Hello and welcome.
I'm justinterreesy litigation and policy analysts focused on anti trust with Bloomberg Intelligence, and joining me today is my colleague Jenniferree are senior anti trust litigation analysts and for both of us, our coverage really runs across all sectors. Today's webinar is part of a series of conversations among the litigation and policy team at BI taking a closer look at this year's election now that it's in the rearview mirror, and the consequences we think the results will have across
several areas of the law and politics in the years ahead. Tomorrow, Gener will participate in a similar webinar with our colleague Matthew Shettenhelm to discuss election impacts on the TMT sector specifically, Our colleague Holley from will take a look at impacts on areas such as electric vehicles and industry is regulated by the EPA. But first a quick word on who
we are. Bloomberg Intelligence is the investment research platform on the Bloomberg terminal, consisting of over five hundred professionals covering over two thousand companies. We cover companies from the perspective of equities, credit ESG Litigation and policy. Bloomberg Terminal clients can always reach out to us with questions about our research, and with that, let's get started. How we structure to
this Today is a conversation between Jen and myself. First focused on some macro thoughts by Jen about the Federal Trade Commission and Antitrust Division at the Department of Justice. I'll then weigh in on some policy considerations for the next Congress and provide a quick rundown of what we might see across the States. So, Jen, how you doing? Jumping right in here?
Good? Good, justin How are you?
I'm good, I'm good, glad the election is overfilling a little bit to me too, Thank everybody is. Oftentimes it's said that personnel is policy, and that was certainly true during the Biden administration with respect to antitrust enforcement initiatives of Biden's assisted Attorney General in Charge of Anti Trust Jonathan Canter and the Chair of the FTC Lena Khan, in particular, many in the business community who will be glad to see when they see Lena Khan leave the FTC.
What do you think when do you think these folks will be replaced by President Trump, and what impact do you think that'll.
Have, Thanks Justin, I mean, it is true. I think the business community is really happy about the likely exit of Lena con from the FTC and Jonathan Cantor from
the DJ as well. You know, it's true that President Biden's anti trust enforcers have really been a thorn in the side of businesses, and that's because they just ramped up anti trust enforcement across the board, right you know, they made it a point to use what they called every tool available to them to slow consolidation of industries and to try to curb the conduct of dominant firms. So that means that they challenged way more proposed deals
than previous enforcers. And they filed or at least continued lawsuits over monopoly stick conduct against Alphabet, Apple, Amazon Meta, and Live Nation, among others. I mean, those are just the cases I'm following. I know you are following even others in other cases many So let's talk about what will happen now that Donald Trump's been elected. So Donald
Trump President Trump two point zero. As we head in, I think it's a certainty that both Cohn and Cantor will be replaced, though right now, it's not clear at all who the new you know, antitrust decision makers will be or when they'll be installed. I just kind of want to dispel one thing that I've seen out there, this speculation that Trump would keep lean to Khan at the FDC, because his Vice president JD. Vance has really
been quite vocal about his support for Khan. You know, one, Yeah, you know, I mean.
A lot of conversation around this.
Yeah, right, I mean, how weird that at one point here at Bloomberg, when he made a speech maybe a year ago or a year and a half ago, he said he thought the only person in the Biden administration who was doing a good job was Cohn. I was really surprised when I heard that.
Total.
Yeah, so he's aligned with this really aggressive enforcement approach that she's taken. But let's just say, I highly doubt that's going to occur.
Now.
First, it's not I don't think it's usual that a president is going to follow the advice of his vice president about who to appoint. And I think it's a near one hundred percent likelihood that Trump's going to install his own people. I mean, this is just the right of a new president. That's what they do. He's going to want his own people that will shape his policy loyalty aside. That's the loyalty aside exactly Now timing, I mean, this could be any time in the one Q next year,
or even into the second. I suspect what's going to happen is that both Conna and Cantor are going to leave on their own once Trump is inaugurated, and it could take months before he names new people and they get confirmed by the Senate as needed. Now that's not because Trump is going to have any trouble finding anyone or getting the needed votes, right, He's got the solid GOP majority in the Senate. But it's really because there's a lot for a new president to do and for
Senate to do. With the beginning of new term, other appointments are going to be a higher priority. So I look back at similar changes in party after an election, and I saw that the fastest replacement of a chair at the FDC was about six months.
Wow, Wow, I'm left then, yeah, right.
But the process can take a year or more.
So.
The thing the question I have is is con going to leave on her own in January? Which I suspect the most likely outcome or is she going to stick around till she's replaced, because if she does, it means it's about another six months before we're going to see some change. But I do think she'll leave and what'll But one thing that will happen immediately justin is that Trump can name his acting chair one of the two current Republicans, So that would be either Melissa Holyoake or
Andrew Ferguson right sow. So once new people are in and the agencies are kind of rolling along, a new Republican majority of the FTC, a new Assistant Attorney General in charge of anti trust who is a Republican at the Department of Justice, I do think there's going to be a pretty significant impact from the changes, and I think the first evident impact will be on M and A. And mostly that's because the current FTC and DJ are
really generally unwilling to settle deals. What that means is before these two current and Biden enforcers, it used to be that most deals that raised antitrust issues could still close, but the companies would have to agree with the relevant agency either to sell off certain assets or make commitments as to their post merger behavior in the market are both right, but con and Kanter are the first that are of the view that problematic deals should just be
prevented wholesale. So what that meant was that under their watch way more deals than before were either abandoned or had to go to court to defend the deal and had to win a court in order to be able to close the deal. And we have very very few settlements. So I think one main thing that the trump enforcers are going to bring us is back to a place where settlements are more commonplace, and so that means more
deals closing than being abandoned or blocked in court. And I also think the new GOP majority of the FTC and the Republican AAG at the DOJ will make some changes we'll talk about later to internal guidance issued by Biden's FDC and DOJ. So just really quickly before we move on, before I go on too long about this. Also, there are ongoing lawsuits against dominant companies. I would say there's going to be no major impact on those litigations in the short run. They are ongoing, They're going to
continue their courses in court. It's certainly possible that the new DOJ or FDC may be more amenable to a settlement, but I think that's going to be way down the road.
All right, makes sense, makes sense, sounds like it might be a bit more of a collaborative relationship with participants in the FTC exactly what we've seen most recently.
Exactly makes sense.
So you've mentioned some certain initiatives there and activities at the FTC and DOJ that you think Trump personnel might alter or resin. Do you have some specific examples you're thinking of on that front.
Yeah, very much.
So.
What I'm specifically thinking about are the FTCs and DOJ's joint Merger Guidelines. So these guidelines have been around for years and they're meant to outline how the agencies are going to assess proposed deals, and the guidelines also set thresholds for when a deal may be presumed to be anti competitive. Now, they're not binding the judges, but they have historically been adopted by judges that preside over merger
challenges in court, so they are useful. And in late twenty twenty three, the DOJ and FDC revised the guidelines, making several changes that collectively all made it such that a larger number of deals ended up sort of falling into the trap. They were considered at the outset to be anti competitive, which set them up for this agency for a challenge, right because they weren't going to settle, And it just means more deals fell fell under those
thresholds and got challenged. And I think one of the first things that a new Republican DOJ and FTC will
do is change these and probably scale them back. Both of the current Republican commissioners at the FTC have said they would revise the guidelines, so they haven't really elaborated on how or how much, but there's no doubt to me that if they revise them, it's going to be to pull back on some of the more novel or radical new aspects that were instituted in twenty twenty three, and that it will probably result in fewer deals being concer it or anti competitive at the outset.
Got it, Got it so turning a little bit here too. And I know I've heard so much from clients and other folks about this too, But I know you've focused for years now on the investigations and now lawsuits by government plaintiffs in the big tech space. So there's a number of these going ongoing right now. Do you see changes at the FTC and c OJ having any impact on those suits? And if you do, what do you think might happen?
You know, it's a funny thing. I've seen a lot of elation by companies and oh, everything's going to be so much EASi. Yeah, I've been you know everything, So all these problems are going to go away. You know that's not the case. I think that we need to remember that now. Specifically, the big tech cases I follow are our Department of Justice has two monopolization suits against Google, one against Apple, one against Live Nation, and then the
FTC has two one against Meta and Amazon. There are others that you're going to talk about, but these are the ones I'm following, sort of focused in the TMT space, And I think what people have to remember is that two of these suits were started by Trump's enforcers, and all of these investigations were launched by Trump's enforcers. So it doesn't necessarily mean that new Trump enforcers are suddenly going to go easy on these companies. I don't think
that's going to happen. No, there's a lot of history there absolutely a lot, you know, and I don't really know why there'd be such an a doubt about face. I mean, we've heard that Trump is no big fan of Meta and no big fan of Google. Now, certainly you might have the possibility that they'd be more amenable to settlements down the road for some of these cases. If we look at the Google cases first, they're just
too far along. I mean, in Google Search, we already have had a trial, we have a liability decision against Google, and now what the judge is trying to figure out are the appropriate remedies. And in this case, the DJ has said maybe not for sure, but maybe they would ask the judge for a structural remedy, in other words, a breakup of Google. We have said, and we have said now for a couple of years that we highly
doubt that would be the case here. Right, just because the DOJ asked for it doesn't mean the judge is going to order it. I think there's a very low chance below ten percent that the judge would order this. And everybody I'm seeing in the news people saying, well, now that it's going to be Trump's people, it definitely won't be broken up. But you know, at the end of the day, it's got a little meaningless because maybe it drops the chance from ten percent to eight percent.
It's all numbers.
Yeah, yeah, I don't think it was going to happen to begin with now ad Tech suit, which of course that was a trial you attended.
Yeah, yeah, And you've been.
Thinking about that and writing about that, And what you've told me is that you think there could be a liability decision there also against Google and I just from the complaint and having looked at the case myself, I would agree, But you also think it's unlikely that there'd be any breakup, right I do.
I do base on what happened a trial. That seems to be the outcome we're looking at already pre trub relection.
Yeah, yeah, so the Trump election doesn't really have that much impact on that. To me, where there might be some impact is the FTC suit against Amazon and the DOJ suit against Apple. I think of all of these suits, to me, at least those may be two of the weakest, and I do think especially the actually both of those
really lend themselves to settlements. You know, it's kind of based on the allegations, it's kind of easy fixes, and the FTC has settled suits against it or allegations against it in the UK and EU with respect to Amazon, and that we're very similar to the lawsuit that's ongoing here. They offered up some of these behavioral changes to this
FTC and those offers were rejected. And it's perhaps the current FTC, as this litigation goes on, may be more willing to open up the door again to settlement talks.
There makes sense, makes sense, got in on it all.
Right, So justin before I go on too long, I talk too much.
Last You're too great, Not too long at all.
That's a lot of good stuff there, and that's what's we've been chatting.
I guess, I guess. Before I move on to some questions for you, the one thing I do want to say is that there's been so much jubilation in the market about deals and the deal floodgates opening up, and I do think deals will get signed. In terms of deals getting signed and deals ramping up again, I do think the floodgates are going to open a little. But I don't necessarily think every single deal is going to get green lighted, you know, just because these are Republicans
and maybe might tend to be more business friendly. It doesn't mean that they don't challenge deals that are problematic and don't have an appropriate remedy, right, I think that's right, Yeah, exactly right. So I don't think people should think every big, huge deals can get signed now that are super problematic and that they're going to go through. There will still be deal challenges. The difference is there will be more settlements.
But let's move on to some other industries and which agencies have lawsuits or investigations that I know you're following, justin so tell us about the cases you're tracking and how you think they could be impacted by the election results.
Yeah.
Sure, So I here really looking at more of those enforcement actions brought up by the FTC and TOOJ versus
those kind of merger reviews. Right, And I think kind of part of parcels to what you were saying, Jen, You know, I think the big themes here that we're watching are a whether there'll be a greater appetite for settlement with the well, there's a greater appetite for settlement with the FTC and DJ under the Trump administration, or you know, perhaps maybe there's a more restrictive approach to to how these cases are brought if there's not a
straight reduction in the number of suits in and of itself.
Right.
So the first one that really comes to mind here is the case that the FTC brought in September against pharmacy benefit managers. And who do I mean there, I'm talking about United Health Optimum talking about CVS care Mark express Scripts, right. And when they brought that case, you know, they brought chose to bring that as a Section five proceeding under the FTC Act. And this followed an interim report by the FTC that they put out in July.
In that report, there was a lot there, right. They're talking about whether these these pharmacy benefit managers or PBMs are taking drug rebates from drug manufacturers, essentially pocketing those rebates or or you know, downstream the customers paying more money as a result of those rebates. That's a central allegation in these kinds of cases, right. And there's a whole lot of vertical consolidation that's happened in the healthcare
space outside of just PBMs too. But in July when this report came out, you know, they really the FTC focused on all of these things that were both anti trust issues and consumer protection issues. There were there was a discussion of how that practice might be affecting groups like local or independent pharmacies down at the consumer level, and you know that that really raised some anti trust concerns.
But when they brought this student September again, it was really crafted as this section five proceeding under the FTC Act, and really rang more like a consumer protection action than it did an anti trust case.
So that in and of.
Itself begs the question would a new FTC have brought that case that way? And we know that Commissioners Holyoake and Fergus and the Republican Commissioners commissioners there now refuse themselves from the vote to authorize that lawsuit. So that makes us scratcher heads a little bit here, and you know, it makes us wonder is that suit a mended perhaps in some way?
Is it settled in some way? You know that that that.
Is different than the course that's been plotted by Chair con and those voted in favor of the suit in September. It seems to be that could be the case. But you know, we know that that Commissioner Hollyoaks was supportive of action against PBMs when she was a solicitor general in Utah. That's not a not an issue that that that she's basically always a lot of support over FORPBM.
She absolutely hasn't done that. So, you know, I think the question becomes, what does this suit look like as time goes on?
Here?
Is it something that maybe takes a new form at the FTC? Is it something that might be punted to Congress? You know, because there has been this bipartisan kind of feeling that PBMs aren't operating in a way that's good for consumers.
So those are big questions.
And we know DJ you know, they're they're looking at United Health, or had been for some time. News reports indicate, you know, so is that perhaps a reframing of things as an issue about vertical consolidation versus kind of this consumer protection guys that the suit was brought under in September, So that that's one instance, Jen, And you know, another you know, I'm coming to mind is the dog's recent action against v set too, where there's a ledge monopolization in the debit card space.
So for years now, for years, for years, right, I was.
Gonna say that Visa has been in and out of anti trust issues for at least two decades.
At this point.
When I started practicing, I was working on a credit card.
Absolutely, and it's still going on in terms of damages. So you know that that to me, you know, really says that, you know, action in this space from an anti trust perspective. It's not a democratic or a Republican issue. It has happened under both sides of the aisle here, if you will. So you know whether again, whether or not there's an appetite to perhaps settle that case a little bit faster on the Trump administration, that's.
A question mark.
But we can't also forget that, you know, a move to block the proposed merger of Visa and Platt in twenty twenty that came from the Trump administration. So really, Visa is not on this favorites list there either, if you will, under a Trump two oh two point zero, we think. So that's just a couple of examples there that I think we're looking at.
Yeah, now, I'll tell you it's so fun need to me, because they're both such complicated industries, meaning the way they operate credit cards aren't necessarily complicated to a consumer. But actually the way it all works, right is complicated.
So many players. You don't see, so many.
Players, and what PBMs do. Who knows what PBMs do?
I still don't completely.
I wish I could explain it all to you clearly right now, but I'm still working on it.
When when it's so complicated, it seems to me is so susceptible to sort of bad practices, you know.
Yes, Yes, it's intentionally opaque, is what I like to say, intentionally.
Yeah, exactly.
Well, let's talk about AI, because that's another area we hear about a lot these days. And I know you're looking at how we anti trust enforcers are thinking about AI, because I think they're trying to get ahead of it, you know, instead of always being behind, which they often are in technology. So can you briefly explain what's going on in that space? And do you think the interest approach there might change?
Yeah?
So I think this one, this one really is a big question mark. I think moving into into Trump two point zero if you will, And to.
Your point in the question there too, that's exactly right.
A lot of folks, more progressive folks in the antitrust camp, if you will, are saying, look, this is an opportunity here to really step in and address anti trust issues in AI from the inception of AI, to kind of avoid a situation like we saw in the nineties with Microsoft's dominance of operating systems or Google's dominance of search that erupted because there purportedly weren't enough actions by the government to rein that in before it got out of control.
But you know, there are some complicating factors too. You know, there was talk in October about some kind of a comprehensive AI legislative package happening in a lame duck session this fall. But now that we're looking at this maybe republican trifact, I think we're you know, inching closer to that just looking at the headlines. We're recording this on November thirteenth right now. But you know, knowing that, it seems like a lot of those issues probably get punted.
To next year.
And you know, with Republican control, if that's what ultimately happens of both Chambers and the White House, they probably navigate that course they see fit to do it, rather than reaching some kind of a compromise, right now let's
send a Democrat. So that's a big question mark for AI think, and the big elephant in the room here really is China too, right, And the issue of competing against China is reigning in the dominance of these companies from an American American anti trust perspective, a problem for America competing abroad in the world of AI. And that's that's really where the conversation of rhetoric, at least politically seems to be headed right now. But you know, just
looking at some specific players here too. You know, we saw over the summer news reports that at the FTC was looking into Microsoft's twelve and a half billion dollar investment into open Ai and whether that raised any anti trust flags there, and DJ was looking at Nvidia and whether or not their acquisition of some smaller AI startups Run AI in Israel is one of them that they said reportedly we're concerned with and you know, they're perhaps
bundling of products, whether those things kind of raise I trust flags. So those investigations, if they are in fact ongoing, it really is a question mark do they continue and to what extent did they continue under a new a new Trump FTC And DJ big question mark there.
Yeah, And you have such differing perspectives about innovation and tech innovation. You know, there are those that think like the innovation has to be taken on by those with a lot of money, right offers that can do the R and D and have giant teams of engineers and and and then there's another other group that thinks, no, you know, these gatekeepers squelch innovation because they you know, new startups just can't compete and so they just don't occur,
right right. So it's just it's just interesting. And even though you know, being able to better compete with China is not really supposed to be a defense to anti competitive.
Content, right market right right now?
I know you hear people talk that way.
Yeah. Absolutely.
I think that political rhetoric, a lot of it really probably shouldn't find its way into anti trust considerations, but as you know, it does, right right there, you have it.
Yeah, So you know something that's been really quiet lately, leve activity. I mean, you're really keyed into sort of the way things work on Capitol Hill, and I know that it's been quiet with respect to antitrust legislation for a while, but it wasn't It wasn't quiet in twenty twenty two, in twenty twenty one that there are there were a lot of bills on the table. There are a lot of bills on the table now. I think
more will be reintroduced with the new Congress. So why don't you talk to us a little bit about that and thoughts on what can happen there.
Yeah, so I think kind of piggybacking on well, you know what we were just discussing with AI, you know again, kind of looking at this this world here where we think there's going to be Republican control of both chambers in the White House. Again, Well, you know, it's November thirteenth.
We'll see how that, how that ultimately shakes out. You know, we think it's unlikely that we're going to see this broad, sweeping kind of progressive legislation that you know, things things like like bills on broad on self preferencing across all industries, right, or are banning the use of you know, AI pricing algorithm them across all industries because they are, you know, purportedly are a price fixing mechanism.
I think those things.
Probably don't take off the way they might have if there were a blue control of at least one House in Congress right now. But that's not to say we couldn't see some of this industry specific legislation where there has been some bipartisan support over the years. And what I'm talking about with that is things like Live Nation, where there's been consensus that there's a real problem with
how tickets are sold. You know, everyone seems to agree that that that there is an inherent antitrust problem there, but not just that. You know, you've got Senator Mike Lee's America Act, which would essentially try to force a divestiture at Google, the very same that's being chased through
litigation right now, albeit through legislative means. So I think maybe we still see some activity around industry specific spaces where there is that bipartisan support, and again PBMs are a big part of that too, I think with the consolidation that's happened in that in the healthcare space.
But in terms of like these these.
Broad, you know, wide ranging rewrites of the Sherman Act, I don't know that we're going to see that though, at least for the next two years in Congress. I think that's probably something that moves a little bit further to the back of the consideration.
Of course, the Department of Justice has an existing lawsuit against Live Nation, and I think the CEO or at least some executive that company said something yesterday about how they think, oh, they're going to have a much easier time with respect to this with the Trump enforcers. That suggests to me maybe they think they'll be able to settle. I'm actually not so sure why they think. You know, it's a very politically attractive case. I think that there
were hearings. If you went back and listened to the hearings in the Senate over I think maybe have been after the Taylor Swift concert tickets, nephew, I don't remember. It might have been some time after that, but there was really bipartisan anger at this company.
Yeah, absolutely, And everybody.
Buys tickets to something concert, sports, something, right, and everybody's upset about those fees. So what you know, I kind of think even if the Live Nation thinks there's some easier chance that they're going to be able to settle, if they do, Congress might step in into something.
Yeah, I think you're right. I think you're right.
I mean for a company that makes a business in selling two fans, it seems like they're are too many fans of the company.
But yeah, I think that's true. That's true.
Okay, let's just talk one last thing then, something that's kind of quiet. But in the anti trust world, it's important. It's important. In the anti trust world. I think people don't really realize how important the states are because they can enforce federal anti trust laws. So let's talk about the states. What do you think about them acting on anti trust policy in the coming years.
Yeah, you know, I think this is kind of a sleeper issue, if you will, in terms of what we might see under the next Trump administration. Let me just paint a little bit of a picture here too. You know, so if you think about the last time around, with the election of President Trump in twenty sixteen, and even you know, traditionally redder states, if you will, with the election of President Biden in twenty twenty, you know, what you really saw was a lot of pushback from states
around social issues. Right, So in twenty sixteen, we saw things like the establishment of sanctuary cities and sanctuary states, and you know, the enshrinement of things like reproductive rights and state constituo. But you know, those things are kind
of done. And since that time, you know, the antitrust movement has really gained in popularity, yes for sure through twenty twenty, and I think for that reason alone, it really could end up being a key piece of the pushback that you're seeing from more traditionally liberal states around what might be coming out of Washington or not coming out of Washington from their perspective. So what I mean there is, you know, states really can and do bring
their own enforcement proceedings. And you know a prime example of that is is the Texas case against Google on advertising technology.
That case was filed before the federal case.
Even though the federal case has already gone through trial and is about to reach a liability verdict at some point soon, you know, Texas initiated that case. Their trial is still on the horizon here coming up in March. So you know, it's a big issue. You know, even though we're not seeing a breakup there for Google, you know, those things are still on the table in a state brought action the same way they would be in a federal case. So that's something to keep in mind from
the states there, and same with Merger clearent. I mean in Kroger, you saw the Kroger Albertson seal. You've seen state's attorney general Attorney's General bring actions to try to stop it, at least within their boundaries too. So there is that real kind of threat from enforcement perspective from states.
But I also point to kind of legislative developments we might see here too, And you know, one to come to mind is no New New York has a bill on file the moment to update update the state's anti trist statute to include enforcement in a class action even against monopsonies. And what do I mean by monoptany know, it's a firm with dominant buying power in a market. And Amazon comes to mind right away there as a resaler of so many goods, right so so really, you know,
that's that's a real issue. You know, if that's a problem in New York, you know, obviously it's a problem for the company, so so many sales coming into this particular state, you know, in California as another example, last week we saw already Gavin Newsom is calling for a special session of the legislature there to kind of evaluate what they can do to push back against Washington the
next you know, four years or so. And in California know already there's an Anti Trust Laws Review Commission that's already been meeting and churning out recommendations as so what California's own state antitrust law should look like moving forward and Monopsony issue, and several aers including AI are also
on the table there with what they're looking at. So there really is both this legislative and kind of enforcement threat, if you will, that that comes from the States and could really I think heightened the next four years too.
Yeah, And I think one thing that's really important that we should mention also that's kind of under the radar about this is that it used to be that if a state filed a lawsuit under the federal antitrust laws, right, and the DOJ r FTC did too, those suits got consolidated, yes right, yeah, right, or yeah, or the states got consolidated with a private suit, which is actually quite different because private suits are usually class actions, and that's just
a whole different thing than a government you know, in ag.
Suer motivations might be a little more motivations are quite different, right for those kinds of plaintiffs and their lawyers.
But you know, we have the state. Then you act that passed with you know, with then omnibus funding bill last year, and what that meant was that the states no longer are subject to that consolidation.
Right.
That's why we've got that separate Texas suit. It's super weird, but Google's basically fighting three separate suits, yes, three separate courts that are almost the identical suits.
Right, and again, I just don't know that we see any signs of easing with that. All right, time goes on, so all right, well, I think that brings us to the end of our prepared marks here. But thanks so much for joining us, and you know, it's really been a pleasure today, and please feel free to reach out anytime to other gender. Myself on the terminal, I will be here as you navigate all of this for the years I had.
Thanks.
Thanks Justin. Bye,