The week’s news included; HP wins largest UK civil fraud lawsuit, Intel gets €1bn antitrust fine overturned, Netflix to face defamation lawsuit over “The Queen’s Gambit”, Meta reportedly ditching Diem crypto project.
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:
- FT – Is Kanye West good for Gap?
- The Fashion Law – What Do Brands Stand to Gain in Fights Over Their Marks in the Metaverse?
- City A.M. – Bye bye to gas? No, it’s too soon
1. HP WINS UK’S LARGEST CIVIL FRAUD TRIAL
Hewlett Packard (HP) has won a huge lawsuit against former heads of UK tech firm Autonomy over alleged fraud. HP claimed that Autonomy’s executives artificially inflated the company’s earnings and value before its $11 billion acquisition. Just a year later, HP had to write-down the value of the Autonomy business by an enormous $8.8 billion. HP claimed that this was a case of deliberate fraud in order to secure the acquisition. After a nearly 2 year court hearing, the court agreed that Autonomy used methods to inflate revenues and the executives were aware of this. HP is seeking $5 billion in damages but the judge confirmed the damages awarded will be considerably less. Regardless, this is the largest civil fraud lawsuit in UK legal history.
Furthermore, CEO Mike Lynch is facing 17 charges in the US over this issue. Home secretary Priti Patel has approved his extradition so he will now face these charges. Former CFO, Sushovan Hussain, is currently serving a five-year jail sentence in the US.
2. INTEL GETS €1BN FINE OVERTURNED
Intel had a €1.06 billion antitrust fine overturned last week. The European Commission fined the tech giant in 2009, claiming that it abused its dominant market position via a strategy to exclude competitors from the market. This was with regards to the “x86 2” data centre processors. The EU General Court ruled however, that the EU Commission failed to do an appropriate economic analysis of the strategy. In 2014, the General Court upheld the verdict but was ordered by the EU Court of Justice in 2017 to reconsider Intel’s appeal.
3. CMA INVESTIGATES STAGECOACH – NATIONAL EXPRESS MERGER
The Competition and Markets Authority (CMA) has launched a formal investigation into the £1.9 billion merger between Stagecoach and National Express. The two travel giants agreed a merger in December last year. Stagecoach, owner of Megabus, and National Express, will have a combined fleet of 40,000 vehicles. The consolidation of the entities is expected to generate £45 million in savings. Both firms have suffered during the pandemic as passenger numbers plummeted to record lows. Transport support funding from the government is due to expire in March so the firms will undoubtedly be keen to get the deal through. The CMA has put the deal on ice, pausing the merger until its investigation is complete. Stagecoach already announced plans to sell off its Megabus UK business, Falcon South-West coach service and its 35% stake in Scottish Citylink bus services in order to push the deal through. Whether this will be enough to satisfy competition concerns remains to be seen.
4. LIBOR TRADERS HAVE CONVICTIONS OVERTURNED
Two ex-traders at Deutsche Bank have had their convictions for rigging Libor rates overturned by a US court. A US district judge held that the prosecution failed to prove that the traders’ submissions were false or fraudulent. The two traders were already sentenced to home confinement along with a $100,000 and $300,000 fines respectively. Federal prosecutors were seeking prison sentences for the traders. The scandal derives from banks and traders colluding to fix the London Interbank Offered Rate (LIBOR), the rates at which they lend to each other. There has already been $9 billion in fines levied against companies involved in the scandal. The Financial Times explores the case in more detail.
5. NETFLIX TO FACE DEFAMATION LAWSUIT
Netflix’s attempt to throw out a defamation lawsuit over its series “The Queen’s Gambit” has been rejected. Netflix must now face the lawsuit as no evidence had been provided to preclude the claim. Chess champion Nona Gaprindashvili claims she was falsely portrayed in Netflix’s hit series The Queen’s Gambit. Based on the 1983 novel by Walter Tevis, the series follows the story of a fictional American chess player, Beth Harmon, who rises to the top of the chess world against all odds. In one scene, the series made reference to Gaprindashvili and claimed she never played competitive chess against men, unlike the supposedly trailblazing series protagonist. Gaprindashvili, now over 80 years old and still competing competitively in chess tournaments, claims this is false. The legal filing explains that by 1968, she had faced at least 59 men. Netflix argued that “The Queen’s Gambit” was a fictional work and therefore, they were entitled to make this portrayal as the First Amendment affords them broad artistic licence. The court rejected this and held that the fact that works are fictional does not “insulate” defendants from defamation claims.
6. TESLA COUNTERSUES JPMORGAN
Tesla is countersuing JPMorgan over its $162 million claim, arguing the filing of litigation was “cynical”. JPMorgan initially sued Tesla over a breach of contract relating to warrants (see previous top 10). A warrant is a derivative that gives a party the right, but not the obligation, to buy or sell a security at a certain price. JPMorgan was due to receive shares or cash from Tesla if its share price went above an agreed level before a certain date. The bank however, adjusted the value of the warrant in 2018 after Tesla CEO Elon Musk tweeted that he was considering taking the electric car maker private which saw its share price rise. Musk however, scrapped the plans just a few weeks later and got in hot water with regulators over the whole fiasco. JPMorgan again, readjusted the value of the warrant. Tesla claims these adjustments were “unreasonably swift” and tried to take advantage of its share price volatility. The tech giant did not adhere to the adjusted warrant, but JPMorgan contends that it was entitled to adjust the warrants and sued for the 228,775 shares of Tesla common stock it was allegedly owed. Tesla claims JPMorgan used “illegitimate machinations” and seeks a declaratory judgement dismissing JPMorgan’s claim.
7. META DITCHING DIEM
Meta is reportedly planning to ditch its ambitions of a cryptocurrency. The Diem Association is selling technology assets for $200 million to Silvergate Capital. Originally called Libra, the project has faced hurdles since its inception. Although it initially had the backing of big firms like Visa, Uber and Mastercard, a number of these quickly dropped out. The Libra currency was designed to be tied to a number of stable currencies, available for use within the Facebook ecosystem. Regulators staunchly criticised the idea and threatened to block any plans that would give too much power to Facebook. Facebook then changed course, relaunching as the Diem Association and releasing a cryptocurrency wallet, Novi. Novi uses an existing stablecoin USDP as its currency. Many challenges faced by Diem seem insurmountable hence why Meta and others appear to be cashing in. The sale of the assets by Diem will generate some returns for Diem Association members and put Silvergate Capital at the helm of the project.
8. CMA PROBES MUSIC STREAMING
The CMA has launched a probe into the music streaming market. There will be a review of the power that individual firms hold and how well the industry is working for consumers. They will also review whether a lack of competition is harming musicians. Over 80% of recorded music is listened to via streaming services rather than traditional physical media. Based on its findings, the CMA may take action against individual streaming providers or the streaming industry as a whole.
9. IPHONES TO ACCEPTS CREDIT CARD PAYMENTS
Apple has revealed plans to allow users to accept payments via their iPhones without any additional hardware. Using the NFC chip, customers can simply tap their card and vendors can accept payments with their iPhone. The technology will be integrated with Apple Pay and will be available via a software update. This new technology could be largely disruptive to payment service providers like Square. Square’s share price fell 3.4% in response to the news. Apple’s announcement came against the backdrop that sales at the tech giant spiked by 11% to a record $123.9 billion in Q4 2021. This comes despite the ongoing shortage of semiconductor chips.
10. KLARNA TO LAUNCH PHYSICAL CARD
Klarna will launch a physical card that will enable users to pay for products using their buy-now-pay-later function in-store. The Swedish fintech firm will team up with Visa. Card holders will only be able to use the “Pay in 30” option, allowing a one month payment delay. Cards will come in either black or pink and users will get notified upon each transaction.