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Commercial Awareness Update April 2020
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<blockquote data-quote="Jaysen" data-source="post: 27918" data-attributes="member: 1"><p>Hi All,</p><p></p><p>I'm delighted to announce a new member of our commercial writers' team - Lauren Counsell ([USER=4861]@Lauren2[/USER])!.</p><p></p><p>Please see below the updates for this week (Wednesday 22 April 2020):</p><p></p><p><strong><em>Amazon Delivers Deliveroo Lifeline</em></strong></p><p></p><p>By [USER=4422]@Curtley Bale[/USER]</p><p></p><p><strong><u>The Story</u></strong></p><p></p><p>In a surprising U-turn, the UK’s competition watchdog, the CMA, has provisionally approved Amazon’s $575m investment in Deliveroo. The initial deal has been under review since June 2019. However, since the outbreak of the coronavirus pandemic, Deliveroo has struggled. Without Amazon’s investment, Deliveroo would likely have failed and exited the market. It has been said that such a quantity of money is “only realistically available from Amazon”.</p><p></p><p><strong><u>What it Means for Businesses and Law Firms</u></strong></p><p></p><p>Despite serving over 500 cities, Deliveroo is suffering due to COVID-19-related restaurant closures. The CMA was keen to avoid narrowing the market, especially when home deliveries are on the rise. If they were to allow Deliveroo to exit the market, it would enable businesses such as Just Eat and Uber Eats to grow their market share. Therefore, the advantage of provisionally allowing Amazon’s investment is that the company can continue to compete in the market, providing variety for UK customers.</p><p></p><p>The CMA has been criticised for their slow decision-making in this space. Many commentators suggested it would be an embarrassing blow to see a company such as Deliveroo fail due to a delay by the market regulator. The CMA’s response to the coronavirus pandemic suggests they are willing to adapt to the ever-evolving situation and help keep businesses afloat.</p><p></p><p>Deliveroo’s cash injection will coincide with the CMA lifting restrictions on JustEat-Takeaway.com’s business integration. The competition authority had been holding up this deal too but has decided to allow the integration of its business operations, as it completes its review into the merger. JustEat’s orders have surged 50% since the lockdown period, therefore securing more cash for Deliveroo is vital if it intends to stay in the market. This will lead to fair competition whilst also maintaining quality of service.</p><p></p><p><strong><em>ByteDance Waltzes Into International Hiring Spree</em></strong></p><p></p><p>By [USER=3115]@Ayah[/USER]</p><p><strong><u></u></strong></p><p><strong><u>The Story</u></strong></p><p></p><p>ByteDance, the parent company of TikTok, has announced plans to hire an additional 10,000 employees internationally. In the current economic climate, such moves are extremely rare, yet this news will not come as a surprise to most, given the surge in popularity of the TikTok app is hard to ignore.</p><p></p><p>Valued at US$75billion (Bloomberg), ByteDance sits as the world’s largest unlisted technology “unicorn” company. However, TikTok’s breakthrough in the global market is unique. It has gained popularity in a way other Chinese tech firms, including Tencent and Baidu, simply failed to. ByteDance have an international audience of over half a billion users, successfully filling the void of similar app Vine, which failed in 2016.</p><p></p><p><strong><u>What it Means for Businesses and Law Firms</u></strong></p><p></p><p>ByteDance is likely to experience increased vulnerability on two fronts: security concerns and intellectual property issues.</p><p></p><p>As discussed in last week’s newsletter, there are numerous security concerns with the various applications that have come to fill the void of lockdown life. TikTok is particularly acute given the fact it is a Chinese-owned company. The US Committee on Foreign Investment has opened a national security investigation into how the app handles US citizens’ data. If TikTok does not prove the separation between their American and Chinese entities is strong enough, it could face the same fate as Huawei – a nationwide ban.</p><p></p><p>Given the nature of TikTok as a short video platform, many users use copyrighted audio over recordings of themselves. The FT reported that following a year of negotiations, Universal Music Publishing Group, the world’s second largest music publishing company, has threatened to sue TikTok for copyright infringement.</p><p></p><p>To avoid the takedown of audio, TikTok is seeking to partner with record companies to acquire the appropriate licenses to use their music, removing the threat of litigation. It may be wise for the mass hiring spree to include an army of intellectual property experts to address this growing issue, given over 50% of the music publishing market was unlicensed with TikTok (National Music Publishers Association).</p><p></p><p><strong>COVID-19 UPDATES:</strong></p><p></p><p><strong><em>Not Faring Well: Coronavirus and Maritime Shipping</em></strong></p><p></p><p>By [USER=3442]@Rachel S[/USER]</p><p></p><p><strong><u>The Story</u></strong></p><p><strong></strong></p><p>Responsible for 90% of global trade, maritime shipping has not escaped the destructive path of the coronavirus crisis. With shipping’s prosperity having long been tied to China, manufacturing shutdowns have led to fewer exports and a collapse in demand for containers.</p><p></p><p>The Capesize Index, which tracks freight costs for the largest carriers of dry bulk commodities, such as coal and grain, fell into negative territory for the first time in February, indicating that shipping companies are operating at a loss on some routes. Furthermore, the global decline in consumer spending has led to retailers revoking orders, which has also led to an increase in ‘blank sailings’ – scheduled ships being cancelled.</p><p></p><p>Strict quarantine rules and travel restrictions have also affected seafarers, those employed on ships. The regular changeover of 100,000 seafarers each month has been delayed and many are struggling to return home. The world’s largest container shipping company, Maersk, has prolonged a ban on crew changes of its vessels until May 12th. Both UK and international shipping bodies, including the International Chamber of Shipping, have urged the government to protect the interests of seafarers, principally by facilitating ship crew changes for their safety and wellbeing.</p><p></p><p><strong><u>What it Means for Businesses and Law Firms</u></strong></p><p></p><p>Amid decreased container demand, managing port restrictions, and employee welfare, 2020 has been a challenging year for the shipping industry. The introduction of a sulphur emissions cap in January has meant an expensive transition from cheaper bunker fuel to more expensive fuel products, alongside the failed implementation of the first phase of a US-China trade agreement. While maintaining profitability will be a focus, in the longer term, shipping companies may invest in movement towards autonomous ships, given human frailty has been exposed by the pandemic.</p><p></p><p>Head of Shipping at HFW, Paul Dean, has predicted that the COVID-19 crisis will generate an <em>“enormous amount of arbitration and litigation”.</em> Likewise, lawyers may experience an increased workload in reviewing shipping companies’ contractual commitments; for example, reviewing if a delayed vessel is deemed ‘on-hire’ and liable for payment, or whether port restrictions constitute a ‘force majeure’ event, allowing shipping companies to escape liability. If so, insurance companies may find themselves covering any associated losses. Employment lawyers may also find themselves advising on the duty of care owed towards the crew.</p><p></p><p>In future, lawyers are likely to be instructed to advise on so-called ‘corona clauses’ in future contracts. Such clauses may be to the effect that shipping companies can <em>“deliver X number of goods, so far as the situation does not develop",</em> to guard against the incurrence of liability, if a similar crisis were to emerge.</p></blockquote><p></p>
[QUOTE="Jaysen, post: 27918, member: 1"] Hi All, I'm delighted to announce a new member of our commercial writers' team - Lauren Counsell ([USER=4861]@Lauren2[/USER])!. Please see below the updates for this week (Wednesday 22 April 2020): [B][I]Amazon Delivers Deliveroo Lifeline[/I][/B] By [USER=4422]@Curtley Bale[/USER] [B][U]The Story[/U][/B] In a surprising U-turn, the UK’s competition watchdog, the CMA, has provisionally approved Amazon’s $575m investment in Deliveroo. The initial deal has been under review since June 2019. However, since the outbreak of the coronavirus pandemic, Deliveroo has struggled. Without Amazon’s investment, Deliveroo would likely have failed and exited the market. It has been said that such a quantity of money is “only realistically available from Amazon”. [B][U]What it Means for Businesses and Law Firms[/U][/B] Despite serving over 500 cities, Deliveroo is suffering due to COVID-19-related restaurant closures. The CMA was keen to avoid narrowing the market, especially when home deliveries are on the rise. If they were to allow Deliveroo to exit the market, it would enable businesses such as Just Eat and Uber Eats to grow their market share. Therefore, the advantage of provisionally allowing Amazon’s investment is that the company can continue to compete in the market, providing variety for UK customers. The CMA has been criticised for their slow decision-making in this space. Many commentators suggested it would be an embarrassing blow to see a company such as Deliveroo fail due to a delay by the market regulator. The CMA’s response to the coronavirus pandemic suggests they are willing to adapt to the ever-evolving situation and help keep businesses afloat. Deliveroo’s cash injection will coincide with the CMA lifting restrictions on JustEat-Takeaway.com’s business integration. The competition authority had been holding up this deal too but has decided to allow the integration of its business operations, as it completes its review into the merger. JustEat’s orders have surged 50% since the lockdown period, therefore securing more cash for Deliveroo is vital if it intends to stay in the market. This will lead to fair competition whilst also maintaining quality of service. [B][I]ByteDance Waltzes Into International Hiring Spree[/I][/B] By [USER=3115]@Ayah[/USER] [B][U] The Story[/U][/B] ByteDance, the parent company of TikTok, has announced plans to hire an additional 10,000 employees internationally. In the current economic climate, such moves are extremely rare, yet this news will not come as a surprise to most, given the surge in popularity of the TikTok app is hard to ignore. Valued at US$75billion (Bloomberg), ByteDance sits as the world’s largest unlisted technology “unicorn” company. However, TikTok’s breakthrough in the global market is unique. It has gained popularity in a way other Chinese tech firms, including Tencent and Baidu, simply failed to. ByteDance have an international audience of over half a billion users, successfully filling the void of similar app Vine, which failed in 2016. [B][U]What it Means for Businesses and Law Firms[/U][/B] ByteDance is likely to experience increased vulnerability on two fronts: security concerns and intellectual property issues. As discussed in last week’s newsletter, there are numerous security concerns with the various applications that have come to fill the void of lockdown life. TikTok is particularly acute given the fact it is a Chinese-owned company. The US Committee on Foreign Investment has opened a national security investigation into how the app handles US citizens’ data. If TikTok does not prove the separation between their American and Chinese entities is strong enough, it could face the same fate as Huawei – a nationwide ban. Given the nature of TikTok as a short video platform, many users use copyrighted audio over recordings of themselves. The FT reported that following a year of negotiations, Universal Music Publishing Group, the world’s second largest music publishing company, has threatened to sue TikTok for copyright infringement. To avoid the takedown of audio, TikTok is seeking to partner with record companies to acquire the appropriate licenses to use their music, removing the threat of litigation. It may be wise for the mass hiring spree to include an army of intellectual property experts to address this growing issue, given over 50% of the music publishing market was unlicensed with TikTok (National Music Publishers Association). [B]COVID-19 UPDATES:[/B] [B][I]Not Faring Well: Coronavirus and Maritime Shipping[/I][/B] By [USER=3442]@Rachel S[/USER] [B][U]The Story[/U] [/B] Responsible for 90% of global trade, maritime shipping has not escaped the destructive path of the coronavirus crisis. With shipping’s prosperity having long been tied to China, manufacturing shutdowns have led to fewer exports and a collapse in demand for containers. The Capesize Index, which tracks freight costs for the largest carriers of dry bulk commodities, such as coal and grain, fell into negative territory for the first time in February, indicating that shipping companies are operating at a loss on some routes. Furthermore, the global decline in consumer spending has led to retailers revoking orders, which has also led to an increase in ‘blank sailings’ – scheduled ships being cancelled. Strict quarantine rules and travel restrictions have also affected seafarers, those employed on ships. The regular changeover of 100,000 seafarers each month has been delayed and many are struggling to return home. The world’s largest container shipping company, Maersk, has prolonged a ban on crew changes of its vessels until May 12th. Both UK and international shipping bodies, including the International Chamber of Shipping, have urged the government to protect the interests of seafarers, principally by facilitating ship crew changes for their safety and wellbeing. [B][U]What it Means for Businesses and Law Firms[/U][/B] Amid decreased container demand, managing port restrictions, and employee welfare, 2020 has been a challenging year for the shipping industry. The introduction of a sulphur emissions cap in January has meant an expensive transition from cheaper bunker fuel to more expensive fuel products, alongside the failed implementation of the first phase of a US-China trade agreement. While maintaining profitability will be a focus, in the longer term, shipping companies may invest in movement towards autonomous ships, given human frailty has been exposed by the pandemic. Head of Shipping at HFW, Paul Dean, has predicted that the COVID-19 crisis will generate an [I]“enormous amount of arbitration and litigation”.[/I] Likewise, lawyers may experience an increased workload in reviewing shipping companies’ contractual commitments; for example, reviewing if a delayed vessel is deemed ‘on-hire’ and liable for payment, or whether port restrictions constitute a ‘force majeure’ event, allowing shipping companies to escape liability. If so, insurance companies may find themselves covering any associated losses. Employment lawyers may also find themselves advising on the duty of care owed towards the crew. In future, lawyers are likely to be instructed to advise on so-called ‘corona clauses’ in future contracts. Such clauses may be to the effect that shipping companies can [I]“deliver X number of goods, so far as the situation does not develop",[/I] to guard against the incurrence of liability, if a similar crisis were to emerge. [/QUOTE]
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