The week’s news included; Banks fined €344m for forex market abuse, Didi delists from NYSE just 5 months after listing, CMA orders Facebook to unwind $400m Giphy acquisition, Grab goes public via SPAC deal.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram 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:
- Time – How the Enron Scandal Changed American Business Forever.
- CNBC – Why Volkswagen is beating Tesla in Europe.
- BBC News – Why Turkey’s currency crash does not worry Erdogan
- City A.M. – Business rates are an outdated tax which threaten to bury our high streets and shops
1. BANKS FINED €344M FOR MARKET ABUSE
Barclays, Credit Suisse, RBS and HSBC have been fined €344 million by the European Commission for market abuse. Traders at the banks colluded with each other in the trading of foreign currencies, providing indicators of when to buy and sell. These traders shared and coordinated their trading strategies through an online chatroom called “Sterling Lads”. This conduct “undermined the integrity of the financial sector” and the banks were slapped with fines totaling €344 million. UBS was also involved but was granted immunity for exposing the cartel. This action by the European Commission forms part of a wider investigation into foreign exchange markets.
2. CMA BLOCKS FACEBOOK – GIPHY ACQUISITION
The UK Competition and Markets Authority (CMA) has officially ordered Facebook’s parent company, Meta, to sell gif platform Giphy. The regulator found that the deal was harmful to competition and social media users. Meta bought Giphy for $400 million last year. Giphy is the largest gif animation platform and is available on Snapchat, TikTok and Twitter as well as Facebook. There were concerns that Meta could limit the availability of Giphy on other social media platforms or gather more competitor data if the deal is allowed to stand. Facebook has already terminated Giphy’s advertising platform, eliminating a competitor for Facebook in the digital advertising space. Meta disagrees with the decision and is considering appealing.
3. FTC INVESTIGATES BIG RETAILERS
The US Federal Trade Commission (FTC) is investigating the supply chains of big retailers to determine to what extent disruption in the chains is causing price rises. Amazon, Walmart, and other big retailers have received requests for internal documents regarding their supply chains. There are severe supply chain shortages in the US fuelled by equipment and labour shortages as well as a rapid surge in consumer demand. Like in the UK, inflation in the US is rising and there are concerns that big retailers are exploiting their power and using anti-competitive practices to put smaller competitors at a disadvantage. Aside from Amazon and Walmart, other giants like Kroger, Procter & Gamble, and Kraft Heinz have all been requested to provide information within 45 days. Firms will be expected to explain the cause of any shortages they have faced, how they maintained their supply chains and the impact on their pricing.
4. DIDI DELISTS FROM NYSE
Chinese ride hailing giant Didi will delist from the New York Stock Exchange (NYSE) only 5 months after listing. Instead, the company will now prepare to list on the Hong Kong stock exchange. Shortly after Didi’s IPO, China announced it would crackdown on domestic companies that list overseas. Online stores in China were banned from offering Didi’s app and regulators put the company under investigation for national security reasons. In the US, Didi is also facing pressure as new laws were introduced allowing regulators to delist foreign companies whose auditors do not comply with requests. While Didi did raise a healthy $4.4 billion from its IPO, it misjudged the political and regulatory climate. Facing pressure from both US and Chinese regulators is unsustainable and it is hoped that a Hong Kong listing will ease the pressure. Didi is the largest ride-hailing app in China. It has 62 million monthly users and turned over $21 billion last year. Uber pulled out of China in 2016 due to fierce competition but currently holds a stake in Didi.
5. MORRISONS TAKEOVER POSTPONED
Clayton, Dubilier & Rice (CDR)’s £7bn takeover of Morrisons has been postponed until next year. The private equity firm was relying on a huge £6.4 billion debt package from lenders to finance the purchase. Given the current volatility of the markets due to fears over the new Omicron COVID-19 variant, lenders are unwilling to proceed with the financing package under the current timeline. The cost of borrowing money has increased significantly making the original plans unviable. CDR’s takeover of Morrisons will still go ahead but will simply be delayed until next year when it’s anticipated that markets will settle.
6. GRAB LISTING
Singapore-based Grab has debuted on New York’s NASDAQ via a SPAC deal and reached a $40 billion valuation. The company raised $4.5 billion despite a huge 21% dip in price on the day. Special Purpose Acquisition Companies (SPACs) are publicly listed shell companies that are designed solely to buy and invest in other companies. When SPACs list on an exchange, the entity itself typically has no track record or operations. Investors buy into SPACs primarily based on the calibre of the team running the SPAC. Once money has been raised, the SPAC will scout companies to merge with or invest in to generate returns for investors. SPAC listings usually cost a fraction of a conventional IPO listing and have fewer regulatory requirements and are subject to less scrutiny. Grab is a popular ride-hailing app in South-East Asia and pushed Uber out of the market in 2018. Like many in the industry however, the company is yet to make a profit. Despite a record $550 million in sales in Q2 2021, Grab posted an $800 million loss for the quarter.
7. SPANISH CLUBS PUSH AGAINST LALIGA – CVC DEAL
Some major Spanish football clubs are pushing for a €2 billion alternative plan to LaLiga’s current deal with CVC Capital Partners. The current deal would see football clubs from Spain’s two divisions receive funding from CVC Capital Partners in return for 11% of the league’s income from TV rights for 50 years. This faced staunch opposition from the likes of Barcelona and Real Madrid. Now, Barcelona, Real Madrid and Athletic Bilbao have proposed an alternative which they consider a better deal for all clubs. The proposal would see Bank of America, JP Morgan and HSBC lend €2 billion to clubs at up to 3% interest for 25 years. LaLiga clubs vote on CVC Capital Partners’ deal this month. LaLiga’s president, Javier Tebas, claims the new proposals are “an attempt to break the consensus and generate uncertainty”. The league claims the CVC deal is not solely a financial support package but rather a long-term strategic partnership.
8. GOVERNMENT FINED £500K FOR NEW YEAR HONOURS BREACH
The UK Information Commissioner’s Office (ICO) has fined the government £500,000 for accidentally sharing the postal addresses of over 1,000 New Year Honours recipients. In December 2019, the Cabinet Office posted a file showing the addresses of people receiving honours including stars like Sir Elton John and Ben Stokes. Although the file was quickly removed, it was viewed thousands of times. The ICO received three complaints from those affected and undertook an investigation. It found that the government failed to implement adequate procedures to prevent such breaches. Consequently, it was issued with a £500,000 fine.
9. FACEBOOK ENDS CRYPTO ADS BAN
Facebook has announced that it will end its ban on cryptocurrency ads. Previously only cryptocurrency companies that were publicly listed or had one of three accepted regulatory licenses were able to post ads. Facebook will now accept 27 different regulatory licenses. Furthermore, many cryptocurrency start-ups will be able to post ads. The tech giant says this loosening of the rules is due to a stabilisation of cryptocurrency markets. Facebook has had to cut back plans to launch its own cryptocurrency after a staunch rebuke from lawmakers.
10. BALENCIAGA ENTERS METAVERSE
Balenciaga has entered the metaverse and created a new division dedicated to exploring this nascent field. The luxury fashion brand sees great opportunities for growth in the metaverse. The metaverse will create new ways to interact with brands and fashion and bring new dimensions to online shopping. Balenciaga undoubtedly sees tech as an important way to achieve growth. Earlier this year, it launched its Fall 2021 collection on Fortnite. Players could unlock and purchase in-game Balenciaga fashion for their characters. It appears luxury fashion brands are shifting away from a discreet and exclusive approach and are reaching out to the mass market in increasingly innovative ways. Gucci recently teamed up with Roblox to launch its own virtual fashion exhibition in the game. Check out our article exploring the metaverse.