This weeks news includes; Google faces £2 billion fine from the EU, Toshiba sues Western Digital for $1 billion, PwC faces investigation over BT audit.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Click on the links for full stories. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- City A.M looks at a study’s exploring whether finance firms which adopt new technologies are more successful.
- The Guardian claims that Trump risks global trade war if he restricts imports of steel and aluminium.
- City A.M asks whether we are overestimating the benefits and ignoring the pitfalls of the iPhone?
1. CONSERVATIVE PARTY REACH DEAL WITH DUP
Theresa May and the Conservative Party have reached a deal with Northern Ireland’s Democratic Unionist party which will see at least £1 billion of new investment into the country. The deal has been long awaited, coming two weeks after the shock election result in which the Conservatives failed to win a majority.
The deal is an agreement of confidence and supply where the DUP will now support the Conservative government in parliament to give them a working a majority. Without a majority in Parliament, the Conservatives would struggle to pass any legislation so this deal was considered a necessity.
Critics say the investment in Northern Ireland in return for Parliamentary seats is not “in the national interest” as Theresa May claims but rather solely for the benefit of the Conservative’s. There are also concerns that the deal could threaten Good Friday agreement.
The Conservatives have made a number of policy concessions as without a strong majority it is unlikely they will pass in Parliament. U-Turns were made on proposed legislation on grammar schools, pension locks, public sector pay freezes.
To find out more about this deal read the BBC’s analysis.
City A.M explores the debate asking: “Is the Tories’ £1bn deal with the Democratic Unionist Party a fair price to secure Brexit?”
2. GOOGLE FINED $2.7 BILLION FOR MARKET ABUSE
The European Commission has fined Google $2.7 billion for abusing its market position with its online price comparison service. The Commission claims Google abused its power by promoting its own shopping comparison service at the top of search results. Google must end the uncompetitive practice within 90 days or face a further fine but the tech giant has said that it may appeal the decision.
The marks the largest competition related fine imposed on a company by the EU to date.
For more on Google’s competition issues read the BBC’s analysis.
City A.M claims that European regulators have totally missed the point about Google and monopolies.
3. TOSHIBA SUES WESTERN DIGITAL FOR $1 BILLION
Toshiba is taking one of its tech partners Western Digital, to court for $1 billion. Toshiba sought to sell off its own $18 billion chip making unit to make up for the enormous losses it suffered after the poor performance of its US nuclear division. It has so far failed to find a buyer for this unit.
Western Digital opposes the deal and Toshiba now alleges that Western Digital intentionally interfered with this attempted sale and is seeking remedy. Toshiba alleges that Western Digital exaggerated their influence in any potential deals and generally interfered in the whole process.
BBC News looks further at the case and why Toshiba so desperately needs this sale.
4. PWC UNDER INVESTIGATION OVER BT AUDIT
PwC are now under investigation by the Financial Reporting Council (FRC) over its auditing of BT. There were failings which led to an accounting scandal in BT’s Italian arm in January where it significantly overstated its profits.
This scandal has been very damaging for the company. BT’s share price fell by 20% and 3rd quarter revenues are expected to fall by £120m. They are also looking to cut 4000 jobs as part of a global restructuring.
City A.M looks at the reactions to the announcement of the investigation.
5. HOLLAND AND BARRETT BOUGHT FOR £1.8 BILLION
The UK’s largest health food retailer has been bought for £1.8 billion. Russian billionaire Mikhail Fridman’s fund, L1 has agreed to purchase the chain. The deal is expected to be completed in September.
Holland and Barrett was founded in 1870 and currently has over 1,300 stores worldwide.
To find out more about the deal and about Fridman’s business empire, take a look at the BBC’s analysis.
6. NEW FCA ASSET MANAGEMENT RULES
The UK’s financial regulator has introduced new rules to increase transparency in the asset management sector. Asset managers must now give investors an “all in fee” quote, that includes all charges that will be paid. This is part of a larger crack down on the asset management sector to improve practices. The FCA will be obligated to appoint a minimum of 2 independent board directors. Fund managers will also have a stronger duty to act in the best interests of investors. The FCA also announced that it would launch a review of investment platforms. This announcement led to falls in the share prices of some of the largest operators.
Asset managers hold the savings of millions of people and the FCA is looking to further improve protections for consumers. To find out more about the asset management sector and how it works click here. (BBC News)
7. BANCO POPULAR TO SELL OFF 30 BILLION EUROS OF ASSETS
Struggling Spanish bank Banco Popular is to dispose of $30 billion worth of toxic assets as part of its restructuring. The bank was bought in June by Santander for just 1 euro after the bank announced it was in severe financial difficulty. It is hoped that this move will help improve finances.
Banco Popular shareholders are looking into taking legal actions as a result of the bank’s failure.
City A.M looks further at Banco Popular’s troubles.
8. TECH FIRMS BEGIN SALE OF BLOCKCHAIN TO INVESTMENT BANKS
IBM has won the bid to create new-blockchain based trading systems for a number of global investment banks.
Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit announced in January that they were collaborating to create a “Digital Trade Chain (DTC),” a blockchain-based trade finance platform.
International trade will significantly benefit from Blockchain as the public ledger will allow all parties involved a transaction to see the entire process rather than just information from one other party in a complicated chain. It is hoped that this could allow for more financing for people lower down the chain as the increased transparency would improve banks’ confidence in the legitimacy of these parties.
IBM announced that it had been selected by the consortium to build DTC, after “a global competitive bidding process.”
For more on this development, read Business Insider’s analysis.
This is one of the first in what is likely to be a series of tech firm sales of Blockchain to Wall Street. Blockchain is an online ledger that records all transactions and this is what the cryptocurrency Bitcoin runs on. To find out about Bitcoin read our insight article.
9. SOFTWARE FIRM BOUGHT OUT FOR RECORD £4.2 BILLION
Business software developer Visma was bought out for £4.2 billion last week by number of investors. UK Private equity firm HgCapital will be increasing its stake to 41% to become the majority shareholder, investing a further £1.42 billion. The other investors include; Singapore’s sovereign wealth fund GIC, asset manager ICG and European investor Montagu.
This is the largest ever buyout of a European software company.
City A.M takes a closer look at this deal.
10. COURT RULES AIRLINES MUST REFUND CANCELLED FLIGHTS
The High Court of Justice has ruled that courts are obligated to refund customers if return flights are cancelled when the initial flight tickets are unused. The case concerned Iberia and a barrister James Dove.
Airlines prefer to cancel return flights if passengers do not use the outgoing flights to prevent passengers buying return flights that are cheaper than single flights. A Mayor’s and City of London court judge ruled in Iberia’s case that airlines must refund customers if they wish to undertake this cancellation practice.
The case could affect all passengers who may have faced similar cancellations in the past 6 years. Iberia has until 3rd of July to appeal the case.
The Telegraph looks further at the case.
