.959 legality and the expected processes for Trump's threatened tariffs. Why 0:09:57.960 --> 0:09:59.880 don't you come in and sort of walk us through 0:10:00.120 --> 0:10:01.120 all these things? 0:10:01.240 --> 0:10:06.080 Please. We're watching a trial that began October seventeenth against 0:10:06.240 --> 0:10:09.880 buyer's Monsanto on behalf of teachers and students in Sky Valley, 0:10:10.000 --> 0:10:15.520 Washington school District over alleged PCB contamination. The plaintiffs claim 0:10:15.600 --> 0:10:20.080 they suffered neurological and other serious health problems when PCBs 0:10:20.200 --> 0:10:23.840 in lighting and cocking the school late. Monsanta was the 0:10:23.880 --> 0:10:27.800 primary manufacturer of PCBs. Around two hundred lawsuits have been 0:10:27.840 --> 0:10:32.199 filed against Monsanto related to Sky Valley. The litigation has 0:10:32.240 --> 0:10:34.360 been sort of a roller coaster so far. Verdicts to 0:10:34.440 --> 0:10:37.800 date by plaintiffs suing over Sky Valley total one point 0:10:37.880 --> 0:10:40.840 five billion dollars, but a one hundred and eighty five 0:10:40.920 --> 0:10:44.600 million dollar verdict was reversed by an intermediate appellate court 0:10:44.679 --> 0:10:47.520 on grounds that could affect all of the verdicts. But 0:10:47.720 --> 0:10:52.320 in October, Washington State's highest court agreed to review that ruling, 0:10:52.720 --> 0:10:56.840 so we await the decision there. On that trial underway, 0:10:57.320 --> 0:11:00.080 we expect a verdict in December, and plaintiffs have asked 0:11:00.160 --> 0:11:03.000 for seven hundred and fifty million dollars, but we can't 0:11:03.000 --> 0:11:04.720 predict the amount it will be. We think the jury 0:11:04.760 --> 0:11:08.600 will find for plainniffs. In litigation by holders of Canadian 0:11:08.600 --> 0:11:11.800 Pacific bonds, a hearing before the Second Circuit Us Court 0:11:11.800 --> 0:11:15.920 of Appeals is scheduled for December sixteenth. The bondholders sued 0:11:16.200 --> 0:11:18.679 Canadian Pacific, claiming they had a right to redeem two 0:11:18.720 --> 0:11:21.320 point four billion dollars worth of bonds at one hundred 0:11:21.320 --> 0:11:24.960 and one percent face value after the company failed to 0:11:24.960 --> 0:11:28.560 get a decision that was effective approving its merger with 0:11:28.720 --> 0:11:32.320 Kansas City Southern Railway by March twenty fifth by the 0:11:32.360 --> 0:11:36.559 relevant agency. They claimed the indenture agreement pursue into which 0:11:36.640 --> 0:11:40.160 the bonds were issued required a decision before that date. 0:11:40.440 --> 0:11:44.480 The approval from the relevant agency was rendered March twenty fifth, 0:11:44.520 --> 0:11:48.520 but wasn't effective until April fourteenth. The lower court found 0:11:48.559 --> 0:11:52.560 Canadian Pacific found four Canadian Pacific based on the language 0:11:52.559 --> 0:11:55.679 of the agreement, and we think that ruling stands on appeal, 0:11:56.200 --> 0:11:58.640 we may get some insight as to the panel's inclination. 0:11:58.679 --> 0:12:02.960 On December sixteenth, the day of the hearing. Turning to terras, 0:12:03.320 --> 0:12:06.400 president elect Donald Trump pledged on the campaign trail terrorists 0:12:06.440 --> 0:12:09.040 is sixty percent on goods from China and up to 0:12:09.080 --> 0:12:13.120 twenty percent on goods from everywhere else. Recently, Trump said 0:12:13.120 --> 0:12:15.800 he would impose additional twenty five percent tariffs on goods 0:12:15.800 --> 0:12:19.040 from Canada and Mexico until the border crisis and Phentanmenal 0:12:19.080 --> 0:12:22.360 crisis is resolved, and ten percent on goods from China. 0:12:22.640 --> 0:12:24.920 We don't know if that ten percent is in addition 0:12:24.960 --> 0:12:28.120 to the sixty percent he mentioned on the campaign trail, 0:12:28.160 --> 0:12:30.439 but whatever the case may be, we think it's highly 0:12:30.559 --> 0:12:33.360 likely terras will be imposed, and we think in general, 0:12:33.480 --> 0:12:36.160 the president has power to impose them. There are a 0:12:36.240 --> 0:12:38.559 number of laws on the books that give the president 0:12:38.600 --> 0:12:42.800 power to impose terrorists, to protect national security, the US dollar, 0:12:42.920 --> 0:12:46.239 and to address countries that are not abiding by trade agreements. 0:12:46.679 --> 0:12:49.400 We think Trump may have justification under one of the 0:12:49.400 --> 0:12:51.480 current laws on the books, but if he does it 0:12:51.559 --> 0:12:56.840 that way through a proclamation or after agency investigations, depending 0:12:56.840 --> 0:13:00.680 on which statute he uses, will likely be challenged in court. 0:13:01.320 --> 0:13:04.080 Based on prior cases in which Trump's first term terrorists 0:13:04.080 --> 0:13:07.040 were challenged, they could those those terriffs could be stayed 0:13:07.120 --> 0:13:09.720 or even tempor early struck. By the way, all the 0:13:09.720 --> 0:13:12.920 cases we located in which terrorifts were struck were reversed 0:13:12.960 --> 0:13:16.720 on appeal. But in any event, that's there's a potential 0:13:16.800 --> 0:13:19.680 for delay of the tariffs. 0:13:19.240 --> 0:13:20.400 And so. 0:13:22.360 --> 0:13:27.960 If the president, if the President decides to address terriffs 0:13:28.000 --> 0:13:30.520 through Congress, and see if think you can get Congress 0:13:30.559 --> 0:13:34.400 to pass a bill that avoids potential judicial challenges on 0:13:34.520 --> 0:13:38.760 grounds the president lacks authority. So we'll be watching for them. 0:13:38.880 --> 0:13:40.800 With that, I'll turn it back to you, Elliott. 0:13:42.040 --> 0:13:44.920 Great, Thanks Holly, and yeah, that's going to be an 0:13:44.960 --> 0:13:49.320 interesting story in the first part of twenty twenty five. 0:13:49.800 --> 0:13:51.880 All right, Jen Reid, let's bring you in to talk 0:13:51.960 --> 0:13:56.080 anti trust. You were in Portland, Oregon in September for 0:13:56.240 --> 0:14:00.480 trial and the FTC's lawsuit challenging the Kroger Albertson deal. 0:14:01.679 --> 0:14:03.760 Now you're here back in New York waiting for her decision, 0:14:03.800 --> 0:14:06.840 which you think will come in December. Why don't you 0:14:06.880 --> 0:14:08.400 come in tell us more about the case and what 0:14:08.440 --> 0:14:09.080 you're expecting. 0:14:09.679 --> 0:14:12.480 Thanks, Elliott, and I certainly hope it comes in December, 0:14:12.559 --> 0:14:14.920 because I am beginning to feel a little bit like 0:14:15.000 --> 0:14:17.880 a broken record saying each month, I expect a decision 0:14:17.920 --> 0:14:20.840 from this court. And that's because I and I think 0:14:20.880 --> 0:14:23.600 most people watching this case thought that she'd be ruling 0:14:23.640 --> 0:14:26.800 the judge of was female, that she'd be ruling in October, 0:14:27.560 --> 0:14:31.840 and now she's really quite late compared to other similar cases. 0:14:32.120 --> 0:14:34.040 So I went back and I looked at the average 0:14:34.040 --> 0:14:37.720 timing for decisions on Federal Trade Commission comparable at least 0:14:37.960 --> 0:14:40.920 Federal Trade Commission court efforts to win a preliminary block 0:14:40.960 --> 0:14:43.160 and a proposed merger. I went back to the start 0:14:43.200 --> 0:14:45.600 of twenty eighteen and I saw that the average days 0:14:45.640 --> 0:14:48.120 from the start of trial was fifty five. And at 0:14:48.120 --> 0:14:50.160 this point we're ninety eight days from the start of 0:14:50.160 --> 0:14:53.760 trial for Kroger, which was August twenty sixth. It had 0:14:53.800 --> 0:14:56.400 finished up on September thirteenth, then the closing arguments were 0:14:56.440 --> 0:14:59.840 held September seventeenth. So I definitely think it'll come out, 0:15:00.440 --> 0:15:02.920 but at this point I'm not really sure what's taking 0:15:02.960 --> 0:15:06.800 so long. I don't think that this delay means anything 0:15:06.800 --> 0:15:09.640 in terms of the verdict. At the end of the trial, 0:15:09.760 --> 0:15:12.160 we thought the FDC was more likely to win the 0:15:12.200 --> 0:15:15.200 preliminary block than not and continue to think that, and 0:15:15.240 --> 0:15:18.960 the main reason is that their case showed undue concentration. 0:15:19.640 --> 0:15:23.720 The evidence really showed undue concentration in various regional grocery 0:15:24.080 --> 0:15:27.080 store markets in a very straightforward way and was really, 0:15:27.120 --> 0:15:29.880 I think supported by most of the evidence presented. That 0:15:30.000 --> 0:15:33.600 the companies had offered a remedy, which included a divestiture 0:15:33.680 --> 0:15:37.120 of just under six hundred stores and other ancillary facilities 0:15:37.680 --> 0:15:40.880 to a company called CNS Wholesale. Now, I should point 0:15:40.880 --> 0:15:43.240 out that when companies offer a remedy for a deal, 0:15:43.520 --> 0:15:46.680 it's essentially conceding that the deal has anti trust problems, 0:15:46.760 --> 0:15:49.160 because if you don't have problems, you don't need a remedy. 0:15:49.400 --> 0:15:52.240 The remedy is intended to fix whatever the issues are. 0:15:52.640 --> 0:15:54.840 And I think the companies were depending on being able 0:15:54.840 --> 0:15:57.200 to convince the judge and trial that the remedy they 0:15:57.200 --> 0:15:59.480 were proposing was sufficient to fix these problems and she 0:15:59.480 --> 0:16:00.960 should allow the deal to close. 0:16:01.800 --> 0:16:02.880 But the FTC said it. 0:16:02.800 --> 0:16:05.360 Was insufficient, and our view, we think they did show 0:16:05.400 --> 0:16:08.120 that in the trial that it has flaws and that 0:16:08.200 --> 0:16:12.120 it's uncertain, and that's primarily due to the piecemeal nature 0:16:12.120 --> 0:16:14.280 of the assets to be sold and the lack of 0:16:14.360 --> 0:16:18.840 experience of CNS as a grocery retailer. So well accepted 0:16:18.880 --> 0:16:23.000 guidelines for remedies for problematic deals say that a remedy 0:16:23.040 --> 0:16:25.680 has to replace the competition that's lost by virtue of 0:16:25.720 --> 0:16:28.120 the merger. So it means the buyer has to be 0:16:28.200 --> 0:16:31.480 shown to have experience, skill, and incentive to be able 0:16:31.480 --> 0:16:33.680 to buy these assets and jump into the market and 0:16:33.720 --> 0:16:37.000 compete pretty viably and quickly in a short period of time. 0:16:37.520 --> 0:16:39.960 And in this case, I think the CNS witnesses weren't 0:16:40.000 --> 0:16:43.160 that convincing with respect to whether CNS could do this 0:16:43.320 --> 0:16:46.080 or even had the incentive to do it. The primary 0:16:46.120 --> 0:16:48.680 experience of the company is in wholesaling, and there was 0:16:48.720 --> 0:16:51.200 also a suggestion that it was more likely to use 0:16:51.240 --> 0:16:53.920 the stores they were buying from Kroger and Albertson's to 0:16:54.000 --> 0:16:57.400 bolster their wholesale business. In other words, they buy the stores, 0:16:57.560 --> 0:17:00.440 then sell them to other grocery store retailers change for 0:17:00.440 --> 0:17:03.480 a contract to beat the wholesaler. So I should just 0:17:03.520 --> 0:17:05.760 say if the judge rules for the FTC, it means 0:17:05.800 --> 0:17:08.560 the deal is blocked pending an internal hearing at the 0:17:08.640 --> 0:17:12.080 FTC to determine whether the deal violates the intertrust laws 0:17:12.160 --> 0:17:14.280 or not. I really doubt the companies will stick with 0:17:14.359 --> 0:17:16.640 the deal if that comes to pass, because that could 0:17:16.680 --> 0:17:18.959 take another eight to twelve months, and this deal has 0:17:19.000 --> 0:17:22.320 already been pending since October of twenty twenty two, so 0:17:22.400 --> 0:17:24.639 a loss in court would likely lead to an abandonment 0:17:24.680 --> 0:17:27.040 of the deal. And if that happens, Kuroker is going 0:17:27.040 --> 0:17:30.840 to owe Albertson. Albertson's a six hundred million dollar breakup 0:17:30.880 --> 0:17:34.320 fee that's in their purchase agreement. Now really quickly, Elliott. 0:17:34.320 --> 0:17:37.119 There are also decisions pending from two state courts, Colorado 0:17:37.160 --> 0:17:40.359 and Washington. Those state attorneys general decided to go it 0:17:40.440 --> 0:17:44.359 alone rather than join the FTC suit. Kind of unusual, 0:17:44.520 --> 0:17:48.080 pretty unprecedented, but they did that in state court under 0:17:48.119 --> 0:17:51.200 state laws. And I think these decisions will come out 0:17:51.240 --> 0:17:55.360 after the federal judge's decision, but the Washington judge recently 0:17:55.440 --> 0:17:59.320 scheduled to issue a ruling on December tenth, so there's 0:17:59.359 --> 0:18:02.199 some chance it come out before the federal courts. But 0:18:02.240 --> 0:18:05.160 I should say both of these judges express hesitation about 0:18:05.240 --> 0:18:08.440 issuing a nationwide injunction on the basis of state laws, 0:18:08.680 --> 0:18:11.200 So I suspect if either won rules against the companies, 0:18:11.240 --> 0:18:13.760 it would be for a state wide injunction only. And 0:18:13.840 --> 0:18:16.520 the FTC decision we expect any day now will be 0:18:16.600 --> 0:18:18.840 the this positive one that's either going to make or 0:18:18.880 --> 0:18:22.800 break the deal. So with that, waiting for this deal, Elliott, 0:18:22.800 --> 0:18:24.399 as I wrote today is like waiting for GOODO. 0:18:25.440 --> 0:18:28.160 I saw that headline. That was good. You know, Portland's 0:18:28.160 --> 0:18:30.159 a nice place. Maybe the judge is just enjoyed the 0:18:30.240 --> 0:18:36.119 surroundings and whatnot. Maybe, okay, justin let's bring you in. 0:18:36.200 --> 0:18:40.679 Let's stick with antitrust. You have been following the DOJ 0:18:40.880 --> 0:18:44.840 case against Google over the company's two hundred billion dollars 0:18:44.960 --> 0:18:48.960 ad tech stack. You attended closing arguments last week. What's 0:18:49.000 --> 0:18:51.679 some investors know about those arguments and what are you 0:18:51.720 --> 0:18:53.640 expecting going forward? Yeah? 0:18:53.680 --> 0:18:56.800 Absolutely, thanks Elliott. So our attention shifts back to the 0:18:56.800 --> 0:18:59.359 Eastern District of Virginia this month as we await the 0:18:59.440 --> 0:19:02.720 verdict following a bench trial before Judge lead and Brinkhema 0:19:02.800 --> 0:19:05.560 on the anti trust case against Google related to the 0:19:05.560 --> 0:19:09.200 company's ad tech stack for display advertising, which reportedly brought 0:19:09.240 --> 0:19:12.119 in thirty one billion dollars of revenue in twenty twenty 0:19:12.160 --> 0:19:14.600 three and this particular case is being led by the 0:19:14.720 --> 0:19:17.640 US Department of Justice. So what's going on here, Well, 0:19:17.680 --> 0:19:20.800 that's complicated, but in a nutshell, the DOJ is alleging 0:19:20.840 --> 0:19:23.640 that Google has a controlling market share in all three 0:19:23.680 --> 0:19:26.280 parts of the ad tech market for display ads, and 0:19:26.320 --> 0:19:29.879 that Google acted anti competitively with respect to that dominance. 0:19:30.160 --> 0:19:32.800 So in the ad tech stack, this includes the cell side, 0:19:32.840 --> 0:19:36.800 which is website publishers, the buy side those wanting to advertise, 0:19:36.880 --> 0:19:39.240 and the ad exchange, which serves in the middle to 0:19:39.280 --> 0:19:42.160 link the two sides. Now, what are display ads, Well, 0:19:42.240 --> 0:19:45.879 those are essentially those little rectangular or square advertisements that 0:19:45.920 --> 0:19:48.800 you see when you visit a website through a standard computer. 0:19:49.200 --> 0:19:52.560 Really important here, Mobile ads in app ads and connected 0:19:52.600 --> 0:19:56.080 TV ads are not a part of the DOJ's alleged 0:19:56.119 --> 0:19:59.400 relevant markets in this case. But based on Trialt testimony 0:19:59.440 --> 0:20:02.479 and comments the court, we think it's extremely unlikely that 0:20:02.520 --> 0:20:04.639 the DOJ is going to get everything that's after in 0:20:04.640 --> 0:20:07.919 this case, especially as it relates to the buyside or 0:20:07.920 --> 0:20:10.560 the advertiser side, because on the last day of trial, 0:20:10.680 --> 0:20:13.560 Judge Brigham has said that that itself was a very 0:20:13.600 --> 0:20:14.680 competitive market. 0:20:15.000 --> 0:20:16.600 We think liability is likely to. 0:20:16.560 --> 0:20:19.520 Be found on the publisher ad server side and possibly 0:20:19.600 --> 0:20:22.840 in relation to claims of illegal product tying, where DJ 0:20:23.040 --> 0:20:25.840 further alleges that in order for a customer to access 0:20:25.920 --> 0:20:29.560 one aspect of Google's ad tech services, that same customer 0:20:29.640 --> 0:20:31.919 must also use another part of the ad tech stack. 0:20:32.480 --> 0:20:35.600 That said, we really don't think a court ordered divestiture 0:20:35.840 --> 0:20:38.959 was supported by the evidence at trial, with the testimony 0:20:38.960 --> 0:20:42.760 of publishers and competing publisher ad servers really suggesting to 0:20:42.880 --> 0:20:46.119 us that behavioral remedies like simply cutting product ties or 0:20:46.160 --> 0:20:49.280 restricting policies could in many ways solve the issues that 0:20:49.320 --> 0:20:51.880 are in hand in the case. We also think Google's 0:20:51.880 --> 0:20:54.560 council did a really good job here of establishing the 0:20:54.640 --> 0:20:58.440 pro competitive benefits of allowing some formulation of a unified 0:20:58.440 --> 0:21:02.920 solution under one roof to continue, like security, web page latency, 0:21:02.960 --> 0:21:06.320 and billing issues, to at least support the continued availability 0:21:06.359 --> 0:21:09.439 of a kind of one stop shop if customers truly 0:21:09.520 --> 0:21:12.840 want that option. Either way, we're almost certain that we're 0:21:12.840 --> 0:21:14.960 almost certain that the out final outcome in this case 0:21:15.000 --> 0:21:17.240 it's not going to be decided now, but rather ru 0:21:17.240 --> 0:21:19.320 in the future by either the Fourth Circuit Court of 0:21:19.320 --> 0:21:23.120 Appeals or possibly even the US Supreme Court that aside, 0:21:23.200 --> 0:21:25.959 it's also too soon to tell whether a new DOJ 0:21:26.200 --> 0:21:28.960 under the incoming Trump administration would be open to some 0:21:29.040 --> 0:21:32.440 kind of a settlement during that appeals process, should liability 0:21:32.480 --> 0:21:35.040 in fact be found. Judge Brinkham must state it her 0:21:35.080 --> 0:21:37.399 hope to have an opinion issued prior to the close 0:21:37.480 --> 0:21:40.480 of the year, and judging by the truly extraordinary speed 0:21:40.480 --> 0:21:43.000 with which he has moved the litigation along here, we 0:21:43.080 --> 0:21:44.960 think it's really likely we're going to see a ruling 0:21:45.000 --> 0:21:48.160 in this case this month. If Judge Brinkhama does find 0:21:48.200 --> 0:21:50.480 against Google, will then move into a phase of the 0:21:50.520 --> 0:21:53.320 case that we centered around what the appropriate remedy should 0:21:53.359 --> 0:21:57.520 be to address to address any antitrust violations that are found. 0:21:57.800 --> 0:22:00.159 And if that's not confusing enough, Eliot, No matter what 0:22:00.240 --> 0:22:03.679 happens here, a second government enforcement suit on substantially the 0:22:03.720 --> 0:22:07.080 same issues is being led by Texas Attorney General Ken Paxton, 0:22:07.480 --> 0:22:08.960 and depending on what we see coming out of the 0:22:09.000 --> 0:22:12.200 Virginia case, as a result, that separate case is slated 0:22:12.200 --> 0:22:14.960 for its own trial this coming year in March. So 0:22:15.080 --> 0:22:17.280 with that, I'll turn it back to you. 0:22:17.320 --> 0:22:19.560 Oh, so you might be going to Texas in March. 0:22:19.400 --> 0:22:20.200 Going to Texas. 0:22:20.200 --> 0:22:22.400 It sounds sounds like it's going to happen as of now. 0:22:22.400 --> 0:22:23.879 That that sounds accurate, Yes, and. 0:22:24.160 --> 0:22:27.000 Kind of funny to compare the speed with which the 0:22:27.080 --> 0:22:29.760 judge in your case, Judge Brinkhama, and the judge in 0:22:29.840 --> 0:22:33.760 Jen's case in Oregon are ruling night and day. 0:22:33.840 --> 0:22:34.000 Yeah. 0:22:34.119 --> 0:22:36.520 I hope for both your sakes it doesn't. These decisions 0:22:36.560 --> 0:22:42.200