Top 10 Stories of Last Week! 23/09/2019

The week’s news included; Thomas Cook collapse – a summary, Google wins right to be forgotten lawsuit, Facebook’s Libra crypto release delay, Liverpool FC fails to trademark “Liverpool”

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. 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 – DEBATE: Was the collapse of Thomas Cook inevitable?
  • Bloomberg – Businesses Finally Think Big About Cutting Emissions
  • E-Financial Careers – The ‘working class millionaires’ putting in 12 hour days. Suddenly the consultants are becoming auditors

1. PARLIAMENT WAS NEVER PROROGUED

Parliament was never prorogued. This was the judgement of the Supreme Court delivered by its President, Lady Hale. Boris Johnson’s attempt to prorogue Parliament until 14 October was ruled unlawful and to have no legal effect. The Supreme Court held that there was no good reason to prorogued Parliament for five weeks. Prorogation served only to inhibit Parliament from carrying out its duties ahead of Brexit. Therefore, the prorogation had no effect and Parliament was to resume as early as possible. The Supreme Court concurred with the ruling of the Scottish Courts. The case was brought forward by Gina Miller, represented by law firm Mishcon de Reya and Blackstone Chambers.

Prime Minister Johnson amongst other cabinet ministers “profoundly disagreed” with the ruling but confirmed they will respect the decision. Johnson cut his trip to New York short and flew back to face an infuriated Parliament. Both Johnson and the Attorney General, Jeffrey Cox, had some explosive encounters with opposing MPs leading to calls for MPs to temper their language.

Johnson is between a rock and a hard place. MPs introduced a law, obligating Johnson to request an extension from the EU if no Brexit deal is approved by Parliament by 19 October. Johnson calls this the “surrender” or “capitulation” bill. Astoundingly, Johnson still says he is committed to leaving the EU on 31 October but will simultaneously respect the “surrender” bill. The two appear fundamentally incompatible so it will be interesting to see how he intends to achieve this.

2. THOMAS COOK COLLAPSE

Package holiday firm Thomas Cook collapsed after emergency funding talks fell through. The 187 year old company had no way to service its debt and confirmed last Monday that it would cease trading immediately. Despite turning over £9 billion, the company was crippled by a £1.7 billion debt pile and has suffered falling sales due to the weak pound and a challenging market. The collapse puts 22,000 jobs worldwide in jeopardy, 9,000 of those within the UK. The collapse also left 600,000 holidaymakers stranded, with some being held hotels by owners who feared they would not be paid. Hotel owners are currently out of pocket by a total of £338 million globally.

Thomas Cook appeared to be saved in August when it secured £900 million but two weeks ago it transpired an additional £200 million was needed. The firm scrambled for the cash and even turned to the government who rejected their request. The company posted a £1.5 billion loss in the first half of this year.  

The bosses of Thomas Cook have received serious backlash over their hefty pay packets. Bosses took home over £35 million over the past 12 years. Manny Fontenla-Novoa took the headlines as under his management, over £1 billion in debt was racked up through acquisitions and he took home £17 million in just four years up to 2011.

Thomas Cook had too many large investments that failed to pay off. Notably, it merged with My Travel in 2007 and was recently forced to write down the value to the tune of £1.1 billion. The company also had 600 UK & Ireland high streets stores at the time of collapse. In an age where most people book holidays online, to retain this number of stores and the accompanying overheads is unjustifiable. As with most downfalls, it was a cocktail of issues that lead to the demise of this veteran of the high street.

3. VOLKSWAGEN EXECUTIVES CHARGED

Two current and one former Volkswagen executive have been charged with market manipulation in relation to the diesel emissions scandal. The prosecutors allege the executives failed to warn investors early enough about the fallout from the scandal. The bosses facing charges are Chief Executive Herbert Diess, chairman Hans Dieter Pötsch and ex-CEO Martin Winterkorn.

In 2015, Volkswagen admitted to using software to cheat on emissions tests. The software recognised test conditions and artificially lowered emissions. This allowed its diesel cars to be classed as low emissions, despite on the road, emissions were significantly higher than in the test conditions. Over 600,000 cars were sold in the USA with the cheat devices.

This is yet another legal case issued against the executives. Four Volkswagen executives were charged with fraud in April this year. The US Securities and Exchange Commission (SEC) has also sued Volkswagen and its boss for misleading investors.

4. GOOGLE RIGHT TO BE FORGOTTEN

Google has won an important EU “right to be forgotten” lawsuit. The right to be forgotten law requires search engines to delete links to sensitive information such as criminal convictions upon the request of the affected person. The case was brought forward by the French data regulator, the CNIL, who sought to establish whether the law could apply globally, not just within the EU. The ECJ’s top legal adviser, Maciej Szpunar, deemed that the law should only apply within the EU earlier this year in his official advice. The ECJ invariably follow the advice of the Advocate General so the concurring judgement from the ECB was expected. Google has been inundated with removal requests in EU alone. Had this ruling been expanded to apply globally, it would have been a huge challenge for the tech giant.  

5. LIBRA DELAY

Facebook has announced that its Libra cryptocurrency may not launch next year, as previously anticipated. Libra has faced significant opposition from various countries, particularly from the US. The US congress has committed to scrutinising the plans for Libra before launch or even freezing plans altogether.

The Libra cryptocurrency will form part of a Facebook payments ecosystem. Users will be able send money to other users via a digital wallet app. Libra will be available on exchanges for conversion to conventional currency. The currency will, however, be tied to bank deposits and government securities so users will not see price volatility as is common with many cryptocurrencies. The idea is to revolutionise access to banking. There is concern that Facebook already wields too much power of user data and additional control of users’ financial transactions through unregulated cryptocurrency poses too much of risk to users.

6. SOCIAL MEDIA MUST SHARE WITH POLICE

US social media platforms will soon be obligated to give UK police access to encrypted user messages as part of a new treaty. The treaty will shape US-UK relations with regards to police investigations and information sharing. Information obtained from British firms will not be permitted to be used in US death penalty cases. In addition, both countries will not investigate each other’s citizens. Notably, social media platforms like Facebook must share encrypted messages with UK police in investigations of serious crimes such as terrorism. The UK government had previously called upon social media companies to set up “back doors” for encrypted message services to help criminal investigations. Facebook has criticised these requests for building back doors as it compromises the privacy of their users data. The treaty is expected to be signed off in October.

7. ASTON MARTIN BOND ISSUE

Aston Martin has raised £120 million from a bond issue but there are still concerns over it’s future. The company issued 12% notes due in 2022 which is a notably high interest rate. This high rate raised concerns amongst some analysts who believe this signifies that the company is in trouble and desperately needs cash. Aston Martin’s IPO last year failed to entice investors and things don’t seem to be improving. Its shares are down 75% from their IPO price and analysts feel the company could soon struggle to meet its hefty debt obligations. The luxury car maker is best known for being the chosen vehicle range of James Bond in 007 films.

8. SAINSBURY’S STORES CLOSURES

Sainsbury’s has announced plans to close 70 Argos stores as part of a cost cutting drive. The supermarket will also integrate a further 80 Argos stores into Sainsbury’s stores. Numerous large supermarkets and convenience stores will close but 120 new sites will open. This all forms part of a drive to make £500 million in savings to deal with the challenging supermarket climate. Sainsbury’s most recent results show like for like sales down by 0.2%. Sainsbury’s £13 billion merger with Asda was blocked earlier this year by the CMA. The supermarkets hoped the consolidation would help them weather the tough climate but are now looking to other means.

Sainsbury’s is also leaving the mortgage lending business due to low interest rates and poor performance. Sainsbury’s shares rose by 1.6% in response to the announcement of the cost cutting programme.

9. UBER’S LONDON LICENSE EXTENDED

Uber’s has been granted a last minute 2-month extension to its license to operate in London. Uber’s attempt to renewable license to operate in London was rejected in 2017 over failures relating to passenger safety. The firm failed to carry out proper background checks and failed to report criminal offences committed by drivers. The ride hailing app then received a 15 month temporary license extension  in 2017 that was about to expire last week. The courts have now given an additional extension while TfL gather further information and decides whether to grant it a full five year operating license. Uber will also have to improve passenger safety protections. There are roughly 45000 Uber drivers in London alone.

10. LIVERPOOL TRADEMARK APPLICATION FAILED

Liverpool FC have failed to trademark the name “Liverpool” as the Intellectual Property Office rejected the proposed registration. The trademark would have covered the name Liverpool in all football related goods and services. This was to protect the club from sales of unauthorised football related products, not restrict the general use of the name Liverpool. The IPO rejected the application due to the geographical significance of Liverpool. Many regarded this as a common-sense decision. The move, to trademark Liverpool received backlash from both supporters and local businesses.

Trademarks of this nature are not new to football. Chelsea and Southampton successfully registered their respective place names as trademarks.

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