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Commercial News Update - March 2018
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<blockquote data-quote="Coralin96" data-source="post: 298" data-attributes="member: 15"><p>Next update, a lot has happened in five days but here are my chosen stories <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" />. I'm going to try something new here and include some thoughts on the impact on law firms.</p><p></p><p><strong>1. Unilever is leaving the UK</strong></p><ul> <li data-xf-list-type="ul"><strong>The story: </strong>The company behind big brands like Magnum ice cream, Persil, Marmite and Dove has chosen Rotterdam instead of London for its new single-structure headquarters. Some, including the shadow business secretary, has used this to suggest businesses 'are losing confidence in the government'. But both Theresa May and Unilever have said it is not related to Brexit and Unilever has said it will continue to invest £1bn in the UK. Others think it's because the Netherlands has better protectionist rules to stop against takeover - this comes after Kraft Heinz tried to buy them last year. The company has been in the UK for 130 years and it's the third biggest UK company by market value (£105bn!).</li> <li data-xf-list-type="ul"><strong>Impact on law firms: </strong>This will require law firms to help with restructuring and relocation. Many companies are doing what Unilever are doing to save costs e.g. moving from having two structures in different locations to one single structure. Typically Slaughter & May normally do a lot of work for Unilever but Linklaters has been more involved recently so if they continue they will need to rely on overseas offices as the central point of contact.</li> </ul><p><strong>2. The EU is targeting tech companies</strong></p><ul> <li data-xf-list-type="ul"><strong>The story: </strong>Next week the European Commission will propose a 3% 'digital tax' on companies like Google, Spotify, Facebook and Apple. It's difficult to say whether it will pass because all member states need to agree and some bases like Ireland are normally low-tax jurisdictions. Countries like the UK and France have pushed for more tax avoidance measures in recent times, whilst US tech groups have pushed back against what they see as harsh treatment. It could raise around €4.8bn a year.</li> <li data-xf-list-type="ul"><strong>Impact on law firms: </strong>Companies that are uncertain about their tax treatment will look for tax advice from lawyers about how to better structure their business. I think law firms will need to be careful that they are complying with the law and not helping companies to avoid tax! Big US tech companies may even think about moving if this does get accepted.</li> </ul><p>3. <strong>The Japan Fair Trade Commission has raided Amazon</strong></p><ul> <li data-xf-list-type="ul"><strong>The story</strong>: Japan's regulator has raided Amazon's Tokyo headquarters on suspicion of competition issues. It is being investigated for requiring suppliers to assume the costs for its discounts. A similar issue happened in 2016 too when the commission found it had forced suppliers to sell Amazon items at the same or a lower price than elsewhere. Two years ago, Amazon took over its rival and the country is its third biggest market (interestingly first and second is USA and Germany, not the UK).</li> <li data-xf-list-type="ul"><strong>Impact on law firms</strong>: This is against Japan's antitrust law which prevents firms with a better bargaining position taking advantage of its partner. Lawyers will have to review contracts and Amazon may have to change the terms to ensure it complies with the law. It also comes as regulatory are trying to deal with the size of these companies and the growth of ecommerce companies acting in many countries.</li> </ul><p>4. <strong>Goodbye to Toys R Us</strong></p><ul> <li data-xf-list-type="ul"><strong>The story: </strong>Quite a sad one this one as Toys R Us are closing all their UK and US stores as they filed for bankruptcy in the US and were then unable to find a buyer in the UK. Again it shows how physical stores have struggled against the likes of Amazon and now many more toy suppliers will shift to these ecommerce platforms helping them to grow even more. This might drag down prices even more. The wider story shows how dangerous debt can be after it was bought by private equity firms in 2005.</li> <li data-xf-list-type="ul"><strong>Impact on law firms</strong>: The company will need the support of insolvency and restructuring lawyers. We could also see an increase in the sale of smaller manufacturers in areas like toys who can't compete. I wonder if it could also cause regulators to take a closer look at how much debt private equity firms are putting onto businesses.</li> </ul><p><strong>5. Trump blocked the biggest even technology deal</strong></p><ul> <li data-xf-list-type="ul"><strong>The story: </strong>Trump blocked Broadcom's attempted $142bn acquisition of Qualcomm. These companies are chipmakers and Apple is a key client of Broadcom. This is the first time a President has blocked a deal over national security fears as they feared it would pave the way for China to lead the growth of 5G wireless technology.</li> <li data-xf-list-type="ul"><strong>Impact on law firms: </strong>This was a hostile takeover and would have made a lot of money for legal advisers in M&A and finance. Broadcom's advisers included Latham & Watkins and Wachtell Lipton Rosen & Katz, whilst firms like Paul Weiss, DLA Piper and Allen & Overy has acted for Qualcomm in the past. It comes as regulators are increasingly worried about foreign takeovers by Chinese companies (but this one is only Singapore registered which makes it odd!) -so companies may look for advice on how to stay on the side of regulators. Law firms could also see a drop in work for M&A deals from China.</li> </ul></blockquote><p></p>
[QUOTE="Coralin96, post: 298, member: 15"] Next update, a lot has happened in five days but here are my chosen stories :). I'm going to try something new here and include some thoughts on the impact on law firms. [B]1. Unilever is leaving the UK[/B] [LIST] [*][B]The story: [/B]The company behind big brands like Magnum ice cream, Persil, Marmite and Dove has chosen Rotterdam instead of London for its new single-structure headquarters. Some, including the shadow business secretary, has used this to suggest businesses 'are losing confidence in the government'. But both Theresa May and Unilever have said it is not related to Brexit and Unilever has said it will continue to invest £1bn in the UK. Others think it's because the Netherlands has better protectionist rules to stop against takeover - this comes after Kraft Heinz tried to buy them last year. The company has been in the UK for 130 years and it's the third biggest UK company by market value (£105bn!). [*][B]Impact on law firms: [/B]This will require law firms to help with restructuring and relocation. Many companies are doing what Unilever are doing to save costs e.g. moving from having two structures in different locations to one single structure. Typically Slaughter & May normally do a lot of work for Unilever but Linklaters has been more involved recently so if they continue they will need to rely on overseas offices as the central point of contact. [/LIST] [B]2. The EU is targeting tech companies[/B] [LIST] [*][B]The story: [/B]Next week the European Commission will propose a 3% 'digital tax' on companies like Google, Spotify, Facebook and Apple. It's difficult to say whether it will pass because all member states need to agree and some bases like Ireland are normally low-tax jurisdictions. Countries like the UK and France have pushed for more tax avoidance measures in recent times, whilst US tech groups have pushed back against what they see as harsh treatment. It could raise around €4.8bn a year. [*][B]Impact on law firms: [/B]Companies that are uncertain about their tax treatment will look for tax advice from lawyers about how to better structure their business. I think law firms will need to be careful that they are complying with the law and not helping companies to avoid tax! Big US tech companies may even think about moving if this does get accepted. [/LIST] 3. [B]The Japan Fair Trade Commission has raided Amazon[/B] [LIST] [*][B]The story[/B]: Japan's regulator has raided Amazon's Tokyo headquarters on suspicion of competition issues. It is being investigated for requiring suppliers to assume the costs for its discounts. A similar issue happened in 2016 too when the commission found it had forced suppliers to sell Amazon items at the same or a lower price than elsewhere. Two years ago, Amazon took over its rival and the country is its third biggest market (interestingly first and second is USA and Germany, not the UK). [*][B]Impact on law firms[/B]: This is against Japan's antitrust law which prevents firms with a better bargaining position taking advantage of its partner. Lawyers will have to review contracts and Amazon may have to change the terms to ensure it complies with the law. It also comes as regulatory are trying to deal with the size of these companies and the growth of ecommerce companies acting in many countries. [/LIST] 4. [B]Goodbye to Toys R Us[/B] [LIST] [*][B]The story: [/B]Quite a sad one this one as Toys R Us are closing all their UK and US stores as they filed for bankruptcy in the US and were then unable to find a buyer in the UK. Again it shows how physical stores have struggled against the likes of Amazon and now many more toy suppliers will shift to these ecommerce platforms helping them to grow even more. This might drag down prices even more. The wider story shows how dangerous debt can be after it was bought by private equity firms in 2005. [*][B]Impact on law firms[/B]: The company will need the support of insolvency and restructuring lawyers. We could also see an increase in the sale of smaller manufacturers in areas like toys who can't compete. I wonder if it could also cause regulators to take a closer look at how much debt private equity firms are putting onto businesses. [/LIST] [B]5. Trump blocked the biggest even technology deal[/B] [LIST] [*][B]The story: [/B]Trump blocked Broadcom's attempted $142bn acquisition of Qualcomm. These companies are chipmakers and Apple is a key client of Broadcom. This is the first time a President has blocked a deal over national security fears as they feared it would pave the way for China to lead the growth of 5G wireless technology. [*][B]Impact on law firms: [/B]This was a hostile takeover and would have made a lot of money for legal advisers in M&A and finance. Broadcom's advisers included Latham & Watkins and Wachtell Lipton Rosen & Katz, whilst firms like Paul Weiss, DLA Piper and Allen & Overy has acted for Qualcomm in the past. It comes as regulators are increasingly worried about foreign takeovers by Chinese companies (but this one is only Singapore registered which makes it odd!) -so companies may look for advice on how to stay on the side of regulators. Law firms could also see a drop in work for M&A deals from China. [/LIST] [/QUOTE]
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