The week’s news included; Donald Trump impeached, Fiat and PSA agree $46 billion merger, ECJ rules Airbnb not an estate agent, Ofcom to ban sale of locked phones
There will be no top 10 next week. The next top 10 will be on 6th January 2020. We wish you an enjoyable and safe festive period and a happy new year!
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:
- Fashion Law – As Influencer Marketing Races to Become a $15 Billion Business, What Will Prompt Action by Regulators?
- BBC News – How much should bosses be paid?
- City A.M – What does the next decade have in store for UK fintech?
- BBC News – Is Amazon putting Santa out of business?
1. DONALD TRUMP IMPEACHED
Donald Trump has become the third president in US history to be impeached. He was charged on grounds of abuse of power and obstruction of Congress. The charges stem from Trump’s alleged pressure on Ukraine to find information on Democratic candidate Joe Biden to damage his campaign. There have been weeks of hearings and evidence and the vote took place in the first chamber of Congress, the House of Representatives. Voting was, as expected, split almost entirely on party lines and the Democrat controlled House of Representatives voted to impeach Donald Trump. Crucially, this is the first stage and impeachment only represents a charge of misconduct against the incumbent. This does not mean Trump will be removed from office.
Trump now faces a Senate trial which, if the Senate supports, could see Donald Trump removed from office. The Senate is however, dominated by Republicans so Trump is likely to be acquitted. Speaker of the House of Representatives and Democrat, Nancy Pelosi, has at this time delayed the Senate trial as she believes the Senate will not hold a fair trial.
The only other two US presidents to be impeached were Richard Nixon and Bill Clinton. Richard Nixon was impeached over the “Watergate scandal” and left office before his senate trial. Bill Clinton was impeached over the Monica Lewinsky scandal but was not removed from office and served the remainder of his term.
2. BREXIT BILL PASSED
MPs were back in Parliament on Friday and voted overwhelmingly to support Boris Johnson’s bill, to take the UK out of the EU on 31 January. The bill will also prohibit the extension of the transition period beyond 2020. Parliament voted 358 to 234 in favour of the bill. Johnson is likely to win by substantial margins in Parliament throughout his tenure, particularly on his Brexit bills. The Conservatives have a huge 80 seat majority and will receive support from some other Brexit supporting MPs. The Bill will now go to the House of Lords for further scrutiny.
This certainly amps up the pressure as Johnson will now have just 11 months to strike a free trade deal with the EU and consequently reintroduces the risk of a no-deal Brexit. Critics argue securing a substantial free trade deal within this timeframe is highly improbable so a no-deal may be the most likely outcome.
3. FIAT PSA MERGER
Fiat-Chrysler and PSA, the owner of Peugeot, have agreed a merger which will create an automaker behemoth with combined revenue of $189 billion. Discussions were announced in October, but an agreement has now been finalised and is subject to regulatory approval. The merger creates the world’s fourth-largest vehicle maker with combined value of $46 billion. Both parties confirmed that there would no plant closures due to the merger. The share prices of associated entities rose, with Peugeot shares spiking 4.2% in response to the news. The deal is expected to be closed in the first quarter of 2021.
4. BOEING HALTS PRODUCTION
Boeing has halted production of its 737 Max jets after failing to gain approval to fly. The aircraft has been grounded worldwide since March 2019 after two crashes caused a total of 346 deaths. The Federal Aviation Administration is still continuing its assessment of the jets into the new year. Boeing is estimated to burn $1 billion every month on the jet even after halting productions. This is because Boeing still has huge overheads and liabilities to suppliers which are still applicable regardless of the halt to production. It is uncertain how long the halt will last. Boeing shares sank 1.3% in response to the news.
5. ECJ RULES AIRBNB NOT AN ESTATE AGENT
AirBnB has won a crucial EU court case which rules that the platform does not require an estate agent licence. Critics have been pushing the EU to subject AirBnB to the regulations of traditional real estate providers. Had AirBnB been deemed a real estate agency it would have been subject to onerous obligations but the European Court of Justice held that AirBnB is an “information society service”. This is because the site lists accommodation, but it does not act as broker. The platform has faced heavy backlash from European cities over its lack of regulation and its domination of local property rental markets which prices locals out. Uber had hoped for a similar classification as a “information society service” under EU law, but it was classed as taxi company and subject to such regulations. AirBnB is planning to launch its IPO next year and this ruling will certainly give it a boost.
6. UK DEFENCE COMPANY TAKEOVER APPROVED
The UK government has approved Advent International’s £4 billion takeover of defence firm Cobham. The proposal sparked concerns over national security as Cobham has several defence contracts with the UK government. The deal could also jeopardise the UK’s capacity for air-to-air refuelling and comprise the institutional security frameworks currently in place. The government, however, says any security concerns have been mitigated to an acceptable level. Advent International is a US private equity firm with a portfolio company revenue of $50 billion.
Founded in 1934, Cobham employs 10,000 people and is a forerunner in air-to-air refuelling technology.
7. NEW GOVERNOR OF BOE
The chief of the financial watchdog, Andrew Bailey, has been
appointed as Mark Carney’s successor as Bank of England Governor. Andrew Bailey
has been at the helm of the Financial Conduct Authority for 3 years and worked
at the bank of England previously for 30 years. He is seen as a safe option and
was widely expected to be appointed. His lack of senior involvement in monetary
policy means his views and outlooks are relatively unknown. Regardless, there
is no expectation of any radical moves, which is precisely what the government
needs amid the political and financial uncertainty posed by Brexit.
Incumbent Mark Carney is to step down on 15 March 2020. He was originally due to step down on 31 January 2019 but extended his contract due to Brexit delays. The selection of a new chief was delayed to ensure stability until the Brexit process gained some clarity. Carney will have been at the helm for 6 years, a period in which the political landscape has been reshaped. Faced with a global economic slowdown, Brexit and changing domestic political landscape, Bailey no doubt will have an equally eventful time at the helm of the UK’s central bank.
8. OFCOM BANS LOCKED PHONES
Ofcom has unveiled plans to end the sale of
“locked” mobile phone. A locked handset cannot be used on any other
network than the one on which it was purchased, without being unlocked for a
fee. The communications regulator claims the locking of handsets discourages
customers from switching network providers. BT/EE, Tesco Mobile and Vodafone
all sell locked handsets and charge £10 for unlocking. This charge only applies
while the customer is still paying off their contract. In addition, they argue
locking phones provides better security against theft and fraud.
The regulator is however, keen to crackdown on network providers to ensure customers can easily get the best deal and prevent barriers to exit. Earlier this year, Ofcom introduced rules allowing customers to switch network providers by sending a free text.
9. TWITCH SUED FOR £2.1 BILLION
Streaming service Twitch is being sued for £2.1 billion by Russian internet company Rambler Group. Rambler claims pirated UK Premier league games were streamed on Twitch’s platforms. It claims there were 36,000 instances of breach of Rambler’s broadcasting rights in the 3 months to November 2019. Rambler has exclusive digital broadcasting rights for EPL games in Russia.
Twitch allows users to upload video streams of content to the platform for other users to view. Streaming copyrighted content is prohibited by Twitch’s terms. The company says however that it cannot change content posted by users but deletes content in violation of it’s terms. Twitch states Rambler’s claims are unfounded and that they have made no such notification of a violation on the platform. The case will now go to the courts in Moscow. Twitch was bought by Amazon in 2014 for $970 million. It now has 100 million users worldwide, 15 million of whom are Russian. The company posted £5 billion revenue last year.
10. UK INTEREST RATES STAY LEVEL
The Bank of England has voted to keep interest rates at 0.75%. The Monetary Policy Committee at the UK central bank is closely monitoring growth both domestically and globally to ascertain whether to change rates. Progress on Brexit and the likely economic outcomes will largely shape policy in the coming year. Fourth quarter economic growth in the UK has been cut to 0.1% as business investment remains limited. This is fuelled by Brexit uncertainty and a wider global economic slow down. The shaky economic backdrop led 2 members of the Monetary Policy Committee to vote to cut rates to 0.5%.