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Commercial Awareness Update - February 2019!
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<blockquote data-quote="Sara Moon" data-source="post: 9348" data-attributes="member: 525"><p>Hello readers<img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /> This week's commercial news round up is here. Enjoy reading!</p><p></p><p>Welcome to this week’s commercial news write up (13th February 2019).</p><p></p><p>Topics discussed this week cover:</p><ol> <li data-xf-list-type="ol">EU blocking of Siemens and Alstom merger</li> <li data-xf-list-type="ol">Disney Fox Merger</li> <li data-xf-list-type="ol">Wirecard Accounting Scandal</li> <li data-xf-list-type="ol">NOPEC’ - No Oil Producing and Exporting Cartels Act 2019 Bill</li> <li data-xf-list-type="ol">Italy’s Recession</li> </ol><p>As always please feel free to ask any questions or add your thoughts <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /></p><p></p><p><strong>EU blocking of Siemens and Alstom merger – Shu Qin</strong></p><p><strong></strong></p><p><strong><u>The story</u></strong></p><p><strong><u></u></strong></p><p>Last Wednesday, EU competition authorities blocked the merger of French and German train companies Alstom and Siemens. The deal between the two giants was supposed to create a single “European champion” in the rail industry, to compete with the growing threat of China’s CRRC, the world’s largest train maker. French finance minister Bruno Le Maire expressed deep disappointment with the EU’s decision, stating that it was “an economic mistake” that would “serve the interests of China”. Alstom is now entering merger talks with Canadian train-maker, Bombardier.</p><p></p><p>Despite several last-minute concessions from both Alstom and Siemens, the EU competition commissioner blocked the merger altogether, as the merger would have led to a near-monopoly of the European rail market. This would have likely hindered fair competition in the industry and carried the risk of higher prices of consumers.</p><p><strong><u></u></strong></p><p><strong><u>Impact on businesses and law firms</u></strong></p><p><strong><u></u></strong></p><p>The failed Siemens-Alstom merger illustrates the patchwork insularity of competition regimes worldwide. As competition regimes cover regions such as the EU and the US, decisions made to protect competition in a region may actually be counterproductive to competition on a more international level. In other words, by blocking Siemens and Alstom’s merger, the EU may have made it easier for China’s CRRC to exert market dominance on a more global level.</p><p></p><p>The decision is likely to prompt fresh efforts from France and Germany for the loosening of EU competition rules, in favour of a broader, more international approach. As business continues to grow across borders, both law firms and businesses alike will continue to keep an eye on whether competition law will begin to converge towards an international standard.</p><p></p><p><strong>Disney Fox Merger – Flora</strong></p><p><strong></strong></p><p><strong><u>The story</u></strong></p><p><strong><u></u></strong></p><p>Back in December 2017, Disney bid $52.4 billion to acquire 21st Century Fox and its entertainment and sports assets to expand their already asset-rich portfolio.</p><p></p><p>Disney’s motivations are clearly to reach an enormous size and there is no company capable of rivalling this.</p><p></p><p>The merger is a consolidation of complementary behemoths for convenience, not two rivals coming together.</p><p></p><p>Disney’s has had to meet domestic and foreign regulations in order to finalise the acquisition which will have taken around 18 months to complete.</p><p></p><p><strong><u>Impact on businesses and law firms</u></strong></p><p><strong><u></u></strong></p><p>The merger will result in thousands of job losses from positions at Disney and Fox because new synergies will make certain positions redundant.</p><p></p><p>The merger follows a series of consolidations across the media space. It will reduce the big Hollywood studios from 6 to 5. There is currently an ‘arms race’ for content around film and TV rights. However, this consolidation means there are fewer players competing for rights which means there is less cost inflation overall.</p><p></p><p>The costs spent on programs each year by these companies is huge. Last year Netflix spent around $13 billion and Disney and Fox combined could be spending over $20 billion. The merger means Disney and Fox will be able to continue to outspend competitors like Netflix and could allow Disney to control as much as 40% of the box office.</p><p></p><p>The merger is great business for Disney, but may not bode well for other players in the industry.</p><p></p><p><strong>Wirecard Accounting Scandal – Kit</strong></p><p></p><p><strong><u>The story</u></strong></p><p><strong><u></u></strong></p><p>According to a preliminary report by a law firm in Singapore engaged by the German online payments company Wirecard, there are allegations of potential financial irregularities, money laundering and forgery at the Singapore unit of Wirecard.</p><p></p><p>The report focused on the alleged involvement of three Wirecard employees in Singapore in the creation of backdated agreements and forged invoices. The report also allegedly indicated accounting irregularities in other countries. An example is the practice of “round-tripping” where money is routed from Wirecard businesses in Hong Kong and Singapore to those it owned in India via external companies, where it would appear as legitimate business revenue.</p><p></p><p>However, Wirecard said that the report is based on evidence that is either faulty or forged and that in preparing a further report would available in “a matter of weeks”, the law firm had "made no conclusive findings of criminal misconduct on the part of any officer or employee of [Wirecard]". Wirecard has also described the Financial Times (FT) reports on the abovementioned allegations as defamatory and stated that it would sue the FT for these reports.</p><p></p><p><strong><u>Impact on businesses and law firms</u></strong></p><p><strong><u></u></strong></p><p>Following the publication of these FT reports, Wirecard’s stock has lost about €9 billion in value. This led Wirecard to file a criminal complaint, to which German prosecutors have responded by launching a market manipulation probe. The Singapore police have also raided Wirecard’s Singapore offices and Wirecard is cooperating with the former’s investigations.</p><p></p><p>When dealing with or faced with the possibility of dealing with similar issues to Wirecard, businesses should be aware of the extent to which their operations can be affected by allegations of fraud. This is so even if they only involve a small part of the businesses’ revenues and a minority of the businesses’ international branch offices or subsidiaries. Law firms should be prepared to advise such businesses accordingly.</p></blockquote><p></p>
[QUOTE="Sara Moon, post: 9348, member: 525"] Hello readers:) This week's commercial news round up is here. Enjoy reading! Welcome to this week’s commercial news write up (13th February 2019). Topics discussed this week cover: [LIST=1] [*]EU blocking of Siemens and Alstom merger [*]Disney Fox Merger [*]Wirecard Accounting Scandal [*]NOPEC’ - No Oil Producing and Exporting Cartels Act 2019 Bill [*]Italy’s Recession [/LIST] As always please feel free to ask any questions or add your thoughts :) [B]EU blocking of Siemens and Alstom merger – Shu Qin [U]The story [/U][/B] Last Wednesday, EU competition authorities blocked the merger of French and German train companies Alstom and Siemens. The deal between the two giants was supposed to create a single “European champion” in the rail industry, to compete with the growing threat of China’s CRRC, the world’s largest train maker. French finance minister Bruno Le Maire expressed deep disappointment with the EU’s decision, stating that it was “an economic mistake” that would “serve the interests of China”. Alstom is now entering merger talks with Canadian train-maker, Bombardier. Despite several last-minute concessions from both Alstom and Siemens, the EU competition commissioner blocked the merger altogether, as the merger would have led to a near-monopoly of the European rail market. This would have likely hindered fair competition in the industry and carried the risk of higher prices of consumers. [B][U] Impact on businesses and law firms [/U][/B] The failed Siemens-Alstom merger illustrates the patchwork insularity of competition regimes worldwide. As competition regimes cover regions such as the EU and the US, decisions made to protect competition in a region may actually be counterproductive to competition on a more international level. In other words, by blocking Siemens and Alstom’s merger, the EU may have made it easier for China’s CRRC to exert market dominance on a more global level. The decision is likely to prompt fresh efforts from France and Germany for the loosening of EU competition rules, in favour of a broader, more international approach. As business continues to grow across borders, both law firms and businesses alike will continue to keep an eye on whether competition law will begin to converge towards an international standard. [B]Disney Fox Merger – Flora [U]The story [/U][/B] Back in December 2017, Disney bid $52.4 billion to acquire 21st Century Fox and its entertainment and sports assets to expand their already asset-rich portfolio. Disney’s motivations are clearly to reach an enormous size and there is no company capable of rivalling this. The merger is a consolidation of complementary behemoths for convenience, not two rivals coming together. Disney’s has had to meet domestic and foreign regulations in order to finalise the acquisition which will have taken around 18 months to complete. [B][U]Impact on businesses and law firms [/U][/B] The merger will result in thousands of job losses from positions at Disney and Fox because new synergies will make certain positions redundant. The merger follows a series of consolidations across the media space. It will reduce the big Hollywood studios from 6 to 5. There is currently an ‘arms race’ for content around film and TV rights. However, this consolidation means there are fewer players competing for rights which means there is less cost inflation overall. The costs spent on programs each year by these companies is huge. Last year Netflix spent around $13 billion and Disney and Fox combined could be spending over $20 billion. The merger means Disney and Fox will be able to continue to outspend competitors like Netflix and could allow Disney to control as much as 40% of the box office. The merger is great business for Disney, but may not bode well for other players in the industry. [B]Wirecard Accounting Scandal – Kit[/B] [B][U]The story [/U][/B] According to a preliminary report by a law firm in Singapore engaged by the German online payments company Wirecard, there are allegations of potential financial irregularities, money laundering and forgery at the Singapore unit of Wirecard. The report focused on the alleged involvement of three Wirecard employees in Singapore in the creation of backdated agreements and forged invoices. The report also allegedly indicated accounting irregularities in other countries. An example is the practice of “round-tripping” where money is routed from Wirecard businesses in Hong Kong and Singapore to those it owned in India via external companies, where it would appear as legitimate business revenue. However, Wirecard said that the report is based on evidence that is either faulty or forged and that in preparing a further report would available in “a matter of weeks”, the law firm had "made no conclusive findings of criminal misconduct on the part of any officer or employee of [Wirecard]". Wirecard has also described the Financial Times (FT) reports on the abovementioned allegations as defamatory and stated that it would sue the FT for these reports. [B][U]Impact on businesses and law firms [/U][/B] Following the publication of these FT reports, Wirecard’s stock has lost about €9 billion in value. This led Wirecard to file a criminal complaint, to which German prosecutors have responded by launching a market manipulation probe. The Singapore police have also raided Wirecard’s Singapore offices and Wirecard is cooperating with the former’s investigations. When dealing with or faced with the possibility of dealing with similar issues to Wirecard, businesses should be aware of the extent to which their operations can be affected by allegations of fraud. This is so even if they only involve a small part of the businesses’ revenues and a minority of the businesses’ international branch offices or subsidiaries. Law firms should be prepared to advise such businesses accordingly. [/QUOTE]
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