December 5, 2025 • 43 mins
Analysis of antitrust risk attendant to bids for Warner Bros. Discovery by Comcast, Netflix and Paramount Skydance was among the topics discussed on Bloomberg Intelligence’s Votes and Verdicts podcast this week. Jen Rie explored that issue, while Justin Teresi analyzed Real Page’s settlement with the Justice Department over alleged collusion in the real estate rental market as well as Compass’ antitrust suit against Zillow for allegedly steering consumers to real estate agents who pay for placement. Matt Schettenhelm addressed the potential for owners of US TV stations, like Nexstar, to consolidate if the FCC eases existing ownership rules. Nathan Dean discussed deregulation for regional banks like US Bancorp and PNC. Holly Froum analyzed Bayer’s petition for Supreme Court review in Roundup weedkiller litigation.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:15):
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg Terminal.
Bloomberg Intelligence has five hundred analysts and strategists working across
the globe and focused on all major markets. Our coverage
includes over two thousand equities and credits, and we've outlooked
(00:36):
on more than ninety industries and one hundred market industries,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today's our weekly look at
the litigation and policy catalysts that we're watching and that
we think will impact companies across a number of different sectors.
My name is Elliott Stein. I'm an analyst with Bloomberg
(00:57):
Intelligence covering litigation in the financial sector, and I'm delighted
today as always to be joined by several of my
BI colleagues. As always, you can find all of our
research on the Bloomberg terminal at BIG and you can
find our litigation and policy research on our dashboard, which
is available at BI laws go on the Bloomberg terminal.
(01:18):
Just to time stamp this episode it is exactly three
pm on Wednesday, December third, twenty twenty five. And with that,
let's get things rolling. Let's bring in Justin Toesi to
talk about antitrust in real estate. Justin, come on in,
how you doing.
Speaker 2 (01:35):
Hey, I'm good, Elia, Thanks so much so. Lots going
on in an anti trust space right now with real estate.
Of all things, are a couple of big developments the
last couple of weeks here, but the first one involving
these AI algorithms that landlords have allegedly been using to
combine kind of confidential or secret data that they have
about their vacancies, their rent rates, their kind of plans
(01:57):
to fill their buildings in the future, sharing that data
with what another to basically come across to price fix
rental rates across different markets nationwide. So what happened here.
There's a bunch of private litigation going on where real
estate investment trusts have been sued, as well as this company,
real Page, which is a software provider that's really been
mixing all of this information together. Allegedly, there was a
(02:19):
big suit last year by the Department of Justice, kind
of the Capstone suit in this area. A few states
joined into that litigation, and a few states have actually
brought their own lawsuits on anti trust grounds with similar
sets of allegation. So what happened last week DOJ really
big settlement there. DOJ basically says you can't use this
non public information anymore sharing this information between landlords to
(02:43):
set your prices. So that's a pretty big development here.
You know, we've been thinking for a long time that
some of these AI algorithms were going to trigger some
anti trust issues. You know, it's not your traditional three
men sitting around a table in a smoky room the
way you might think of these price fixing conspiracies working.
But that a technology, it really serves that same purpose, right,
You're really seeing that same end result from using this platform.
(03:06):
So that's the big news from DOJ. Landlords can't use
his software and have this auto accept setting anymore, where
you know, the software spits out a price and the
landlord just has to accept it automatically.
Speaker 1 (03:18):
So I think that's pretty significant. So was there no
monetary penalty as part of that settlement? This was just
sort of like an injunctive type of settlement.
Speaker 2 (03:28):
Yeah, that's right, and I think that's a big reason
probably why we've seen some of these states that are
joined in that lawsuit not join onto the settlement, So
I think it's possible. You know, We've got Arizona, Washington State,
the District of Columbia. You know, a lot of different
jurisdictions have decided to bring their own cases against Real
Page and varying landlords like Camden Property Trust or Avalon
(03:48):
Bay UDR. It really varies from jurisdiction and jurisdiction. But look,
I think the states probably will continue to pursue some
civil penalties against Real Page and these landlords, probably for
manageable amounts, right, But you know, the cavey up there
too is that I think some of these states are
also going to pursue regulation and legislation around this issue
(04:09):
at their own state level. So you know, I think
signing on to a settlement that DJ is a part
of and then seeking some legislative change that flies in
the face of it, that obviously prevents a bit of
a problem there for states looking to regulate. So that's
really the landscape I think here moving forward on these
AI algorithms.
Speaker 1 (04:24):
At least with real estate. All right, it super interesting,
always great to talk about AI collusion and landlords all
in one case, what.
Speaker 2 (04:31):
Else do you want to So also in real estate
this time kind of turning the page here a little
bit away from real page. We're looking at Compasses lawsuit
against Zilo, right, and this really involves for sale home listings,
you know Zilo here. Obviously, I think I have the
app on my phone. This is part of the problem, right,
most folks have the app on their phone. It's one
(04:52):
of you know, folks favorite apps to kind of look
at when you're and you're in the home market, or
maybe you're not in the home market. You just want
to see what's going on in your neighborhood, right you know.
Speaker 1 (04:59):
Yeah exactly. I know you live in the city. We
in the suburbs. Just like to see the value of
our houses, right sure.
Speaker 2 (05:06):
Sure, yeah, yeah, I mean I'm looking at the value
of my potential future there, I hear it. Yeah, yeah, definitely.
But look, you know, I think what's going on here
is that Compass. You know, the federal rules around these
things from the National Association of Realtors, they got relaxed
in the past year. And in response to that, what
Compass did is it developed this three tiered kind of
(05:28):
private exclusive listing system where they could withhold they could
try to you know, get a temperature around the value
of a real estate listing by showing it in an
office or between you know, preferred clients, perhaps at Compass
kind of having a coming soon mode on their own
website where folks can kind of get a taste of
what's coming to market. And then on that third phase
it would go out to Zilo and through the MLS,
(05:49):
the multilisting service to all these different websites. Zillo is saying,
wait a minute, we don't really like this here because
by the time it gets to our website, it's already stale. Right,
it's already been marketed, and it's a reads our product.
That's their big response here. And and turn what they've
done is developed this ban well that's what Compass calls
it the ziloban. But you know, they developed this policy
(06:09):
where if something's been marketed for twenty four hours anywhere else,
it can't appear now on Zilo's website. So that's the
crux of the of the dispute that's going on right now.
There's a lot of good arguments on both sides here
sides here too. Now I don't think either party really
comes off as looking like a hero in the in
the scenario. I think that's a big reason why we
(06:30):
ultimately think the case is going to settle jury trial
really unproductible. Right on the one hand, you know, Compass
looks like it's withholding listings from the public, right and
I found maybe you know, a middle income a person
looking to purchase at home and I can't see all
the listings that are out that are out there. That's
not necessarily fair. But then on the other hand, here too,
you've got Zilo saying, you know, look, you know, not
(06:53):
also not looking good in the sense that they're they're
kind of bullying these other folks who want to get
on this home search market, you know, really kind of
adopting these aggressive stances versus competition. So you know, it's
really a role of the dices of how a jury
would go. And last week there was a preliminary injunction
hearing at the Southern District of New York. Look, I
think it's a close call, but I just don't think
(07:14):
Compass meets that bar for a preliminary preliminary injunction to
block this ban because there are so many questions still
left to answer I think later on at a trial phase,
if the case ever did get there.
Speaker 1 (07:26):
Yeah, so, all right, so you went thatliminary injunction hearing
was last week. You went to court for that. When
do you so? And you're leaning towards Compass's motion being denied.
It sounds like when do you expect to hearing?
Speaker 2 (07:42):
I mean, yeah, so I think we'll probably get one
out either either later in December or January at latest.
I do think there's a little bit of a of
a speed issue involved here, which is not a surprise
given that we're talking about at preliminary injunction. But look,
I do think it's a bit of a closer call
than I thought it was in I think the law
here is on Zillo's side at least in terms of
(08:05):
winning on a preliminary injunction not being issued. But I
do think the judge had, you know, through comments made
by the court of questions posed by the court, I
do think she probably has some issues with the way
that this quote unquote Zilo band has been you know,
has been you know, introduced to the market, if you will.
So it's a little bit of a roll of the
dice there either way, there's I don't think there's any
(08:26):
way that that Zillo is able to defeat these claims
in emotion to dismiss that gets us into discovery and
again the jury trial being so risky for both of them,
it's got to be a settlement, I think down the
road here, that's really what it looks like.
Speaker 1 (08:38):
Got it? And just one last question, who's the judge?
Speaker 2 (08:40):
Yeah, oh, it's a judge Jeanette Vargas. She's buying an
appointee relatively new to the court, but you know, she
she I think this might be the first anti trust
case that she's had before her so far, but really
steeped in bankruptcy law a lot of these more technical
areas of the of the law before coming to the bench.
She's actually hearing one of these brand new anti trust
cases involving know, just trust, debt and viability management exercises.
(09:03):
So it's going to be really interesting, I think, to
see how what she does here and in some ways
see how far she's willing to go and how that
could apply to other cases coming up before her in
the near future.
Speaker 1 (09:12):
Are got it?
Speaker 3 (09:13):
All?
Speaker 1 (09:13):
Right? Great stuff? Justin thank you, We'll let you go.
I know, you have a place to be. Let's bring
in Let's stick with the anti trust and bring in
Jen Ree Jen. You had such a great note like it.
I think it was yesterday. I've lost a little track
of time. The headline was quote Paramount best on anti
trust in Clash of the Titans for Warner end quote.
(09:35):
You know I always love a good Clash of the
Titans reference. And this note was all about this bidding
war for Warner Brothers discovery between Comcast, Netflix and Paramount Skuidance.
And you had this great note analyzing sort of the
different anti trust risks that each bidder might pose. You
(09:58):
want to just you know us more about that.
Speaker 4 (10:01):
Sure, Yeah, you know, Elliott, I really wanted to use
big Warner movie in the title, And it turns out
that one of the biggest grossing movies of Warner is Barbie.
But there's just wasn't any way I was going.
Speaker 3 (10:10):
To work for.
Speaker 1 (10:11):
That's a hard one to spin into a title.
Speaker 3 (10:13):
Yeah, so I went with Clash of the Titans. But
you know, let me just preface this by saying what
anti trust generally and in particular the merger control piece
of anti trust is actually really subjective. I know, that's
weird to say, but anti trust has no black and white,
no yes and no. It's all gray.
Speaker 4 (10:28):
And that means reasonable minds can differ on a lot
of the elements that are needed to assess a deal.
And I say that because what we've seen so far.
This plays into how I think about this, because we've
seen so far with the Trump administration that the Department
of Justice hasn't made its decisions entirely independently, that they
seem to be quite focused on outcomes that align with
(10:51):
the policy priorities of the Trump administration, even if maybe
they're not completely aligned with the anti trust laws. And
that can mean crafting a remedy or maybe erecting arguments
and seeking to block a deal if either of those
things would be aligned with the policy priorities. And I
say that because this administration has already made it clear
(11:11):
that they like Paramount Best as the buyer and that
they have concerns about Netflix and Comcasts. So aside from
doing an actual anti trust analysis of the overlaps between
among these companies, we start with that risk that the
other two buyers have going forward, with the possibility of
arguments being constructed by the DOJ. To seek to block
(11:31):
and as I said, you know, there's a lot of
flexibility for the DOJ. There are reasonable arguments that can
be articulated, even if they aren't winners at the end
of the day. But Paramount starts. It's run by the Ellisons.
They are friends with President Trump, they are aligned with
his goals. President Trump has already been vocal about liking
Paramounts guidance better and already, by the way, just clear
(11:53):
to deal between Paramount and sky Dance. That was a
merger that recently was cleared as well. But we think
Paramount actually better from an antitrust perspective too, because even
though all three of these companies have overlaps and have
some problems, we kind of walk through reach of Paramounts
and thinks that they are resolvable or probably not problematic. So,
you know, if you look at streaming HBO Max and
(12:15):
Paramount Plus, Paramount Plus is pretty small, and the combined
share here is about we think by subscribers is about
nineteen percent, and that's below thirty percent is kind of
a trigger number.
Speaker 3 (12:25):
Ideals that have a thirty percent share start to raise
the eyebrows and they need to be looked into more,
we don't think nineteen percent is going to trigger that,
so we don't really think that's a big problem. And
in the UK and EU, we really identified only France
and the UK as having overlaps here and they don't
really amount very much. Again, the combined shares are low.
Speaker 1 (12:44):
Does a justice department look at market share in other
countries as well? Does it take that into account or
is that a concerns us for other country regulators?
Speaker 3 (12:52):
Now for me, it's a concern generally for a deal
being able to get closed because they've got to clear
UK and EU two.
Speaker 4 (12:58):
And those two are key because they have the will
and the means the authorization to block a global deal.
So you know, while these deals often need to be
cleared in something like one hundred different antitrust jurisdictions, most
of those jurisdictions don't have the authority within their law
or the will to block a deal.
Speaker 3 (13:15):
But UK and E you would, and they do. So
we have to look at the risk there too, because Netflix,
by the way, has a giant risk in UK and
in some of the probably sixty percent shares sitting alone
right now in the UK. So I'll get into that.
But you know, movies. Again, there's movie studio overlaps between
Paramount and Warner Brothers Discovery, and that's at that borderline place.
(13:37):
Looking at box office share in the US that they
have about a thirty percent combined share, But that's on
the threshold. And if there's a good defense, that's probably okay.
And there is a good defense there is new entry.
Apple is a new studio, and there's some independents that
are doing really well right now that are new entrants,
and that's a very good argument, especially when your shares
are at that threshold level, So we think they're okay.
(13:59):
There may have a news overlap between CNN and CBS
that's easily remedied by selling CNN. But on the other hand,
President Trump has criticized CNN, doesn't like its coverage, might
be happy about the Lessons taking it over, so maybe
that wouldn't even be needed there now. The last thing
is they have a lot of sports rights combined. They
(14:20):
have rights to just about every professional and college sport.
Speaker 4 (14:23):
But these are contracts that expire. They can be competed
for at the end of the expiration. There are big,
powerful companies that compete for these contracts. I think that's
going to get a pass as well.
Speaker 3 (14:33):
Right, So those are all the reasons we sort of
like Paramount best from an edge dress risk perspective.
Speaker 4 (14:39):
Comcast comes in second for us. It doesn't really have
much of a streaming issue either. Peacock is pretty small, right,
so combined with HBO Max not too problematic. They do
have a giant through NBCU. They have giant movie studios
and that's probably their biggest problem. We think based on
box office they're at about forty four percent a combined
(15:00):
and again that's over that thirty percent number. And there
are also some vertical issues created because Comcast has broadband
and provides the pipes. You have content plus the pipes.
That can also create some anti trust issues. So we
think that there could be a problem there.
Speaker 3 (15:19):
Maybe they could divest a studio, not sure if that's
something they would be willing to do.
Speaker 1 (15:25):
What about does Comcast on NBC?
Speaker 3 (15:27):
Yes, Comcast owns NBC. That's where they have a movie
production assets.
Speaker 1 (15:32):
But is that an issue with NBC on Comcasts and
CNN under Warner Brothers.
Speaker 4 (15:36):
So that is not a thank you for saying that
I should have raised it. Comcast is not interested in
buying buying the entirety of Warner Brothers. They only want
the stringing and the movie studios, so they would not
be buying the very extensive lineup.
Speaker 3 (15:48):
Of cable channels that Warner has. But I do think
Comcast issues probably could be remedied. But the thing is,
they are also very reasonable arguments to go to trial with, right,
So there's a viable commit to hear that it's problematic,
and so if the Trump administration doesn't like it, they
can go into trial without being ashamed and with having
good arguments.
Speaker 4 (16:08):
Now, Netflix, I mean, you know, I think every that
kind of goes without saying. When you think about HBO
Max combining with Netflix, this is really problematic. They're well
over forty percent share in the US, and I think,
as I mentioned, they're worse in the UK and in
some MEU countries, and so they're going to have problems
with issues there too. And the other problem is that
they're both giant content creators TV and video, mostly because
(16:32):
Netflix isn't really creating movies for theaters, but they're both,
and this means they are hiring a lot of talent, right,
And this creates what's called a monopsony concern this is
too few, We're too powerful of a buyer of a
service or a product. And this is exactly the issue
that allowed the Department of Justice to successfully block Simon
and Schuster from buying Penguin Random House because that was
(16:53):
about a negative impact on the competition for top selling authors.
So it's kind of a similar situation here.
Speaker 1 (16:59):
And if I'm a oh, I think there were headlines
either earlier this week or maybe last week at some
point about the White House raising some interfast concerns about
Netflix's bid.
Speaker 4 (17:12):
Yes, right, and that's I said that. I think the administration,
whether through Trump or through White House senior officials, have
been vocal about all of these, and they've been kind
of fear that they like Paramount and I think they
say things like that because the bidding process is going
on now and Warner may want to pick the bidder
that has the least risk in getting through antitrust screens, right,
(17:35):
So they're signaling. The White House is signaling where they
are on this, maybe to influence the bidding now. HBO,
Netflix is really coming in hard, they really want to
do this, and they've said a couple of things. I
think There have been some suggestions they could divest HBO Max.
I don't really think that fixes their problems.
Speaker 3 (17:52):
It minimizes them obviously in Europe and in the UK,
but I think there are still issues here with Netflix
being the huge streaming service and Warner Brothers being a
huge content supplier. So now would allow Netflix to raise
its rivals costs by increasing licensing fees to must have
content or to even foreclose their streaming competitors offering a
(18:12):
great big bundle, and everybody moves off of Peacock and
all the other small ones and they move over to
this Netflix, Netflix plus HBO Max.
Speaker 4 (18:21):
They said, hey, this is going to be cheaper. We
could bundle them together, and it's going to cost people
less to get HBO Max plus Netflix than the people
who are buying both. That's just not a good anti
trust defense. I mean this is used all the time.
Anti trust goal is to keep a market competitive by
virtue of the market structure, not because a company with
market power is making promises about prices. Right, it's sort
(18:41):
of short term good for consumers, long term bad because
in the long term they can do whatever they want
to once they've killed off other competitors. Or diminished other competitors.
So I don't see that as that's the argument they're
out there making. I don't see that as a winning argument. So,
you know, a lot of considerations go into choosing buyer
and a bidding more eliot and anti trust really is
(19:02):
just one. So I don't know at this point who
they will choose. I do think that they roll the
anti trust ice have a riskier situation if they go
with Netflix or Compast, and I could easily see if
they picked either of those two. This process dragging two years.
Speaker 1 (19:18):
That's great analysis. And I mean the political reality is,
as you mentioned, paramount Skuydance seems to be, you know,
the obvious favorite. Do you have any sense of timing
on when you know when a deal gets announced or
when the spinning war sort of wraps up.
Speaker 3 (19:38):
All these things can go on for months and months
and months. I've even seen dragging out for a year
or so all that, you know, I think that that
completely depends on what Warner's strategy is, how quickly they
want to do this and get into a deal, And
that's just unknown information. So they would play those those
cards close to their best strategically anyway to get the
(19:59):
best big as fast as they can. So it could
be a month, if it could be six months.
Speaker 1 (20:04):
Got it all right? Great stuff is always jen And
that wraps up our antitrust segment of this episode. Let's
bring in Matt Shettenhelm to talk about consolidation in the
TV station space. So, Matt, you've been tracking the potential
for owners of US TV stations to consolidate if the
(20:24):
FCC his existing rules. And then on November twenty third,
President Trump jumped into that debate with a post on
truth Social and in that post he said, and I'm
just going to read the whole thing because I think
it gives a good flavor of what he was thinking. Quote.
If this would also allow the radical left networks to enlarge,
(20:48):
I would not be happy. ABC and NBC in particular
are a disaster, a virtual arm of the Democrat Party.
They should be viewed as an illegal campaign to the
radical left. No expansion of the fake news networks, if anything,
make them smaller, President djt end quote, uh so, Matt,
what do you make of that? Did that change your
(21:09):
view in any way?
Speaker 5 (21:10):
Yeah? Fascinating development. Nextstar had just filed its application with
the FCC five days earlier. And what you know, what
you didn't say is is his post was also retweeting
in a commentary from Newsmax, which was a pose opposing
the FCC's raising of the thirty nine percent cap. Basically,
(21:33):
TV stations can't reach more than thirty nine percent of
US households. This next Star deal would would require the
would make the company go way beyond thirty nine percent,
you know, under using some math, that's at least fifty
four percent. And so having Trump five days later retweet
(21:54):
that story is not what you wanted. It's something we
had warned about because Newsmax was was one voice in
these FCC dockets that had been objecting to the deregulation
in this space, and and we we raised the you know,
the possibility that President Trump might latch onto that, and
(22:15):
he's sort of unpredictable. And Brendan Carr at the FCC
is ultimately going to follow President Trump's direction on this,
the way the FCC is acting these days.
Speaker 3 (22:25):
But does it.
Speaker 5 (22:26):
Change my view ultimately, I'm not yet based on this.
And and you read what what President Trump wrote, It's
sort of written is sort of a if this lets
the broadcast networks grow larger. And I think there's an
opportunity for the FCC Brendan Carr to speak with the
(22:46):
White House about why this wouldn't raising the ownership cap
wouldn't necessarily also allow those networks to expand. There are
extra hurdles in the way of letting those networks expand,
and so you could ease the cap, the thirty nine
percent cap, without letting what Trump refers to as fake
(23:06):
news grow larger. And I think after you get you know,
some education going between the FCC and the White House,
I'm not sure this will crystallize into a firm view
against the cap.
Speaker 1 (23:19):
So what are what are some of those extra hurdles
that would make it harder for you know, the major
networks to consolidate.
Speaker 5 (23:27):
Yeah, so any anytime they they would propose a deal.
So if if you know, for example, right now, next
Star and Tegna are trying to combine, they filed an
FCC application, and so two things have to happen there,
not only to have to change the thirty nine percent cap,
but the FCC has to grant the application. And so
if you had any of the big news networks, you know, Disney, Comcast, ABC, CBS, Fox,
(23:54):
come in, they would need to file a separate application
with the FCC and ask the FCC to grant that,
and the FCC can always say no. So just raising
changing the rule on the thirty nine percent cap doesn't
mean that the FCC has to say yes to everything
forever going forward, because the FCC always asks is this
(24:16):
in the public interest or not? And that that says
does that comply with our rules? So you have to
get you have to change the thirty nine percent. But
there are still other rules and still other bases to
you know, sit on applications forever or to deny them.
And so I as well, as we talked about anti
trust earlier, but you know there's an anti trust component
(24:37):
to every deal as well, and so so there are
multiple hurdles.
Speaker 1 (24:42):
There are ways for the FCC to block some deals
and allow others to.
Speaker 5 (24:47):
Go back absolutely, and I think that will be the
message that they'll they will convey to the White House
and that it doesn't change the fake news that he's
concerned about. Y.
Speaker 1 (24:56):
So, what do you see as to path forward here?
Speaker 5 (24:59):
Yeah, so that application is filed, there's now a pleading
cycle at the FCC on it that takes us into
next year, and so there's there's what we're really waiting for, though,
is action on that rule making, which is all the
comments are in, and this is the rule making to
raise the thirty nine percent cap. That could come. It's
(25:20):
not going to come in December, because we already know
the agenda for the December meeting, but it could come
in the first quarter of next year, and that would
be announced at an FCC meeting where they would say, Okay,
we're going to finalize this rule making, change the thirty
nine percent rule, scrap it, or at least raise it significantly.
I think that will probably come first, and then you'll
(25:40):
see action on the next Star application. But you're likely
to see litigation in the middle of all of that
as well, because there's a really tough question that we've
talked about before and we don't need to get into today,
but can't please.
Speaker 1 (25:54):
Get well, well, well, just I know how much you
love talking about this. I don't let me stop you.
Speaker 5 (26:01):
You know, big question about can the FCC change the
thirty nine percent cap or did Congress write that in
law in a way where Congress would have to act here.
And so there's there's in my view inevitably going to
be a tough legal fight on the rule making, potentially
on the deal itself. The Next Star techna deal on
(26:24):
that question of can the FCC get rid of the
thirty nine percent or must Congress pass a law to
do that?
Speaker 1 (26:31):
That's going to be so interesting. So you might see
two separate at least two separate lawsuits or lawsuits on
two separate issues. Right the rule making itself and that
the specific TEGNA.
Speaker 5 (26:41):
It's very possible. It's tough to say exactly how this
is going to play out procedurally if one's going to
wait for the other. The Next Star, for example, has
asked for a waiver of that thirty nine percent rule.
If the FCC doesn't get around to, you know, changing it,
I don't know that they the FCC can wave it.
It really gets you to the same legal issue of
they can they change something that Congress sets and so
(27:04):
I'm not sure that's really much of a workaround, but
it's going to be fascinating legally to see it all
play out.
Speaker 1 (27:09):
Right in the first half, I can tell you're talking
at the bid for all this to happen.
Speaker 3 (27:13):
There and Elliott, I'm chomping at the bit to society.
Speaker 1 (27:15):
Yeh yeah, jump in here.
Speaker 4 (27:16):
I have to because Matt and I have worked on
this together, so I think, yep, it makes me laugh
a little bit because it could all be in vain
at the xCC, because the Department of Justice has an
entirely different way of looking at these deals. And I think,
I know, I said, they have flexibility to do what
the administration wants, but in this case they would literally
have to do.
Speaker 3 (27:33):
Acrobatics to reverse the way they have historically, year after
year after year.
Speaker 4 (27:39):
And super consistently looked at TV station consolidation and they
have never allowed one company to own more than one
of the big four stations CBS, NBC, ABC, Fox.
Speaker 3 (27:49):
In any locality. And like let's say, appending next our
techna deal would result in a lot of that kind
of overlap, and I think there'd still be a big
fight at the DOJ, which would seek divestis of a
lot of those stations.
Speaker 1 (28:01):
Oh wow, so the two of you are chopping at
the bits is. This is gonna be fascinating, all right.
A lot of really interesting moving parts and a lot
of interesting legal questions. All right, good stuff, Thank you both.
All right, let's move from de regulation in the TMT
space to devaguation in the financial space. Nathan Dean, let's
(28:22):
bring you in. How you doing, Nathan?
Speaker 6 (28:25):
Just filling the holiday spirit because the regulators are trying
to do so much before they go home for the holidays.
Speaker 1 (28:31):
All right, we all, aren't we? All? All right? I
know you wanted to talk about regional banks and dereguation
in that space. I guess there was a House Financial
Services here and I think yesterday that you watched you
want to talk us about that?
Speaker 6 (28:44):
Yep, So I watched all about three hours and fifty
minutes of it. So it was no I'm actually joking here.
I mean, well, it was three hours and fifty minutes.
But the House Financial Services Committee had a hearing that
featured the comptrourver, the currency Jonathan Gold, acting FDIC Chairman
Hill and FED vice chair Michelle Bowman. Obviously the NCUA chairman,
(29:05):
Kyle Hutman was also there, but he got two questions.
I think over those three hours and fifty minutes poor
and happens that way the SCA shows up and then
they get like two questions. But but the reason why
I wanted to talk about that this week is because
last week, the FED and the FDIC and the OCC
finalized the enhanced supplementally leverage ratio that was on par
(29:27):
with our expectations. Looks like it's going to return around
thirteen billion dollars in capital to the g SIPs. But
the reason why I wanted to bring that up bringing
up the regional bank is because the first question coming
out of Chairman French hills question was about regional bank relief.
Because we've talked all about investment bank relief before for
big banks, whether it's stress testing, the Basle three end game,
(29:50):
the g sibsurd charge, but nobody's talking about the regional banks.
And I put out a note last month talking about, okay,
what would happen if the regional banks were to get
some type of relief, what would it look like? And
Chairman Hill's first question on this is are you going
to give relief to the regional banks? So paraphrasing here now,
(30:11):
what Governor Bowman or Vice chair Bowman came back with
was they're evaluating it, they're looking into it, but they're
looking into this idea of thresholds. So the way it
works in the United States is that if you're a
bank that's above one hundred billion in assets depending on
where you are asset wise, and this isn't assets under management.
This is assets that you have in FDIC deposit assets
(30:34):
where you are fits within a certain category. If you're
one hundred to two hundred fifty billion, you're considered a
category four. If you're two hundred and fifty to seven
hundred your category three. If you're seven hundred up your
category two, or you're what's considered a g SIB it's
category one. And each category has different regulatory requirements stress
capital BUS for stress testing, liquidity coverage ratio. And the
(30:56):
challenge has been is the only threshold that is in
their STETE sjuatorially is two hundred and fifty billion enough.
That's what considers you to be a SIFY domestically systemically
important financial institution. If you're a JESIB or Global systemically important,
that's done by a global body and that's not part
of these thresholds. But the biggest question for these regional
(31:18):
banks that I'm looking at P and C Capital, ie
US Bank and Truist is the thresholds for those other categories.
So the one hundred billion, the seven hundred billion and
so forth. That wasn't set statutorially by law. That was
set by the FED back in twenty nineteen. So you know,
many associations and many banks have suggested, well, look, there's
(31:40):
things like inflation, there's things like nominal GDP. The economy
is growing and those thresholds should grow as well. And
so there's been a lot of talk about indexing these thresholds,
specifically that seven hundred billion dollar threshold to nominal GDP.
If you were to do that, then that seven hundred
billion dollar threshold comes up to be around nine hundred
(32:01):
and fifty billion. And so the question that Chairman Hill
had to the FED is are you going to do this?
Speaker 1 (32:06):
Are you gonna look at it?
Speaker 6 (32:07):
And so they said, we're looking into it. But Governor
Bowman has said in the past that she's open to
the idea. The reason why this is so important is
because if you're one of those banks that's just under
seven hundred billion, P and C Capital One, truest Us Bank,
which are all around that six hundred billion dollar threshold,
if that seven hundred billion is now rising up to
(32:27):
nine ern and fifty billion, we get to grow by
another three hundred and change billion without having additional regulatory requirements.
That's pretty good from an M and A opportunity or
an organic growth opportunity. So you can see why these
regional banks would be just dreaming of this threshold moving
up from seven hundred to nine hundred and fifty billion. Now,
our theory has always been is that the FED is
(32:48):
going to do this, but they're gonna do it after
they get through the big bank proposals, because cher Bowman
said Vice chair Bowman said in the same breath that
they have the Basle three a gain game proposal, and
they had the Jesup surcharge proposal to work on. We
think those are going to be out in the first
half of next year, probably first quarter of next year
for one of them, probably the Bossle three end game.
(33:09):
And then after that, as we get into the second
half of twenty twenty six, you're gonna see this, you know,
regional bank threshold proposal come out. The last thing to
throw in here is is that we talked a lot
about the be the pncs and the capital ones. There
is some love in here for this plan for the
M and T banks, the key banks, the ones that
are one hundred billion to two hundred and fifty billion,
(33:31):
and that is the FED can also change what's the
idea of the prudential standard, so they can loosen up
the liquidity coverage ratio, they can loose on up some
of the stress testing requirements. So there's definitely stuff here
in for that one hundred to two hundred fifty billion
dollars level. They're gonna get the love as well. And
I feel pretty confident I met a seventy percent chance
that they they'll put out this rule, this proposal in
(33:51):
twenty twenty six.
Speaker 1 (33:53):
Very interesting, And is it just the FED that has
to do it or also the FDIC.
Speaker 6 (33:57):
It's all it's about the FDIC, the OCC and the FED.
But they're well aligned. I mean they they you know,
they're they're they're aligned on this, and we just like
to look at the FED because Vice Chair Bowman usually
leads this. Although I was a little surprised last week
that the fdi C was the first one to finalize
the ESLR and that they did it, you know, in
(34:18):
a way that caused the FED to have to do
it behind closed doors. That's the first time that I've
seen that in fifteen years.
Speaker 1 (34:24):
Why do you think they did that?
Speaker 6 (34:26):
Well? Normally what has to happen is you have to
give a seven day grace period to have a meeting,
and you put the Sunshine Act to Notice out there.
But you can also do it under and seven days
if you deem it an emergency, and that emergency in
this case I think was Thanksgiving. Well look, I mean,
anybody who's been the Whole Foods the night before Thanksgiving,
(34:47):
you know there's an emergency. But you know, I don't
exactly know why they did that. I'm hoping our friends
of Bloomberg News can figure that out and do a
little reporting on that. Maybe if somebody's listening to this
from the FED or the FDIC, just give us ring,
tell us why it happened. But you know, it was
interesting because the FDIC finalized that they had a meeting
for it, and then the FED because they were you know,
(35:08):
in part of their blackout periods, you know, they didn't
have a meeting. They did this behind closed doors. Then
they released the vote afterwards. I've never seen that in
the fifteen years I've been covering Dot frank in financial regulations.
So interesting. Doesn't change anything. I mean, the FED was
going to approve it no matter what, so it's not
like it's controversial, but just interesting.
Speaker 1 (35:28):
Yeah, I mean, it makes it a little more puzzling
given the fact that it was going to.
Speaker 6 (35:32):
You know, I should state I'm pretty confident that I'm
wrong in saying Thanksgiving was the emergency. That's just the
tongue in cheek answer. So apologies. If anybody from the
FED or the FDIC heard that was getting a little
little uh, you know, I was just being tongue in cheek.
Speaker 1 (35:49):
There, All right, good stuff, Nathan, all right, Holly fellm
let's bring you in to talk about Buyer and all
the roundup weed killer cases that they're facing. I know
one adverse verdict that went against them. They have asked
for Supreme Court review, and the Supreme Court then asked
(36:15):
the Justice or the Solicitor General to weigh in to
get the United States view as to whether the Supreme
Court should take Buyers except grant sorry grant Buyer's petition,
and the Solicitor General weigh in this this week or yeah,
I think monthly. When was it first? Ye, Monday night,
December first, and said yeah, take the case, and buyers
(36:39):
stock shot up after that. So that's my summary. Why
don't you tell US, you know, in more detail exactly
what's going on.
Speaker 3 (36:45):
Sure, this is a long saga. So this has been
going on since I guess the first verdict I think
was in twenty seventeen. Actually twenty eighteen, I think. But yeah,
So they've been sued by over one hundred thousand consumers
who have said that their weed killer causes cancer. And
so Buyer's Monsanto appealed a one point two million dollar
(37:11):
verdict at a Missouri to the US Supreme Court, and
the jury had found that Buyer was liable for failure
to warn that its weed killer causes cancer. So Buyer
has argued to the Ninth Circuit and the Eleventh Circuit
that the claims are preempted. Basically, what they say is
the federal pesticide law, which is Fiffrau, says that manufacturers
must use the label the EPA approves, and a state
(37:32):
can't require They can ban a pesticide completely, but they
cannot require a label that adds to or differs from
the one that the EPA has approved. But the Federal
pestis said law also says that the product can not
be misbranded. So what Buyer has said is that the
EPA approved the label repeatedly register the product, and to
(37:55):
do so, the EPA had to find that it doesn't
have adverse health effects for humans. So they found it's
not carcinogenic, and they said that in order to comply
with the label that the state law is requiring by
virtue of these jury verdicts, they would have to say
it's cancerous, and that would be a state requirement that
differs or adds to from the label. What consumers have
(38:18):
said with the Ninth and Eleventh Circuit have found is
that the misbranding provision in the federal law, which says
that you know you have to warn of health risks,
is consistent with state law requirements which you know, basically
say that you have to warn of health risks, even
if the application of those requirements the state law and
of federal law result in different labels. So back in
(38:43):
I think it was twenty twenty one when the Ninth
the Ninth Circuit ruled the buyer had asked the Supreme
Court to weigh in on this. The Supreme Court asked
for this Solicitor general's recommendation as to whether to take
the case, and under the Biden administration said do not
take the case. But now what's happened was there was
(39:05):
another case that made its way up to the third
Circuit appellate court, and the third Circuit found that the
claims are preempted. So there's a circuit split and there's
a different administration. And this time when they petitioned the
Supreme Court, the Supreme Court asked for the sg's a recommendation.
The SGA, as you said on December first, is said
that the Supreme Court should take the case.
Speaker 1 (39:26):
And just just for listeners who don't know, SG is
the Solicitor General. That argus is Supreme Court cases for
the United States.
Speaker 3 (39:34):
Yeah, the Solicitor Generals. It's a tough one to say
over and over again.
Speaker 1 (39:37):
You can say from that one yes.
Speaker 3 (39:40):
So that's what's happened. And so the reason why that's
important is because the Supreme Court listens to the Solicitor
Generals recommendation most of the time, thinking that the Supreme
Court is actually going to take the case. And I think,
you know, I've said that if the Supreme Court, I've
said this for a while now, though I was wrong
the first time when I thought this where wouldake the case?
(40:00):
But I've repeatedly said that I think that the claims
are in fact preempted, and the Supreme Court will find
that the claims are preempted. So the next step in
the case is so we have to hear, you know,
find out what the Supreme Court thinks. I think they're
going to conference it again. And then the next conference
date is uh, you know, there's a distribution schedule where
(40:22):
they distribute the case again to the judges and then
there's a conference. And I don't think that this case,
the court will decide whether to take the case until
January right than January right.
Speaker 1 (40:35):
And you expect them to take it. And then you'll
get you have written briefing, written arguments on the on
the merits, and then do you think we'll get a
decision by the end of this term, by the end
of you know, end of June, a bit by the
end of June, or does in the fall?
Speaker 3 (40:56):
Yeah, I mean I think it could go into the fall,
but you know, definitely next year. But in the meantime,
all these cases are you know, still playing out before
the lower courts, and I it's a final judgment, meaning
like it's gone, you know, they've exhausted their appeals at
the state court level. They then, you know, the Supreme Court,
(41:18):
those cases don't get reversed. So there are you know,
many many judgments already that you know that the end
cases that they've settled that wouldn't be.
Speaker 1 (41:26):
The wouldn't be wouldn't be impacted. Right but right, I
gotta think if the Supreme Court takes it grants the petition,
all the pending cases will probably sort of either slow
down or be put on hold pending the Supreme Court's ruling.
Speaker 3 (41:44):
I would think, so, I would think that the state
courts wouldn't want to wait, I mean would want to wait.
Speaker 1 (41:49):
Yeah, how much exposure does buyers still have? I mean
they've paid, they've paid a lot. How much have they paid?
And how much exposure do they still have?
Speaker 3 (41:56):
So they've paid, they settled around one hundred that for
around eleven billion. Wow, they reserved sixteen billion in total,
sixteen billion. But then they added to it and so
what I've said that is that it could cost seven
to eight billion dollars more.
Speaker 1 (42:14):
Okay, still quite a bit of exposure.
Speaker 3 (42:17):
Yeah, because they have around right now they have around
sixty seven thousand I think it's a sixty seven thousand
cases pending around around there. I might be wrong on
that exact number, but it's you know, definitely tens of
thousands of cases. And so the last case is settled
for around one hundred thousand and seventy seven to one
(42:39):
hundred thousand average. So that's yes for plaintiffs. And so
that's why we've said that, you know, the sixty some
odd thousand remaining cases could settle for around that amount.
Speaker 1 (42:51):
Yep, all right, So the nice scattles for you is
the Supreme Court most likely granting the petition, probably in January.
I think, yeah, all right, cool, good stuff, Holly. I
think in the interest of time, we'll have to leave
it there and we'll wrap up this episode of Votes
and Verdicts. As always, thank you for listening. If you
have any questions about any of the matters that we
discussed on this episode, please don't hesitate to reach out
(43:14):
to us at your convenience with questions. As a reminder, again,
you can find all of our research on the Bloomberg
terminal at big or on our litigation and policy dashboard
at BI Lawsgo. We also, as always, want to thank
our producer Adita Somani, without whom this podcast would never
really publish on time or at all. Thank you for
listening and have a great day.
Hello, and welcome to the Votes and Verdicts podcast, hosted
by the Litigation and policy team at Bloomberg Intelligence, the
investment research platform of Bloomberg LP on the Bloomberg Terminal.
Bloomberg Intelligence has five hundred analysts and strategists working across
the globe and focused on all major markets. Our coverage
includes over two thousand equities and credits, and we've outlooked
(00:36):
on more than ninety industries and one hundred market industries,
currencies and commodities. This podcast series examines the intersection of
business policy and law, and today's our weekly look at
the litigation and policy catalysts that we're watching and that
we think will impact companies across a number of different sectors.
My name is Elliott Stein. I'm an analyst with Bloomberg
(00:57):
Intelligence covering litigation in the financial sector, and I'm delighted
today as always to be joined by several of my
BI colleagues. As always, you can find all of our
research on the Bloomberg terminal at BIG and you can
find our litigation and policy research on our dashboard, which
is available at BI laws go on the Bloomberg terminal.
(01:18):
Just to time stamp this episode it is exactly three
pm on Wednesday, December third, twenty twenty five. And with that,
let's get things rolling. Let's bring in Justin Toesi to
talk about antitrust in real estate. Justin, come on in,
how you doing.
Speaker 2 (01:35):
Hey, I'm good, Elia, Thanks so much so. Lots going
on in an anti trust space right now with real estate.
Of all things, are a couple of big developments the
last couple of weeks here, but the first one involving
these AI algorithms that landlords have allegedly been using to
combine kind of confidential or secret data that they have
about their vacancies, their rent rates, their kind of plans
(01:57):
to fill their buildings in the future, sharing that data
with what another to basically come across to price fix
rental rates across different markets nationwide. So what happened here.
There's a bunch of private litigation going on where real
estate investment trusts have been sued, as well as this company,
real Page, which is a software provider that's really been
mixing all of this information together. Allegedly, there was a
(02:19):
big suit last year by the Department of Justice, kind
of the Capstone suit in this area. A few states
joined into that litigation, and a few states have actually
brought their own lawsuits on anti trust grounds with similar
sets of allegation. So what happened last week DOJ really
big settlement there. DOJ basically says you can't use this
non public information anymore sharing this information between landlords to
(02:43):
set your prices. So that's a pretty big development here.
You know, we've been thinking for a long time that
some of these AI algorithms were going to trigger some
anti trust issues. You know, it's not your traditional three
men sitting around a table in a smoky room the
way you might think of these price fixing conspiracies working.
But that a technology, it really serves that same purpose, right,
You're really seeing that same end result from using this platform.
(03:06):
So that's the big news from DOJ. Landlords can't use
his software and have this auto accept setting anymore, where
you know, the software spits out a price and the
landlord just has to accept it automatically.
Speaker 1 (03:18):
So I think that's pretty significant. So was there no
monetary penalty as part of that settlement? This was just
sort of like an injunctive type of settlement.
Speaker 2 (03:28):
Yeah, that's right, and I think that's a big reason
probably why we've seen some of these states that are
joined in that lawsuit not join onto the settlement, So
I think it's possible. You know, We've got Arizona, Washington State,
the District of Columbia. You know, a lot of different
jurisdictions have decided to bring their own cases against Real
Page and varying landlords like Camden Property Trust or Avalon
(03:48):
Bay UDR. It really varies from jurisdiction and jurisdiction. But look,
I think the states probably will continue to pursue some
civil penalties against Real Page and these landlords, probably for
manageable amounts, right, But you know, the cavey up there
too is that I think some of these states are
also going to pursue regulation and legislation around this issue
(04:09):
at their own state level. So you know, I think
signing on to a settlement that DJ is a part
of and then seeking some legislative change that flies in
the face of it, that obviously prevents a bit of
a problem there for states looking to regulate. So that's
really the landscape I think here moving forward on these
AI algorithms.
Speaker 1 (04:24):
At least with real estate. All right, it super interesting,
always great to talk about AI collusion and landlords all
in one case, what.
Speaker 2 (04:31):
Else do you want to So also in real estate
this time kind of turning the page here a little
bit away from real page. We're looking at Compasses lawsuit
against Zilo, right, and this really involves for sale home listings,
you know Zilo here. Obviously, I think I have the
app on my phone. This is part of the problem, right,
most folks have the app on their phone. It's one
(04:52):
of you know, folks favorite apps to kind of look
at when you're and you're in the home market, or
maybe you're not in the home market. You just want
to see what's going on in your neighborhood, right you know.
Speaker 1 (04:59):
Yeah exactly. I know you live in the city. We
in the suburbs. Just like to see the value of
our houses, right sure.
Speaker 2 (05:06):
Sure, yeah, yeah, I mean I'm looking at the value
of my potential future there, I hear it. Yeah, yeah, definitely.
But look, you know, I think what's going on here
is that Compass. You know, the federal rules around these
things from the National Association of Realtors, they got relaxed
in the past year. And in response to that, what
Compass did is it developed this three tiered kind of
(05:28):
private exclusive listing system where they could withhold they could
try to you know, get a temperature around the value
of a real estate listing by showing it in an
office or between you know, preferred clients, perhaps at Compass
kind of having a coming soon mode on their own
website where folks can kind of get a taste of
what's coming to market. And then on that third phase
it would go out to Zilo and through the MLS,
(05:49):
the multilisting service to all these different websites. Zillo is saying,
wait a minute, we don't really like this here because
by the time it gets to our website, it's already stale. Right,
it's already been marketed, and it's a reads our product.
That's their big response here. And and turn what they've
done is developed this ban well that's what Compass calls
it the ziloban. But you know, they developed this policy
(06:09):
where if something's been marketed for twenty four hours anywhere else,
it can't appear now on Zilo's website. So that's the
crux of the of the dispute that's going on right now.
There's a lot of good arguments on both sides here
sides here too. Now I don't think either party really
comes off as looking like a hero in the in
the scenario. I think that's a big reason why we
(06:30):
ultimately think the case is going to settle jury trial
really unproductible. Right on the one hand, you know, Compass
looks like it's withholding listings from the public, right and
I found maybe you know, a middle income a person
looking to purchase at home and I can't see all
the listings that are out that are out there. That's
not necessarily fair. But then on the other hand, here too,
you've got Zilo saying, you know, look, you know, not
(06:53):
also not looking good in the sense that they're they're
kind of bullying these other folks who want to get
on this home search market, you know, really kind of
adopting these aggressive stances versus competition. So you know, it's
really a role of the dices of how a jury
would go. And last week there was a preliminary injunction
hearing at the Southern District of New York. Look, I
think it's a close call, but I just don't think
(07:14):
Compass meets that bar for a preliminary preliminary injunction to
block this ban because there are so many questions still
left to answer I think later on at a trial phase,
if the case ever did get there.
Speaker 1 (07:26):
Yeah, so, all right, so you went thatliminary injunction hearing
was last week. You went to court for that. When
do you so? And you're leaning towards Compass's motion being denied.
It sounds like when do you expect to hearing?
Speaker 2 (07:42):
I mean, yeah, so I think we'll probably get one
out either either later in December or January at latest.
I do think there's a little bit of a of
a speed issue involved here, which is not a surprise
given that we're talking about at preliminary injunction. But look,
I do think it's a bit of a closer call
than I thought it was in I think the law
here is on Zillo's side at least in terms of
(08:05):
winning on a preliminary injunction not being issued. But I
do think the judge had, you know, through comments made
by the court of questions posed by the court, I
do think she probably has some issues with the way
that this quote unquote Zilo band has been you know,
has been you know, introduced to the market, if you will.
So it's a little bit of a roll of the
dice there either way, there's I don't think there's any
(08:26):
way that that Zillo is able to defeat these claims
in emotion to dismiss that gets us into discovery and
again the jury trial being so risky for both of them,
it's got to be a settlement, I think down the
road here, that's really what it looks like.
Speaker 1 (08:38):
Got it? And just one last question, who's the judge?
Speaker 2 (08:40):
Yeah, oh, it's a judge Jeanette Vargas. She's buying an
appointee relatively new to the court, but you know, she
she I think this might be the first anti trust
case that she's had before her so far, but really
steeped in bankruptcy law a lot of these more technical
areas of the of the law before coming to the bench.
She's actually hearing one of these brand new anti trust
cases involving know, just trust, debt and viability management exercises.
(09:03):
So it's going to be really interesting, I think, to
see how what she does here and in some ways
see how far she's willing to go and how that
could apply to other cases coming up before her in
the near future.
Speaker 1 (09:12):
Are got it?
Speaker 3 (09:13):
All?
Speaker 1 (09:13):
Right? Great stuff? Justin thank you, We'll let you go.
I know, you have a place to be. Let's bring
in Let's stick with the anti trust and bring in
Jen Ree Jen. You had such a great note like it.
I think it was yesterday. I've lost a little track
of time. The headline was quote Paramount best on anti
trust in Clash of the Titans for Warner end quote.
(09:35):
You know I always love a good Clash of the
Titans reference. And this note was all about this bidding
war for Warner Brothers discovery between Comcast, Netflix and Paramount Skuidance.
And you had this great note analyzing sort of the
different anti trust risks that each bidder might pose. You
(09:58):
want to just you know us more about that.
Speaker 4 (10:01):
Sure, Yeah, you know, Elliott, I really wanted to use
big Warner movie in the title, And it turns out
that one of the biggest grossing movies of Warner is Barbie.
But there's just wasn't any way I was going.
Speaker 3 (10:10):
To work for.
Speaker 1 (10:11):
That's a hard one to spin into a title.
Speaker 3 (10:13):
Yeah, so I went with Clash of the Titans. But
you know, let me just preface this by saying what
anti trust generally and in particular the merger control piece
of anti trust is actually really subjective. I know, that's
weird to say, but anti trust has no black and white,
no yes and no. It's all gray.
Speaker 4 (10:28):
And that means reasonable minds can differ on a lot
of the elements that are needed to assess a deal.
And I say that because what we've seen so far.
This plays into how I think about this, because we've
seen so far with the Trump administration that the Department
of Justice hasn't made its decisions entirely independently, that they
seem to be quite focused on outcomes that align with
(10:51):
the policy priorities of the Trump administration, even if maybe
they're not completely aligned with the anti trust laws. And
that can mean crafting a remedy or maybe erecting arguments
and seeking to block a deal if either of those
things would be aligned with the policy priorities. And I
say that because this administration has already made it clear
(11:11):
that they like Paramount Best as the buyer and that
they have concerns about Netflix and Comcasts. So aside from
doing an actual anti trust analysis of the overlaps between
among these companies, we start with that risk that the
other two buyers have going forward, with the possibility of
arguments being constructed by the DOJ. To seek to block
(11:31):
and as I said, you know, there's a lot of
flexibility for the DOJ. There are reasonable arguments that can
be articulated, even if they aren't winners at the end
of the day. But Paramount starts. It's run by the Ellisons.
They are friends with President Trump, they are aligned with
his goals. President Trump has already been vocal about liking
Paramounts guidance better and already, by the way, just clear
(11:53):
to deal between Paramount and sky Dance. That was a
merger that recently was cleared as well. But we think
Paramount actually better from an antitrust perspective too, because even
though all three of these companies have overlaps and have
some problems, we kind of walk through reach of Paramounts
and thinks that they are resolvable or probably not problematic. So,
you know, if you look at streaming HBO Max and
(12:15):
Paramount Plus, Paramount Plus is pretty small, and the combined
share here is about we think by subscribers is about
nineteen percent, and that's below thirty percent is kind of
a trigger number.
Speaker 3 (12:25):
Ideals that have a thirty percent share start to raise
the eyebrows and they need to be looked into more,
we don't think nineteen percent is going to trigger that,
so we don't really think that's a big problem. And
in the UK and EU, we really identified only France
and the UK as having overlaps here and they don't
really amount very much. Again, the combined shares are low.
Speaker 1 (12:44):
Does a justice department look at market share in other
countries as well? Does it take that into account or
is that a concerns us for other country regulators?
Speaker 3 (12:52):
Now for me, it's a concern generally for a deal
being able to get closed because they've got to clear
UK and EU two.
Speaker 4 (12:58):
And those two are key because they have the will
and the means the authorization to block a global deal.
So you know, while these deals often need to be
cleared in something like one hundred different antitrust jurisdictions, most
of those jurisdictions don't have the authority within their law
or the will to block a deal.
Speaker 3 (13:15):
But UK and E you would, and they do. So
we have to look at the risk there too, because Netflix,
by the way, has a giant risk in UK and
in some of the probably sixty percent shares sitting alone
right now in the UK. So I'll get into that.
But you know, movies. Again, there's movie studio overlaps between
Paramount and Warner Brothers Discovery, and that's at that borderline place.
(13:37):
Looking at box office share in the US that they
have about a thirty percent combined share, But that's on
the threshold. And if there's a good defense, that's probably okay.
And there is a good defense there is new entry.
Apple is a new studio, and there's some independents that
are doing really well right now that are new entrants,
and that's a very good argument, especially when your shares
are at that threshold level, So we think they're okay.
(13:59):
There may have a news overlap between CNN and CBS
that's easily remedied by selling CNN. But on the other hand,
President Trump has criticized CNN, doesn't like its coverage, might
be happy about the Lessons taking it over, so maybe
that wouldn't even be needed there now. The last thing
is they have a lot of sports rights combined. They
(14:20):
have rights to just about every professional and college sport.
Speaker 4 (14:23):
But these are contracts that expire. They can be competed
for at the end of the expiration. There are big,
powerful companies that compete for these contracts. I think that's
going to get a pass as well.
Speaker 3 (14:33):
Right, So those are all the reasons we sort of
like Paramount best from an edge dress risk perspective.
Speaker 4 (14:39):
Comcast comes in second for us. It doesn't really have
much of a streaming issue either. Peacock is pretty small, right,
so combined with HBO Max not too problematic. They do
have a giant through NBCU. They have giant movie studios
and that's probably their biggest problem. We think based on
box office they're at about forty four percent a combined
(15:00):
and again that's over that thirty percent number. And there
are also some vertical issues created because Comcast has broadband
and provides the pipes. You have content plus the pipes.
That can also create some anti trust issues. So we
think that there could be a problem there.
Speaker 3 (15:19):
Maybe they could divest a studio, not sure if that's
something they would be willing to do.
Speaker 1 (15:25):
What about does Comcast on NBC?
Speaker 3 (15:27):
Yes, Comcast owns NBC. That's where they have a movie
production assets.
Speaker 1 (15:32):
But is that an issue with NBC on Comcasts and
CNN under Warner Brothers.
Speaker 4 (15:36):
So that is not a thank you for saying that
I should have raised it. Comcast is not interested in
buying buying the entirety of Warner Brothers. They only want
the stringing and the movie studios, so they would not
be buying the very extensive lineup.
Speaker 3 (15:48):
Of cable channels that Warner has. But I do think
Comcast issues probably could be remedied. But the thing is,
they are also very reasonable arguments to go to trial with, right,
So there's a viable commit to hear that it's problematic,
and so if the Trump administration doesn't like it, they
can go into trial without being ashamed and with having
good arguments.
Speaker 4 (16:08):
Now, Netflix, I mean, you know, I think every that
kind of goes without saying. When you think about HBO
Max combining with Netflix, this is really problematic. They're well
over forty percent share in the US, and I think,
as I mentioned, they're worse in the UK and in
some MEU countries, and so they're going to have problems
with issues there too. And the other problem is that
they're both giant content creators TV and video, mostly because
(16:32):
Netflix isn't really creating movies for theaters, but they're both,
and this means they are hiring a lot of talent, right,
And this creates what's called a monopsony concern this is
too few, We're too powerful of a buyer of a
service or a product. And this is exactly the issue
that allowed the Department of Justice to successfully block Simon
and Schuster from buying Penguin Random House because that was
(16:53):
about a negative impact on the competition for top selling authors.
So it's kind of a similar situation here.
Speaker 1 (16:59):
And if I'm a oh, I think there were headlines
either earlier this week or maybe last week at some
point about the White House raising some interfast concerns about
Netflix's bid.
Speaker 4 (17:12):
Yes, right, and that's I said that. I think the administration,
whether through Trump or through White House senior officials, have
been vocal about all of these, and they've been kind
of fear that they like Paramount and I think they
say things like that because the bidding process is going
on now and Warner may want to pick the bidder
that has the least risk in getting through antitrust screens, right,
(17:35):
So they're signaling. The White House is signaling where they
are on this, maybe to influence the bidding now. HBO,
Netflix is really coming in hard, they really want to
do this, and they've said a couple of things. I
think There have been some suggestions they could divest HBO Max.
I don't really think that fixes their problems.
Speaker 3 (17:52):
It minimizes them obviously in Europe and in the UK,
but I think there are still issues here with Netflix
being the huge streaming service and Warner Brothers being a
huge content supplier. So now would allow Netflix to raise
its rivals costs by increasing licensing fees to must have
content or to even foreclose their streaming competitors offering a
(18:12):
great big bundle, and everybody moves off of Peacock and
all the other small ones and they move over to
this Netflix, Netflix plus HBO Max.
Speaker 4 (18:21):
They said, hey, this is going to be cheaper. We
could bundle them together, and it's going to cost people
less to get HBO Max plus Netflix than the people
who are buying both. That's just not a good anti
trust defense. I mean this is used all the time.
Anti trust goal is to keep a market competitive by
virtue of the market structure, not because a company with
market power is making promises about prices. Right, it's sort
(18:41):
of short term good for consumers, long term bad because
in the long term they can do whatever they want
to once they've killed off other competitors. Or diminished other competitors.
So I don't see that as that's the argument they're
out there making. I don't see that as a winning argument. So,
you know, a lot of considerations go into choosing buyer
and a bidding more eliot and anti trust really is
(19:02):
just one. So I don't know at this point who
they will choose. I do think that they roll the
anti trust ice have a riskier situation if they go
with Netflix or Compast, and I could easily see if
they picked either of those two. This process dragging two years.
Speaker 1 (19:18):
That's great analysis. And I mean the political reality is,
as you mentioned, paramount Skuydance seems to be, you know,
the obvious favorite. Do you have any sense of timing
on when you know when a deal gets announced or
when the spinning war sort of wraps up.
Speaker 3 (19:38):
All these things can go on for months and months
and months. I've even seen dragging out for a year
or so all that, you know, I think that that
completely depends on what Warner's strategy is, how quickly they
want to do this and get into a deal, And
that's just unknown information. So they would play those those
cards close to their best strategically anyway to get the
(19:59):
best big as fast as they can. So it could
be a month, if it could be six months.
Speaker 1 (20:04):
Got it all right? Great stuff is always jen And
that wraps up our antitrust segment of this episode. Let's
bring in Matt Shettenhelm to talk about consolidation in the
TV station space. So, Matt, you've been tracking the potential
for owners of US TV stations to consolidate if the
(20:24):
FCC his existing rules. And then on November twenty third,
President Trump jumped into that debate with a post on
truth Social and in that post he said, and I'm
just going to read the whole thing because I think
it gives a good flavor of what he was thinking. Quote.
If this would also allow the radical left networks to enlarge,
(20:48):
I would not be happy. ABC and NBC in particular
are a disaster, a virtual arm of the Democrat Party.
They should be viewed as an illegal campaign to the
radical left. No expansion of the fake news networks, if anything,
make them smaller, President djt end quote, uh so, Matt,
what do you make of that? Did that change your
(21:09):
view in any way?
Speaker 5 (21:10):
Yeah? Fascinating development. Nextstar had just filed its application with
the FCC five days earlier. And what you know, what
you didn't say is is his post was also retweeting
in a commentary from Newsmax, which was a pose opposing
the FCC's raising of the thirty nine percent cap. Basically,
(21:33):
TV stations can't reach more than thirty nine percent of
US households. This next Star deal would would require the
would make the company go way beyond thirty nine percent,
you know, under using some math, that's at least fifty
four percent. And so having Trump five days later retweet
(21:54):
that story is not what you wanted. It's something we
had warned about because Newsmax was was one voice in
these FCC dockets that had been objecting to the deregulation
in this space, and and we we raised the you know,
the possibility that President Trump might latch onto that, and
(22:15):
he's sort of unpredictable. And Brendan Carr at the FCC
is ultimately going to follow President Trump's direction on this,
the way the FCC is acting these days.
Speaker 3 (22:25):
But does it.
Speaker 5 (22:26):
Change my view ultimately, I'm not yet based on this.
And and you read what what President Trump wrote, It's
sort of written is sort of a if this lets
the broadcast networks grow larger. And I think there's an
opportunity for the FCC Brendan Carr to speak with the
(22:46):
White House about why this wouldn't raising the ownership cap
wouldn't necessarily also allow those networks to expand. There are
extra hurdles in the way of letting those networks expand,
and so you could ease the cap, the thirty nine
percent cap, without letting what Trump refers to as fake
(23:06):
news grow larger. And I think after you get you know,
some education going between the FCC and the White House,
I'm not sure this will crystallize into a firm view
against the cap.
Speaker 1 (23:19):
So what are what are some of those extra hurdles
that would make it harder for you know, the major
networks to consolidate.
Speaker 5 (23:27):
Yeah, so any anytime they they would propose a deal.
So if if you know, for example, right now, next
Star and Tegna are trying to combine, they filed an
FCC application, and so two things have to happen there,
not only to have to change the thirty nine percent cap,
but the FCC has to grant the application. And so
if you had any of the big news networks, you know, Disney, Comcast, ABC, CBS, Fox,
(23:54):
come in, they would need to file a separate application
with the FCC and ask the FCC to grant that,
and the FCC can always say no. So just raising
changing the rule on the thirty nine percent cap doesn't
mean that the FCC has to say yes to everything
forever going forward, because the FCC always asks is this
(24:16):
in the public interest or not? And that that says
does that comply with our rules? So you have to
get you have to change the thirty nine percent. But
there are still other rules and still other bases to
you know, sit on applications forever or to deny them.
And so I as well, as we talked about anti
trust earlier, but you know there's an anti trust component
(24:37):
to every deal as well, and so so there are
multiple hurdles.
Speaker 1 (24:42):
There are ways for the FCC to block some deals
and allow others to.
Speaker 5 (24:47):
Go back absolutely, and I think that will be the
message that they'll they will convey to the White House
and that it doesn't change the fake news that he's
concerned about. Y.
Speaker 1 (24:56):
So, what do you see as to path forward here?
Speaker 5 (24:59):
Yeah, so that application is filed, there's now a pleading
cycle at the FCC on it that takes us into
next year, and so there's there's what we're really waiting for, though,
is action on that rule making, which is all the
comments are in, and this is the rule making to
raise the thirty nine percent cap. That could come. It's
(25:20):
not going to come in December, because we already know
the agenda for the December meeting, but it could come
in the first quarter of next year, and that would
be announced at an FCC meeting where they would say, Okay,
we're going to finalize this rule making, change the thirty
nine percent rule, scrap it, or at least raise it significantly.
I think that will probably come first, and then you'll
(25:40):
see action on the next Star application. But you're likely
to see litigation in the middle of all of that
as well, because there's a really tough question that we've
talked about before and we don't need to get into today,
but can't please.
Speaker 1 (25:54):
Get well, well, well, just I know how much you
love talking about this. I don't let me stop you.
Speaker 5 (26:01):
You know, big question about can the FCC change the
thirty nine percent cap or did Congress write that in
law in a way where Congress would have to act here.
And so there's there's in my view inevitably going to
be a tough legal fight on the rule making, potentially
on the deal itself. The Next Star techna deal on
(26:24):
that question of can the FCC get rid of the
thirty nine percent or must Congress pass a law to
do that?
Speaker 1 (26:31):
That's going to be so interesting. So you might see
two separate at least two separate lawsuits or lawsuits on
two separate issues. Right the rule making itself and that
the specific TEGNA.
Speaker 5 (26:41):
It's very possible. It's tough to say exactly how this
is going to play out procedurally if one's going to
wait for the other. The Next Star, for example, has
asked for a waiver of that thirty nine percent rule.
If the FCC doesn't get around to, you know, changing it,
I don't know that they the FCC can wave it.
It really gets you to the same legal issue of
they can they change something that Congress sets and so
(27:04):
I'm not sure that's really much of a workaround, but
it's going to be fascinating legally to see it all
play out.
Speaker 1 (27:09):
Right in the first half, I can tell you're talking
at the bid for all this to happen.
Speaker 3 (27:13):
There and Elliott, I'm chomping at the bit to society.
Speaker 1 (27:15):
Yeh yeah, jump in here.
Speaker 4 (27:16):
I have to because Matt and I have worked on
this together, so I think, yep, it makes me laugh
a little bit because it could all be in vain
at the xCC, because the Department of Justice has an
entirely different way of looking at these deals. And I think,
I know, I said, they have flexibility to do what
the administration wants, but in this case they would literally
have to do.
Speaker 3 (27:33):
Acrobatics to reverse the way they have historically, year after
year after year.
Speaker 4 (27:39):
And super consistently looked at TV station consolidation and they
have never allowed one company to own more than one
of the big four stations CBS, NBC, ABC, Fox.
Speaker 3 (27:49):
In any locality. And like let's say, appending next our
techna deal would result in a lot of that kind
of overlap, and I think there'd still be a big
fight at the DOJ, which would seek divestis of a
lot of those stations.
Speaker 1 (28:01):
Oh wow, so the two of you are chopping at
the bits is. This is gonna be fascinating, all right.
A lot of really interesting moving parts and a lot
of interesting legal questions. All right, good stuff, Thank you both.
All right, let's move from de regulation in the TMT
space to devaguation in the financial space. Nathan Dean, let's
(28:22):
bring you in. How you doing, Nathan?
Speaker 6 (28:25):
Just filling the holiday spirit because the regulators are trying
to do so much before they go home for the holidays.
Speaker 1 (28:31):
All right, we all, aren't we? All? All right? I
know you wanted to talk about regional banks and dereguation
in that space. I guess there was a House Financial
Services here and I think yesterday that you watched you
want to talk us about that?
Speaker 6 (28:44):
Yep, So I watched all about three hours and fifty
minutes of it. So it was no I'm actually joking here.
I mean, well, it was three hours and fifty minutes.
But the House Financial Services Committee had a hearing that
featured the comptrourver, the currency Jonathan Gold, acting FDIC Chairman
Hill and FED vice chair Michelle Bowman. Obviously the NCUA chairman,
(29:05):
Kyle Hutman was also there, but he got two questions.
I think over those three hours and fifty minutes poor
and happens that way the SCA shows up and then
they get like two questions. But but the reason why
I wanted to talk about that this week is because
last week, the FED and the FDIC and the OCC
finalized the enhanced supplementally leverage ratio that was on par
(29:27):
with our expectations. Looks like it's going to return around
thirteen billion dollars in capital to the g SIPs. But
the reason why I wanted to bring that up bringing
up the regional bank is because the first question coming
out of Chairman French hills question was about regional bank relief.
Because we've talked all about investment bank relief before for
big banks, whether it's stress testing, the Basle three end game,
(29:50):
the g sibsurd charge, but nobody's talking about the regional banks.
And I put out a note last month talking about, okay,
what would happen if the regional banks were to get
some type of relief, what would it look like? And
Chairman Hill's first question on this is are you going
to give relief to the regional banks? So paraphrasing here now,
(30:11):
what Governor Bowman or Vice chair Bowman came back with
was they're evaluating it, they're looking into it, but they're
looking into this idea of thresholds. So the way it
works in the United States is that if you're a
bank that's above one hundred billion in assets depending on
where you are asset wise, and this isn't assets under management.
This is assets that you have in FDIC deposit assets
(30:34):
where you are fits within a certain category. If you're
one hundred to two hundred fifty billion, you're considered a
category four. If you're two hundred and fifty to seven
hundred your category three. If you're seven hundred up your
category two, or you're what's considered a g SIB it's
category one. And each category has different regulatory requirements stress
capital BUS for stress testing, liquidity coverage ratio. And the
(30:56):
challenge has been is the only threshold that is in
their STETE sjuatorially is two hundred and fifty billion enough.
That's what considers you to be a SIFY domestically systemically
important financial institution. If you're a JESIB or Global systemically important,
that's done by a global body and that's not part
of these thresholds. But the biggest question for these regional
(31:18):
banks that I'm looking at P and C Capital, ie
US Bank and Truist is the thresholds for those other categories.
So the one hundred billion, the seven hundred billion and
so forth. That wasn't set statutorially by law. That was
set by the FED back in twenty nineteen. So you know,
many associations and many banks have suggested, well, look, there's
(31:40):
things like inflation, there's things like nominal GDP. The economy
is growing and those thresholds should grow as well. And
so there's been a lot of talk about indexing these thresholds,
specifically that seven hundred billion dollar threshold to nominal GDP.
If you were to do that, then that seven hundred
billion dollar threshold comes up to be around nine hundred
(32:01):
and fifty billion. And so the question that Chairman Hill
had to the FED is are you going to do this?
Speaker 1 (32:06):
Are you gonna look at it?
Speaker 6 (32:07):
And so they said, we're looking into it. But Governor
Bowman has said in the past that she's open to
the idea. The reason why this is so important is
because if you're one of those banks that's just under
seven hundred billion, P and C Capital One, truest Us Bank,
which are all around that six hundred billion dollar threshold,
if that seven hundred billion is now rising up to
(32:27):
nine ern and fifty billion, we get to grow by
another three hundred and change billion without having additional regulatory requirements.
That's pretty good from an M and A opportunity or
an organic growth opportunity. So you can see why these
regional banks would be just dreaming of this threshold moving
up from seven hundred to nine hundred and fifty billion. Now,
our theory has always been is that the FED is
(32:48):
going to do this, but they're gonna do it after
they get through the big bank proposals, because cher Bowman
said Vice chair Bowman said in the same breath that
they have the Basle three a gain game proposal, and
they had the Jesup surcharge proposal to work on. We
think those are going to be out in the first
half of next year, probably first quarter of next year
for one of them, probably the Bossle three end game.
(33:09):
And then after that, as we get into the second
half of twenty twenty six, you're gonna see this, you know,
regional bank threshold proposal come out. The last thing to
throw in here is is that we talked a lot
about the be the pncs and the capital ones. There
is some love in here for this plan for the
M and T banks, the key banks, the ones that
are one hundred billion to two hundred and fifty billion,
(33:31):
and that is the FED can also change what's the
idea of the prudential standard, so they can loosen up
the liquidity coverage ratio, they can loose on up some
of the stress testing requirements. So there's definitely stuff here
in for that one hundred to two hundred fifty billion
dollars level. They're gonna get the love as well. And
I feel pretty confident I met a seventy percent chance
that they they'll put out this rule, this proposal in
(33:51):
twenty twenty six.
Speaker 1 (33:53):
Very interesting, And is it just the FED that has
to do it or also the FDIC.
Speaker 6 (33:57):
It's all it's about the FDIC, the OCC and the FED.
But they're well aligned. I mean they they you know,
they're they're they're aligned on this, and we just like
to look at the FED because Vice Chair Bowman usually
leads this. Although I was a little surprised last week
that the fdi C was the first one to finalize
the ESLR and that they did it, you know, in
(34:18):
a way that caused the FED to have to do
it behind closed doors. That's the first time that I've
seen that in fifteen years.
Speaker 1 (34:24):
Why do you think they did that?
Speaker 6 (34:26):
Well? Normally what has to happen is you have to
give a seven day grace period to have a meeting,
and you put the Sunshine Act to Notice out there.
But you can also do it under and seven days
if you deem it an emergency, and that emergency in
this case I think was Thanksgiving. Well look, I mean,
anybody who's been the Whole Foods the night before Thanksgiving,
(34:47):
you know there's an emergency. But you know, I don't
exactly know why they did that. I'm hoping our friends
of Bloomberg News can figure that out and do a
little reporting on that. Maybe if somebody's listening to this
from the FED or the FDIC, just give us ring,
tell us why it happened. But you know, it was
interesting because the FDIC finalized that they had a meeting
for it, and then the FED because they were you know,
(35:08):
in part of their blackout periods, you know, they didn't
have a meeting. They did this behind closed doors. Then
they released the vote afterwards. I've never seen that in
the fifteen years I've been covering Dot frank in financial regulations.
So interesting. Doesn't change anything. I mean, the FED was
going to approve it no matter what, so it's not
like it's controversial, but just interesting.
Speaker 1 (35:28):
Yeah, I mean, it makes it a little more puzzling
given the fact that it was going to.
Speaker 6 (35:32):
You know, I should state I'm pretty confident that I'm
wrong in saying Thanksgiving was the emergency. That's just the
tongue in cheek answer. So apologies. If anybody from the
FED or the FDIC heard that was getting a little
little uh, you know, I was just being tongue in cheek.
Speaker 1 (35:49):
There, All right, good stuff, Nathan, all right, Holly fellm
let's bring you in to talk about Buyer and all
the roundup weed killer cases that they're facing. I know
one adverse verdict that went against them. They have asked
for Supreme Court review, and the Supreme Court then asked
(36:15):
the Justice or the Solicitor General to weigh in to
get the United States view as to whether the Supreme
Court should take Buyers except grant sorry grant Buyer's petition,
and the Solicitor General weigh in this this week or yeah,
I think monthly. When was it first? Ye, Monday night,
December first, and said yeah, take the case, and buyers
(36:39):
stock shot up after that. So that's my summary. Why
don't you tell US, you know, in more detail exactly
what's going on.
Speaker 3 (36:45):
Sure, this is a long saga. So this has been
going on since I guess the first verdict I think
was in twenty seventeen. Actually twenty eighteen, I think. But yeah,
So they've been sued by over one hundred thousand consumers
who have said that their weed killer causes cancer. And
so Buyer's Monsanto appealed a one point two million dollar
(37:11):
verdict at a Missouri to the US Supreme Court, and
the jury had found that Buyer was liable for failure
to warn that its weed killer causes cancer. So Buyer
has argued to the Ninth Circuit and the Eleventh Circuit
that the claims are preempted. Basically, what they say is
the federal pesticide law, which is Fiffrau, says that manufacturers
must use the label the EPA approves, and a state
(37:32):
can't require They can ban a pesticide completely, but they
cannot require a label that adds to or differs from
the one that the EPA has approved. But the Federal
pestis said law also says that the product can not
be misbranded. So what Buyer has said is that the
EPA approved the label repeatedly register the product, and to
(37:55):
do so, the EPA had to find that it doesn't
have adverse health effects for humans. So they found it's
not carcinogenic, and they said that in order to comply
with the label that the state law is requiring by
virtue of these jury verdicts, they would have to say
it's cancerous, and that would be a state requirement that
differs or adds to from the label. What consumers have
(38:18):
said with the Ninth and Eleventh Circuit have found is
that the misbranding provision in the federal law, which says
that you know you have to warn of health risks,
is consistent with state law requirements which you know, basically
say that you have to warn of health risks, even
if the application of those requirements the state law and
of federal law result in different labels. So back in
(38:43):
I think it was twenty twenty one when the Ninth
the Ninth Circuit ruled the buyer had asked the Supreme
Court to weigh in on this. The Supreme Court asked
for this Solicitor general's recommendation as to whether to take
the case, and under the Biden administration said do not
take the case. But now what's happened was there was
(39:05):
another case that made its way up to the third
Circuit appellate court, and the third Circuit found that the
claims are preempted. So there's a circuit split and there's
a different administration. And this time when they petitioned the
Supreme Court, the Supreme Court asked for the sg's a recommendation.
The SGA, as you said on December first, is said
that the Supreme Court should take the case.
Speaker 1 (39:26):
And just just for listeners who don't know, SG is
the Solicitor General. That argus is Supreme Court cases for
the United States.
Speaker 3 (39:34):
Yeah, the Solicitor Generals. It's a tough one to say
over and over again.
Speaker 1 (39:37):
You can say from that one yes.
Speaker 3 (39:40):
So that's what's happened. And so the reason why that's
important is because the Supreme Court listens to the Solicitor
Generals recommendation most of the time, thinking that the Supreme
Court is actually going to take the case. And I think,
you know, I've said that if the Supreme Court, I've
said this for a while now, though I was wrong
the first time when I thought this where wouldake the case?
(40:00):
But I've repeatedly said that I think that the claims
are in fact preempted, and the Supreme Court will find
that the claims are preempted. So the next step in
the case is so we have to hear, you know,
find out what the Supreme Court thinks. I think they're
going to conference it again. And then the next conference
date is uh, you know, there's a distribution schedule where
(40:22):
they distribute the case again to the judges and then
there's a conference. And I don't think that this case,
the court will decide whether to take the case until
January right than January right.
Speaker 1 (40:35):
And you expect them to take it. And then you'll
get you have written briefing, written arguments on the on
the merits, and then do you think we'll get a
decision by the end of this term, by the end
of you know, end of June, a bit by the
end of June, or does in the fall?
Speaker 3 (40:56):
Yeah, I mean I think it could go into the fall,
but you know, definitely next year. But in the meantime,
all these cases are you know, still playing out before
the lower courts, and I it's a final judgment, meaning
like it's gone, you know, they've exhausted their appeals at
the state court level. They then, you know, the Supreme Court,
(41:18):
those cases don't get reversed. So there are you know,
many many judgments already that you know that the end
cases that they've settled that wouldn't be.
Speaker 1 (41:26):
The wouldn't be wouldn't be impacted. Right but right, I
gotta think if the Supreme Court takes it grants the petition,
all the pending cases will probably sort of either slow
down or be put on hold pending the Supreme Court's ruling.
Speaker 3 (41:44):
I would think, so, I would think that the state
courts wouldn't want to wait, I mean would want to wait.
Speaker 1 (41:49):
Yeah, how much exposure does buyers still have? I mean
they've paid, they've paid a lot. How much have they paid?
And how much exposure do they still have?
Speaker 3 (41:56):
So they've paid, they settled around one hundred that for
around eleven billion. Wow, they reserved sixteen billion in total,
sixteen billion. But then they added to it and so
what I've said that is that it could cost seven
to eight billion dollars more.
Speaker 1 (42:14):
Okay, still quite a bit of exposure.
Speaker 3 (42:17):
Yeah, because they have around right now they have around
sixty seven thousand I think it's a sixty seven thousand
cases pending around around there. I might be wrong on
that exact number, but it's you know, definitely tens of
thousands of cases. And so the last case is settled
for around one hundred thousand and seventy seven to one
(42:39):
hundred thousand average. So that's yes for plaintiffs. And so
that's why we've said that, you know, the sixty some
odd thousand remaining cases could settle for around that amount.
Speaker 1 (42:51):
Yep, all right, So the nice scattles for you is
the Supreme Court most likely granting the petition, probably in January.
I think, yeah, all right, cool, good stuff, Holly. I
think in the interest of time, we'll have to leave
it there and we'll wrap up this episode of Votes
and Verdicts. As always, thank you for listening. If you
have any questions about any of the matters that we
discussed on this episode, please don't hesitate to reach out
(43:14):
to us at your convenience with questions. As a reminder, again,
you can find all of our research on the Bloomberg
terminal at big or on our litigation and policy dashboard
at BI Lawsgo. We also, as always, want to thank
our producer Adita Somani, without whom this podcast would never
really publish on time or at all. Thank you for
listening and have a great day.
Host
Elliott Stein
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