Thank you so much for joining us for this special edition of Bloomberg Daybreak. US markets are close for the Juneteenth holiday. I'm Nathan Hager, and coming up this hour, we will focus on retail, a close look at the health of the country's biggest companies. Bert Flickinger, Managing director at Strategic Resource Group, will join us along with Bloomberg Intelligence senior retail analyst Punam Gooyle. Plus, the government has
been very busy filing lawsuits against big tech. We will bring you up to date on the latest anti trust litigation with the senior analyst who covers just that topic, Jennifer Ree of Bloomberg Intelligence. But we want to begin with a closer look at the gas and oil market as the official start of summer approaches. For that, we are pleased to welcome Stephen Shork, the founder and president
of the energy industry consultancy the Short Group. Steven, great to have you with us as always, But we're speaking right in the middle of an East Coast heat wave and that has got to put high demand on the energy grid. Is demand going to keep a lid on prices?
Do you think it's an interesting situation here with regard to the heat wave. Of course, that translates into air conditioning demand, so it's also so therefore it's a bullesh boom for the natural gas market. Now, the natural gas market did have a nice run up up until about a week ago, but it looks like that situation is
over and we're retracing back into a bear market. Why even though we have strong demand, we have very strong supplies, and that also translates, Nathan into the situation with gasoline.
We are at the peak season or just beginning with the peak season, you know, right from Memorial Day through July and August, of course, and when we look at the supply situation from either a year over year basis, where we're looking at inventories now in and around New York Harbor, which is where you take delivery of the New York Mark until Exchanges gasoline contract and down in Pad three, which is the Gulf Coast refinery at the center.
So those two market areas are the most important market areas as far as East Coast drivers are concerned, because you manufacture gasoline in Philadelphia and New York Delaware, and then you get the rest of it along the Colonial
pipeline that gets shipped up from the North coast. So when we look at the inventories in those two particular market areas, we're looking at a surplus on a year over year of three point nine million barrels and a one point three million barrel surplus to the seasonal time series analysis. So whether we're looking on a year over year basis or on a seasonally adjusted basis, supplies as we go into the summer driving season are very comfortable at this point.
So do you see that supply demand imbalance coming more into balance as we get further into the summer driving season? Is demand going to continue even when we we you know, have these forecasts of a demand slowdown in global energy.
Yeah, it will be, and that is contingent on, of course, an economics slowdown. So that is certainly a secondary driver to prices in the near term. That that is more of a long term bearers driver. But as far as the summer goes, this is a spot market driven contract at this point and therefore the market Nathan is based on.
Pricing is in balance. That is to say that when we look at crude oil prices, for instance, the New York WTI market, it's been yo yoing in between the middle eighties and the middle seventies, with the mean thus far this quarter right around eighty one eighty one dollars and twenty cents. Now our modeling coming into the second quarter, the central tendency or the median in our model's output
was eighty one sixty, So we're right there. We're very stable market and the stable market Nathan again going into I think it's intuitive you have a stable market, that's a telltale that the market is in balance. And more importantly, Nathan, when we look at the futures market to spread the differential and prices between July and August, September, October, this gives you the market's view of any potential imbalances coming
on the horizon. And what we're seeing there is not only we're seeing in market that is balanced, but the way the spread markets are trading, that is, July is losing value to August, August is losing its value relative to September. This is a telltale that when we do see the imbalance, the market thinks we're going to have too much supply not enough enough demand, and of course that's going to translate into much more appetizing prices at the pump for consumers.
How appetizing would you say? How accommodating are these gasoline retailers going to be to the driving public this summer, do you think?
Well, the great think about gasoline retailers is that there are one hundred and forty five thousand retailers in the lower forty eight United States. So that's a lot of competition. In my hometown in Villanova suburbs of Philadelphia, we have virtually a gasoline station on every block. Therefore, that competition will certainly keep a lid on prices. Now, of course, there will be higher prices in the summer. There are always our higher prices in the summer for two very
obvious reasons. One of course, is demand. We're going to hit the pinnacle of our demand in July and August. And the second driver is the type of gasoline we have to put in our car. It's what's called the summer grade gasoline. And when we have to acquire the seed stocks that go into making that cocktail of gasoline, the seed stocks we use the summer are much more expensive than what we can use in the winter. Therefore, the manufacturing, the blending of gasoline is more offensive so
we will see gasoline prices higher, But the retailers. I think this is important because I think the retailers they're the ones who bear the brunt of it because they're on the firing line. But ask yourself, why does a gastline station retailer always have a convenience store or an auto mechanic garage adjacent to it, Because that's where they make their money. They don't make their money on gasoline. Their margins are that thin they have to make it
up elsewhere. So it will be contingent on oil prices, which again have been very stable, and the retailers, because of this competition, they will not be quote unquote gouging the consumer this summer.
Speaking with Steven Short, the founder and president of the Short Group, which consults on the energy industry, and given this backdrop, Steven, the stability that you see in the gasoline market, I'm curious to get your take as well on the decision by OPEC and OPEQ plus to continue with supply constraints into next year. What kind of read through that potentially could have even longer term as we get past the summer.
Yeah, absolutely, it is certainly a barished telltale because they came out with a rather dubbish statement of the last meeting that they'll start to curtail these quotas later on in the year. And when we look at and it's really not surprised because what OPEK, because I've had the opportunity to work with OPEC, so I do know this firsthand that they will look at the structure of the
forward market. So there is that curve. There's a price for oil every single month going out for the next ten years, so they look at the formation of that curve and what the curve has been telling us in the past six months, whether we're looking at the three main oil contracts that trade around the globe of the NIMES contract hearing in the US, the Brent contract which is a London based contract, and then they do buy contract.
And when we look at the forward pricing, we're looking at a market that is certainly signaling that the barrels that are coming closer to delivery are cheaper or are losing their value to the longer dated contracts. So what this tells you is that the expectation is for weaker demand going beyond the summer and through the end of this year, and certainly this is the way I think OPEC is looking at the market situation.
Is that something that you agree with that we are going to see a continued slow down in global demand given where things are this summer?
Yes, I do. I think for two reasons. One, the US consumer is completely tapped out with credit card debt these high interest rates. We know that household debt is got record highs, now, credit card debt at record highs, and so forth, so we do know. And then now what Maason, what we're starting to see is a delinquency rate on credit card payments that are ninety days in the arrears. We're starting to see that now at highs we have not seen since before the Great Recession. So
clearly the consumer is tapped out. Now that doesn't mean they won't tap out more on their credit cards, but certainly consumer spending will certainly take a hit. And because you don't have to drive to the Jersey Shore, you can stand in your backyard and run a hose over your head, your demand is much greater or much more susceptible to these high prices. So yes, the answer that question, I do see constraints on demand because even though gasoline
prices are cheaper than a year ago. The consumer is in a much worse place than they were a year ago. So it's a little bit of both here.
To that point, Stephen, we've had predictions many times over the past few months about that the consumer is going to crack, even if we are starting to see some of those signs come through now, I mean, what's the possibility that we could continue to see the consumer power through like they seem to have done over the last few months, defying some of the predictions.
Yeah. Absolutely, that has been a major surprise, certainly to me. But there are other signs. As we said now a year ago people defaulting or not making their credit card payments, even minimum payments with half of what it is today that are defaulting or delinquent, I should say. So that is a clear telltale. Also when we look at the jobs numbers. Now we're looking at the jobs numbers and the establishment and the households. You have two different surveys,
and there is a considerable deficit between these two. The establishment survey, which is the one that the market trades on, which has beaten expectations by the biggest Wall Street banks have been wrong on the jobs number month in, month out for the past year. So what is going on there? These are very good economists. What are they missing? Well, part of the missing is the way they calculate, that is to say, the way the Bureau of Labor Statistics
calculates their numbers. They're making some assumptions that that are pretty grandy oaks when it comes to the amount of new businesses being created, which factors into statistically what they think the new jobs being created are. All it is is a statistical number that they are guessing at and putting in and when you look at this adjustment, it is very high relative to what we've seen in the past.
So where I'm going with this, Nathan, is perhaps the jobs market, which continues to beat on the headline numbers. If you just dig into the weeds a little bit, the job situation in this country is not as rosy as the headline number would suggest. So now you marry that with tap dot consumers and inflation which is still high. Granted that inflation might only be grown at four percent this year. That's four percent on top of the twenty percent it's grown over the past three years. So we're
looking at a market. So to answer your question. It's great. Who knows ken consumer continue to power on perhaps, but we do know that they're facing a considerable wall and eventually at one point they're going to have to cry uncle when that is. Your guess is as good as mine.
Thank you for this. Stephen, really great having on with us. Matt Stephen Short, founder and president of the Short Group. And coming up next we'll take a closer look at the health of the country's retailers. Will be speaking with Bert Flickinger of Strategic Resource Group and put them Goyle, senior retail analysts at Bloomberg Intelligence. It's twenty minutes past the hour, Nathan Hager, and this is Bloomberg Welcome back to this special edition of Bloomberg Daybreak. US markets are
closed for the June teen holiday. I'm Nathan Hager. Thanks for joining us. We want to turn our attention now to the health of the country's retailers, and for that we have a special holiday roundtable for you. Joining us now Bert Flickinger, Managing director at Strategic Resource Group, along with Punham Goyle, senior US retail analyst at Bloomberg Intelligence.
It's great to have the both of you with us on this holiday, and we are doing this as we come off the latest read on retail sales, we are still seeing signs of slow down in the American consumer. Bert, I'll start with you, what does this slowdown mean in terms of where we could go for the rest of the summer.
Nathan, As you reference the monthly retail sales reported on the Bloomberg terminal yesterday Tuesday, it's stick an ask. It's the worst of times for retailers. It's the best of times of times for retailers like Kroger and Costco. Costco hit a fifty two week high. Kroger's doing a very constructive, well intentioned merger with Albertson's the lower prices to consumers even more as consumers are fighting record inflation, which you're
seeing in the rest of retail. Nathan. That the only other elements other than food retail that are doing well or off price, led by TJX and other off price, with a handful of specialty retailers also putting together strong results too.
Speaking of specialty retailers, Punham, I know you cover those, particularly in the specialty apparel space. Is it a best of time's worst of time situation in your world as well.
Well, I think there is a confluence of events that are happening. So you do have a weaker consumer that's spending less undiscretionary, but at the same time, you have this fashion cycle where consumers are out and about more so they are spending a little more in apparel. They're just deciding where to go. So we think in this case, the retailers that are benefiting with a play on value are some of the ones that we've seen rise very fast.
Those you know, Chinese based or originated retailers, whether it's Shean or Temu, They're they're starting to take share. And then the Walmarts of the world, we've seen that they've posted strong results and they continue to make their play for value, drive consumer interest, whether it's the high end now or even you know, continue to keep the mid and low tier consumer.
Well, if we do bert continue to see pile into sort of lower priced retail names and sectors, what could that mean for some of the higher price point companies. Are they going to have to start bringing in sales this summer.
Yes, the higher price companies will have to bring in sales, and it's going to be tough. In a presidential year with record ad spending and costs to bring in that consumer. And also what's interesting is in our strategic Resource group analyzes chain drug, which is normally a safe harbor and typically good and affordability, is struggling. Walgreens down seventy five five years, write a down ninety nine point seven CBS
down fifteen percent. Walmart wins. As Poonam said, and you said, Nathan and Kroger Elbertson's with over four thousand pharmacy went. Pharmacies win and consumers win. But unless it's everyday low price or price impact like Costco, like Winco, like TJX, Ross, Dress for Last, et cetera, promotional will still be a big part of the playbook for Macy's and others, but it'll be tougher to track customers. As Punham reference that shoppers are spending for want, not for need.
So in terms of the retail names that you cover, Poonam, how could that play out for names like some of those apparel companies that you look at, are they going to start discounting as well?
They will start discounting. I mean, discounts will definitely come into play. And sometimes it's not a function of the inventory that they have at hand. But it's the neighbors, right, So if the stores around you are discounting, you need to show the value proposition too. But there is a group that I cover that I think benefits in this environment, and that's the resale companies like Rent the Runway, like
thread Up, Poshmark. These companies have a resale element to them and eBay and they drive the value message across pretty nicely. So we think that they're going to benefit in all of this.
And Bert, what about the interplay between brick and mortar stores and e commerce? How do you see that playing out into the summertime.
We're seeing Internet sales trailing twelve month growth rate below seven percent for a long time, so still strong, still
stronger than the rest of retail. But people are going to bricks and mortar because, as Punam said, they're own to Walmart, they're going to Target, they're going to Costco, aldi in Kroger, and they want to see the produce and see the meat, especially with meat prices soaring because of a b and bird flow affecting first the poultry flocks but now transferring over to livestock, so egg prices, especially for meat pork poultry are the highest in years,
with poultry still a value, but maybe not for long.
Of course, a lot of those names that Bert just referenced have some e commerce business of their own Punham, Do you see any interplay there, some divergence between foot traffic and clicks.
Yeah. Look, I think you know, for grocery, it's still a largely brick and mortar business, so I think consumers will prefer that channel for the foreseeable future as the way they shop for their produce, especially, But when you talk about the off price retailers that were just mentioned don't have a clicks business. Teach X is a very small online presence, so for those stores, if you want the value, you have to go into them. But on the same front, retailers like Amazon, which you know you're
shopping online. The reason to go to Amazon is because you can get the breadth of offering and you can get the convenience and the items same day, next day. So I think that's still a medium that people will want to shop at because they want their things quickly, and some people still don't like going to stores for some of the stuff that can be replenished automatically, and they don't need to feel in touch.
Speaking with Punam Goyle, senior US retail analyst at Bloomberg Intelligence, along with Bert Flickinger, the Managing director of Strategic Resource Group, Bert, I know something you follow in particular is the impact of movie attendance on brick and mortar mall traffic. It seems like it's been kind of hit or miss. I mean, we just had a record weekend for the new Pixar sequel.
Some other movies haven't done as well. What could this mean for malls in terms of this cinema traffic that in a lot of ways they've had to come to rely on in recent years.
Nathan, you synthesize it very well, hit or missed with fewer theatrical releases as a carryover from the understandable artists and writers strike, so fewer properties from Disney, Marvel, etc. From the major studios, so new releases don't come to
the rescue Nathan until after the December holidays. In the meantime, to your point, customer counsel are down thirty percent, and a lot to the movies at the malls, and a lot of those customers cross over and shop after they go to the movies, especially families with large presence of
children or caregivers going with children. So at a time that the malls are suffering and Walmart's abandoning tens of millions of square feet of real estate that reached their plan absolescence, some of the co anchors are either going bankrupt or where they're just segueing out as Walmart and Amazon do. And so it's very concerning crossroads for retail this summer, especially with the movie drop off for the first time in a decade.
Curious to get your view on the mall outlook as well, Punam. I know you spent a fair amount of time in the outlets as well.
Yeah. I think Look, mall traffic has been challenged for over a decade now and I don't see that changing regardless of where we go in the future. I see that there is a shift more growing to digital, which is going to continue to really deter especially the lower quality malls. Right. I think the A malls like the
Short Hills Mall in New Jersey, they'll have traffic. But when you go to some of these other malls when they lose the anchors, as brit just said, that the traffic really falls off, and that's going to continue to hurt the mall cycle in the stores within those malls.
Anything else besides movie theater, they can keep them all business going.
Bird BJS and Costco are constructively converting former Macy's, former Seers, former j C. Pennies to wholesale clubs as his wind Co a Esop, which is the highest volume food retailer in America and also the lowest price, even lower than Walmart.
So there is repurposing in the space. But to Punam's present point, we're seeing America go from four hundred percent over stored a decade ago in terms of retail mall space to between one hundred and twenty to one hundred and thirty percent over stored, which will be back in balance probably a few to no more than five years
from now. And there's going to be quite a commercial quote unquote casualty count with a even viable change closing brick and mortar flagship stores and undercapitalized chains going out of business.
We're also going to see America go to Paris in the next few weeks for the Summer Olympics. Just to think about summer in general. Punam, in your world when it comes to apparel sales. Can we see something of a Team USA gear bump?
Yeah. Absolutely. Look, these sporting events are back in full motion to how they were a pre pandemic. It's the first year, you know, we're really back the way we used to watch sports and attend sporting events. We not only have the Paris Olympics, though, we also have the euro Championships going on, and there's a lot of momentum, and there are new launches, whether it's by Nike, Aditas whom or the other names that are going to drive brand heat, and the teams that win and the endorsers
behind them are going to gain momentum. And that momentum really lasts right. It's brand heat that's driven today that will continue for the next six to twelve months because those product launches carry on their momentum.
What do you see as a potential bigger catalyst this summer in terms of retail shopping, Bert, is it the summer sports or could it be back to school later on the summer.
It's a combination that to Nathan, and also the wild card is our family used to be one of the largest restaurant suppliers, everything from fast food defined dining, and we know the math of McDonald's and BK and everybody else.
They've raised prices thirty percent over the last two and a half years, so we're seeing menu inflation and fast food, which means the customer that ten years ago eight eleven meals a week away from home and only ten at home, that customer is now eating about twenty meals a week at home. So they're shifting. They're spending from fast food and casual dining in home, where the basic markup for McDonald's on food is about seven hundred to nine hundred
percent over one thousand percent on beverages. So for the Bloomberg terminal math and for the consumer at home, you can see each person in the family for a dollar or to a meal for something you're going to be paying half one hundred to sixty five dollars a meal for a family five going through the fast food window.
So I think to the key reference points you've made back to school or BTS and sports, and the first major transformational shift from food away from home to food at home for the first time in nearly forty years.
Speaks to the challenges to come for the consumer. As you've been seeing just in the data this week. Thank you Bert, thank you Poonham for all of this. That's Bert Flickinger, Strategic Resource Group and Punham Goyle, senior US retail analyst for Bloomberg Intelligence. Now, next we're going to get you caught up on the government's latest anti trust cases. We're going to speak with Jennifer Ree of Bloomberg Intelligence as a special Juneteenth edition of Bloomberg Daybreak continues. It's
thirty seven minutes past the hour. I'm Nathan Hager, and this is Bloomberg. Thanks again for joining us on the special edition of Bloomberg Daybreak. West markets are closed for the Juneteenth holiday. I'm Nathan Hager. Big Tech has been in the crosshairs of US anti trust along with some other major sectors. So let's get an update on where some of these cases stand. There are quite a few to get through. Let's bring in Jennifer Ree, senior litigation
analyst for Antitrust with Bloomberg Intelligence. Really appreciate the time considering how heavy the caseload has become in your world. Jen, Thank you for this, especially when it comes to Google. Amazon's search giant is facing scrutiny on a number of fronts, isn't it?
Oh so many? That company has a lot of trials coming up, because I really don't expect settlements in any of them. They're a waiting a verdict in one and have several coming up, one in September and then one in the spring.
Yeah, so let's start with the one that's coming up. This is having to do with the search business, right, Well.
The decision that's going to come out anytime now, I think has to do with the search business, right That trial ended at the end of last year and then closing arguments were in early May, and I believe it could come out at any time, although my gut tells me that Judge is going to be very careful about this, and it's probably still a couple months before he decides and issues a decision just on liability, by the way,
not on remedy. So if he decides for the DOJ in that case, at that point, after that there will be a hearing on remedy and what the proper injunction would be for Google on this one. I think this is on Google Search right, just to be clear, and it's about whether or not it's default its agreements to be the default search engine in a lot of different places where people have to access the Internet and don't even really know they're using a search engine like set
behind Safari in the Apple devices. Whether or not, those four closed other competitors and really led to maintaining the dominance that Google Search has obtained over the years.
So what could a potential ruling mean in terms of damages, in terms of the kinds of changes Google might potentially need to make to satisfy the Justice Department?
You know, that is a really big question, and so many have said the DFJ didn't really think through what the proper injunction would be if they did win. There are no damages at play here. This is not about money. This is about changing the conduct of the company. And I think there are a few options, and the judge might actually impose several of them rather than just one. But I think the most obvious one would be to
prohibit them from entering into these default search agreements. I mean, they're paying something like twenty five or twenty six billion dollars a year to various companies to have that default position. I think twenty or twenty two something like that alone, just to Apple and the judge could say you simply can't do that anymore. But the weird thing about that, Nathan, is that who does that really hurt? It hurts companies like Apple and Mozilla because the chances are still great
that they set Google searches the default. They think it's the better option for their users, but now Google doesn't have to pay them. Another option would be something like what's happening in Europe, where there have to be at least in Android devices and in Chrome these are the properties owned by Google. There would be a choice screen. So if somebody buys a new Android phone and they're setting it up, they'd be given a choice as to what search browser they want a search engine I'm sorry
to be as their default. That's another option. The judge can't force Apple to do that, but can have Google do that in the Google owned properties. And I think one other option would be forcing Google to share some of the data and maybe even algorithms that it uses for all the searches that have been done over the years, because there was a lot of evidence in trial that every single search that's done allows that search engine to improve,
and the more searches you have, the better the search engine. Becomes. And part of the reason that some of the rivals haven't really been able to become as good as Google Search is because they just simply haven't had that scale.
I mean, if we saw some kind of remedy like that, I mean, that could be a major change, a major issue for Google. I mean, that kind of data is something that big tech companies really hold close, is it?
You know?
Absolutely? But I will say Google's argument was, look, we're just better. We've put a lot of money into improving this search engine. We have the best people, the best R and D, We've spent a lot of time on it, and we're really good. And if that's true, if that's their argument, well then the companies will have to prove they can do that too, once they have the data. And that's not necessarily a given.
Now.
In terms of the other cases that the Google is waiting for, we're also looking for some remedies in the Epic Games lawsuit against the Google App Store, how are we expecting that to go down?
Well, you know, I would say that the first hearing on that surprised me a little bit because the judge is really really intent on a remedy that covers every single thing that the jury found the Google had done unlawfully. So this is there was a verdict already and a jury found that Google was unlawfully maintaining a monopoly both for the distribution of apps on Android devices but also for the payment of apps or the in app payments within the Playstore. So the judge talked about what we
would expect. He said, Google's going to have to let other companies distribute apps on Android devices, so in other words, there'd be other app stores on the device outside of the Playstore, and also let other payment services companies exist on the Playstore and in these other apps, so that the developers could process the payments through those companies and
not through Google. The thing the judge did that was surprised me a little bit is he said, look, these companies need a bit of a leg up because Google has suppressed them for so long. They need to get at foothold and get some developers that are willing to develop apps just for their store. So Google, maybe what you're going to have to do is provide your entire catalog, your entire Playstore catalog to these other distributors for some matter of years, maybe two, and allow them to sell
your apps. Now Google would take the profit from that, would get the revenue from those sales, But what it would do was it would get a foothold in there for these other app stores, so they could get to know developers. They could get some customers and start to develop their own apps and make money that way.
Wow.
Really fascinating to think about some of the sea changes that could keep coming in the tech sector. We're speaking with Jennifer Ree, the senior litigation analyst for Antitrust with Bloomberg Intelligence. Now, outside of big tech, there's a lot to talk about. We just had this major case filed over the Live Nation Ticketmaster tie up. I know this is early days, but what's the thinking about where this could go down?
You know, it's an interesting case because I think they're really after reading the complaint, which is all we have, and it was not an unexpected complaint. I think people really differ on how what they think about the strength of the complaint. I happen to think it's a pretty good one. They are aspects of the complaint that are weaker in aspects that are stronger, but I tend to think it's a pretty good one, particularly where they allege
that the companies engaged in unlawful exclusive dealing. In the antitrust world, if a company that has a monopoly in a market tied up with exclusive deals, long term exclusive deals, I should say, more than about forty or fifty percent of the outlets for whatever that product is, which it's apparently according to what the DOJ says, the facts are at this company is done. That means it forecloses its rivals. Its rivals can't get in there and enter those contracts.
What I'm talking about is Ticketmaster and the agreements that the company enters with venues for Ticketmaster to be the exclusive ticketing agent for anything that takes place at that venue for like ten years or fourteen years, it means seat Geek or some other company can't come in there and sell tickets. And it's pretty straightforward in antitrust law,
that kind of an agreement can violate the law. I mean, all of the facts are taken into accounts, so you have to look at whether it's terminable, whether it's terminable by will, as I said, the term of the agreement, and many other issues related to that agreement, but just on its face, if the facts are as the DOJ says, it looks like there's a possibility they could at least get some traction on that claim. We also claim that
there's tying going on. And what tying is is Live Nation saying to the artist it promotes, and it promotes a lot of artists or artists that want to use its venues, I should say, and it owns and operates and manages a lot of venues. We have to promote you too. You can't perform in that venue, and that might be some big, great venue, particularly amphitheaters where the artist wants to perform unless you also hire us for promotion. Oh and by the way, we're going to use ticket
Master too to sell the tickets to your events. This can also violate the antitrust laws. So I thought those two claims were actually pretty good, and I think they go beyond what's in the consent orders that have already been entered by this company related to when the two companies merged. Some people say, look, this is just about violating that consent order. But this is beyond just violating that consent order.
You know, it's interesting to think about why this action was brought against Live Nation and ticket Master. Now when you know, the merger has been fairly contra almost from the time it was entered into more than a decade ago. I mean, why go after them now? You know it.
Really And this is why some people think the case is weak. They're saying, well, this is just political because why now? But I think you have to look at sort of the pattern of the history in twenty ten when they first merged and the deal was cleared, but cleared with a consent order. So a consent order is a settlement, meaning that the DOJ found the deal to be illegal, but the company was willing to enter a remedy that fixed at least what they thought would be
illegal about the deal. And you know what, they're looking into a crystal ball. They're not always right. These things don't always work, but they're trying their best, and it didn't really work. I mean, that's what history has shown. But they entered that consent order, so at that point they were allowed to go forward with the deal. Now, back in twenty nineteen, there were a lot of complaints from industry participants that they weren't abiding by the terms
of that order. At that time, Trump's DOJ did look at it open an investigation, I think just as to whether they're violating order, and found that they were. And what Ticketmaster said was, look, the terms are vague and ambiguous, we're not really violating it. But if you read the terms the way we are, but you need to clarify the terms. So the dj did that. They were much
more explicit about the terms. They laid out that the companies cannot retaliate against venues that don't use Ticketmaster and use arrival, cannot retaliate against artists or you know, anybody for not using any part of the supply chain for not using Ticketmaster, and they extended it by about five years. So I think we have a couple things happening. First, we're getting complaints that they're violating that order again now, and then you also had that the tailor Taylor Swift
fiasco that everybody knows about now. I should say that the investigation of the company was already ongoing before that happened. But what that did is provide an example of why more competition is needed in my mind and in the mind of many people, because it shows that without competition, the company doesn't really have to put a lot of money in R and D and innovation into their it, and maybe that's part of the reason for the failure.
Certainly the high demand might have been part of it too, but the it also possibly could have been better had they faced more competition to be better. So I think when you put all that together and you look at that history and you think, well, we settled once for violating the consent order, we can't just settle again because we'll look foolish. Now there's public attention. It's a politically
you know, it's a politically good case to bring. There's nobody that's going to be upset about us suing Live Nation. No one who's ever gone to a concert and paid for all those fees and paid for the ticket price. So why not just go for it now?
Now, apart from the Live Nation ticket master dispute, we do have some other anti trust cases coming up related to mergers that are pending. We also have an election coming up. How do you expect antitrust to potentially differ between a Biden administration and a Trump administration in our last minute?
You know, I think it's going to be uncertain because first it depends on who Trump nominates for DOJ and at FDC to be the decision makers, and you know, it's kind of a split in the Republican Party, some that are very business friendly and some that sort of like what the current FDC and DJ are doing. So it depends on that, but I also think it'll be a little bit erratic.
Thank you for this, Jen, really great to have you on with us.
Thank you.
That's Jennifer Ree, senior anti trust litigation analyst at Bloomberg Intelligence. Our thanks as well to Stephen Shork of the Short Group, Strategic Resource Groups, Bert Flickinger, and Punam Goyle of Bloomberg Intelligence. And thanks to you as well for listening on this Juneteenth holiday. I'm Nathan Hager. Stay with us. Today's top stories and global business headlines are coming up right now.