Top 10 Stories of Last Week! 13/07/2020

The week’s news included; ECJ strikes down key US-EU data privacy agreement, Huawei banned from UK’s 5G network, Apple wins Ireland back tax appeal, Jay-Z & Oprah invest in Oatly milk

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: 

  • Forbes – What are the skills required of lawyers in the 2020’s?
  • City A.M – Contact tracing is a legal minefield for businesses
  • FT – The $6bn judgment pitting Nigeria against a London court

1. ECJ RULES ON PRIVACY SHIELD

The European Court of Justice (ECJ) has struck down a key data protection agreement between the US and the EU, creating added complications for businesses. The EU-US Privacy shield was a framework allowing for EU entities to transfer personal data from the EU to the US. In this case, the ECJ found that US privacy laws do not adequately protect EU user data from government surveillance, rendering the Privacy shield invalid. In terms of security, the US is now considered equivalent to any other non-EU country. Instead, companies will now have to use EU drafted contractual clauses to ensure privacy when transferring data to the US. Wired looks at the case in more detail.

The case was brought forward by data protection activist Max Schrems who was also at the centre of the huge ECJ “safe harbour” lawsuit against Facebook. Again in this case, the ECJ held the safe harbour agreement confirming the US had adequate privacy protections was invalid (see more).

 2. HUAWEI BANNED FROM UK 5G NETWORK

Huawei has been banned from all UK 5G infrastructure and providers must remove any Huawei 5G technology from their networks by 2027. UK mobile network providers will face a ban from buying any Huawei 5G equipment. The decision has been made due to concerns over the Chinese government’s potential for use of Huawei as an agent for espionage. Huawei vehemently denies that the Chinese government has any undue influence over it. This decision marks a U-Turn in the UK government approach. In February, Huawei was given the green light to provide non-sensitive parts of the UK’s 5G network. Many backbench Conservative MPs had been applying pressuring for the reversal of this decision due to the security concerns. The US had also banned Huawei from its 5G networks and was urging allies to do the same. This decision does not however, affect 2G, 3G, or 4G technology.

Huawei is a market leader in 5G technology which is considered essential for the next generation of technology such as driverless cars. The only other suitable alternatives are Nokia and Ericson but even these are behind Huawei. Experts say the development of the UK’s 5G network could be delayed by up to 3 years and mobile blackspots could appear due to this decision. 

3. APPLE WINS IRISH TAX BILL APPEAL

The General Court of the EU has ruled against an order requiring Apple to pay Ireland €13 billion in  back taxes following an appeal. In 2016, the European Commission ruled Ireland’s tax arrangement allowing Apple to record EU sales through Ireland constituted unfair state aid. Apple’s EU tax bill plummeted to as low 0.005% in 2014. The General Court deemed however, that the Commission did not adequately prove there was an advantage gained by the parties, in breach of EU regulations. This judgement is a blow for the European Commission who has been keen to clamp down on the questionable tax practices of tech giants. The commission may appeal the decision.

4. MAN CITY EUROPE BAN OVERTURNED

Manchester City Football Club has had its two-year Champions League ban reversed. The club was found in February to have breached Financial Fair Play Regulations by spending too much money relative to income. It was also alleged to have overstated sponsorship revenue. Crucially, it had also failed to cooperate in the CFCB’s investigation. Last week however, the Court of Arbitration for Sports deemed it improper to ban Man City from European club football solely for failing to cooperate. Instead Manchester City will pay a €10 million fine instead of the €30 million penalty originally imposed. UEFA can appeal the CAS ruling, but this is unlikely. Participation in the Champions League is lucrative and can provide up to £150m per season in revenue.

5. OATLY INVESTMENT

Oat milk producer, Oatly, has received $200 million in investments from celebrities including Oprah Winfrey, Jay-Z and Natalie Portman. A large group of investors contributed to this figure, including Blackstone Group, the world’s largest asset manager and a number of other celebrities. Oatly first launched in the US in 2016 and proved a huge hit. There is a growing consumer shift away from dairy towards alternatives and this is partly driven by the rise in veganism. The milk producer posted $200 million in sales last year and is now set on expansion. Oatly will use the money primarily to open new production factories and is aiming for $400 million in sales for 2021. This latest investment round values Oatly at roughly $2 billion.

6. ZIZZI’S OWNERS JOB CUTS

The owner of Zizzi’s, Ask Italian & Coco Di Mama has been bought out of administration, but 1200 jobs will be lost. The Azzurri Group fell into administration last month due to the coronavirus lockdown which wiped out sales. TowerBrook Capital Partners has bought the company but has revealed that 75 branches will need to close in order to keep the company afloat. The rescue deal does however, save 5000 jobs. Azzurri group has been battered by the coronavirus outbreak despite performing well prior to the pandemic. Last year, it posted nearly £300 million in sales and considered the year to June 2019 “another successful year”. The UK government is changing its guidance on working from home to help reignite the economy. With new coronavirus cases still topping 500 per day however, many people will no doubt be weary of returning to normality. How quickly the retail and hospitality sector will recover remains to be seen.

7. VIRGIN SECURES RESCUE DEAL

Richard Branson’s Virgin Atlantic has secured a £1.2 billion rescue package, saving thousands of jobs. The airline had sought a £500 million government bailout but was rejected. The Virgin Group raised over £1 billion from investors and lenders while the group itself will inject £200 million into the airline. 3500 job cuts have already been announced, which constitutes around a third of its staff.

Airlines have been severely damaged by the coronavirus outbreak, but holidaymakers are unlikely to return in significant numbers at least for the next six months. For Virgin, this rescue deal will support it for the next five years providing it with enough time for sales to recover. Even as measures ease, it is unclear how long airlines can sustain themselves with severely diminished passenger travel without such rescue packages.

8. LIDL CREATES 1000 NEW JOBS

Lidl is to create 1000 new UK jobs, some rare positive news amidst a coronavirus meltdown throughout retail. The discount supermarket will open 25 new stores by early 2021 and a further 100 stores in 2022. Even prior to Covid, Lidl had it sights set on a massive expansion plan and coronavirus has not scuppered these plans. Like many supermarkets, Lidl had a bumper season during the start of the Covid lockdown as shoppers stockpiled essentials. The supermarket plans to invest £1.3 billion next year.

Lidl has been clawing its way up the chain of supermarkets, now boasting a 5% market share, up 3% since 2015. The growth of Lidl and Aldi has sparked a supermarket price war and led the Big Four supermarkets to change tact. Lidl hopes to operate 1000 UK stores by 2024.

9. FIAT-PSA NAME CHANGE

Fiat Chrysler and PSA will be adopting the name Stellantis, once their $50 billion merger is complete. The car brands under the new behemoth will retain their names and Stellantis will be used as the corporate name for the group. This merger will create the fourth-largest carmaker in the world, if it goes through. The merger is still subject to board and regulatory approval. Understandably, there are huge competition concerns particularly in the EU where the two automakers dominate many markets. Fiat-Chrysler owns brands including Alfa Romeo, Fiat and Jeep while PSA owns Citreon, Peugeot and Vauxhall.

10. ASOS REPAYS FURLOUGH DUE TO LOCKDOWN BOOM

Asos’ sales have boomed over lockdown and now the retailer will pay back the money it claimed for furloughed staff. This is in stark contrast to the overall retail sector which has seen collapsing sales and thousands of job cuts. With no physical stores and increased online shopping, lockdown was something of a bumper period for ASOS. Sales at Asos increased by 10% to £1 billion between March and June. It is not clear how many staff were furloughed at ASOS.

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