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Commercial Awareness Update - March 2020
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<blockquote data-quote="Alice Manners" data-source="post: 26788" data-attributes="member: 3460"><p><strong>Price Gouging by [USER=3460]@Alice Manners[/USER] </strong></p><p><strong></strong></p><p><u>The Story</u></p><p><u></u></p><p>In the midst of the COVID-19 panic, some shops and individual sellers have been increasing prices of ‘in demand’ goods, including hand sanitiser, toilet roll and face masks. This is described as price gouging.</p><p></p><p>This may contradict section 18 of the 1998 Competitions Act, which states that businesses could be abusing a dominant position by ‘directly or indirectly imposing unfair purchase or selling prices.’</p><p></p><p>The Competition and Markets Authority has therefore been contacting traders and platforms and has launched a UK ‘taskforce’ to deal with inquiries and identify harmful sales and pricing practices.</p><p></p><p>They have said they will take “direct enforcement action” against those charging above the market rate for these goods, and where they cannot act they will advise the government on steps they could take.</p><p></p><p><u>Impact on Businesses and Law Firms</u></p><p></p><p>Individuals increasing the price of goods raises questions of how liable a seller is as to what is sold on their platform. Amazon have terminated marketplace accounts unfairly increasing prices and eBay have heavily restricted the sale of masks and hand sanitiser.</p><p></p><p>France announced this month that the sale of hand sanitiser would be regulated and many US states already have restrictions on price gouging. Businesses operating internationally will have to ensure they comply with laws across the globe, and lawyers will need to keep up with the changing regulatory environment.</p><p></p><p>Businesses will have also to grapple with the fine line between what is legal and what is ethical, a problem law firms will have to help advise on. How businesses act during this crisis could have an impact on how consumers perceive and use them long-term. </p><p></p><p>The UK government may be under pressure to introduce similar anti-price gouging legislation. However, this would likely face criticism as increasing prices due to increased demand is a measure which makes economic sense. If problems in production or trade due to travel bans or lockdowns occur, businesses could suffer if they cannot increase prices of these goods.</p><p></p><p><strong>Covid-19’s impact on currencies by [USER=4295]@Jiraiya[/USER] </strong></p><p></p><p><u>The Story </u></p><p></p><p>Pound Sterling has now fallen to a 35-year low against the dollar—1 GBP to 1.16 USD—as Covid-19 continues to rip through global markets. The pound has not been this weak since the 1980s when the US President Reagan instituted a series of economic policies which created a strong demand for dollars. By the same token, the dollar is appreciating against sterling—and all other major currencies. </p><p></p><p><u>Impact on Businesses and Law Firms</u></p><p></p><p>You may wonder why the USD is swimming against the tide. The dollar is traditionally seen as the global haven during times of economic crisis and geopolitical uncertainty. Investors believe the dollar is the safest form of liquid asset to preserve value. </p><p></p><p>Just as you may be going to Sainsbury to stock up on essentials in fear of extended lock-down, investors, experiencing market crashes (and heart attacks), are selling off their riskier assets for dollars to mitigate their losses. </p><p></p><p>With the dollar skyrocketing, a large number of companies will go into wall. The overall size of global liabilities(debts) denominated in the dollar is $12tn, meaning companies globally have to pay regular dollar bills when demand is already faltering. The ever-increasing price of the dollar outside of the US makes repayment more expensive and companies may default their loan payments, triggering a series of insolvencies. </p><p></p><p>This, however, does not explain why the pound is singled out. The outflow of capital, Johnson government’s early strategy to deal with the pandemic and a potentially delayed Brexit all potentially weigh on the pound—even after the Bank of England slashed interest rates to 0.1% and the Exchequer rolled out a series of unprecedented financial measures. </p><p></p><p>Currencies are the bloodstream of the global financial system. Central banks are now scrambling to set up arrangements with the Federal Reserve for exchanging their own currencies into dollar. The aim is to steady their home markets by maintaining the supply of the dollar. The effect of these measures remains to be seen as no one knows the full scale of the pandemic yet. An unknown enemy is the hardest to defeat.</p></blockquote><p></p>
[QUOTE="Alice Manners, post: 26788, member: 3460"] [B]Price Gouging by [USER=3460]@Alice Manners[/USER] [/B] [U]The Story [/U] In the midst of the COVID-19 panic, some shops and individual sellers have been increasing prices of ‘in demand’ goods, including hand sanitiser, toilet roll and face masks. This is described as price gouging. This may contradict section 18 of the 1998 Competitions Act, which states that businesses could be abusing a dominant position by ‘directly or indirectly imposing unfair purchase or selling prices.’ The Competition and Markets Authority has therefore been contacting traders and platforms and has launched a UK ‘taskforce’ to deal with inquiries and identify harmful sales and pricing practices. They have said they will take “direct enforcement action” against those charging above the market rate for these goods, and where they cannot act they will advise the government on steps they could take. [U]Impact on Businesses and Law Firms[/U] Individuals increasing the price of goods raises questions of how liable a seller is as to what is sold on their platform. Amazon have terminated marketplace accounts unfairly increasing prices and eBay have heavily restricted the sale of masks and hand sanitiser. France announced this month that the sale of hand sanitiser would be regulated and many US states already have restrictions on price gouging. Businesses operating internationally will have to ensure they comply with laws across the globe, and lawyers will need to keep up with the changing regulatory environment. Businesses will have also to grapple with the fine line between what is legal and what is ethical, a problem law firms will have to help advise on. How businesses act during this crisis could have an impact on how consumers perceive and use them long-term. The UK government may be under pressure to introduce similar anti-price gouging legislation. However, this would likely face criticism as increasing prices due to increased demand is a measure which makes economic sense. If problems in production or trade due to travel bans or lockdowns occur, businesses could suffer if they cannot increase prices of these goods. [B]Covid-19’s impact on currencies by [USER=4295]@Jiraiya[/USER] [/B] [U]The Story [/U] Pound Sterling has now fallen to a 35-year low against the dollar—1 GBP to 1.16 USD—as Covid-19 continues to rip through global markets. The pound has not been this weak since the 1980s when the US President Reagan instituted a series of economic policies which created a strong demand for dollars. By the same token, the dollar is appreciating against sterling—and all other major currencies. [U]Impact on Businesses and Law Firms[/U] You may wonder why the USD is swimming against the tide. The dollar is traditionally seen as the global haven during times of economic crisis and geopolitical uncertainty. Investors believe the dollar is the safest form of liquid asset to preserve value. Just as you may be going to Sainsbury to stock up on essentials in fear of extended lock-down, investors, experiencing market crashes (and heart attacks), are selling off their riskier assets for dollars to mitigate their losses. With the dollar skyrocketing, a large number of companies will go into wall. The overall size of global liabilities(debts) denominated in the dollar is $12tn, meaning companies globally have to pay regular dollar bills when demand is already faltering. The ever-increasing price of the dollar outside of the US makes repayment more expensive and companies may default their loan payments, triggering a series of insolvencies. This, however, does not explain why the pound is singled out. The outflow of capital, Johnson government’s early strategy to deal with the pandemic and a potentially delayed Brexit all potentially weigh on the pound—even after the Bank of England slashed interest rates to 0.1% and the Exchequer rolled out a series of unprecedented financial measures. Currencies are the bloodstream of the global financial system. Central banks are now scrambling to set up arrangements with the Federal Reserve for exchanging their own currencies into dollar. The aim is to steady their home markets by maintaining the supply of the dollar. The effect of these measures remains to be seen as no one knows the full scale of the pandemic yet. An unknown enemy is the hardest to defeat. [/QUOTE]
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Commercial Awareness Update - March 2020
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