The week’s news included; P&O Ferries fire 800 staff without notice via pre-recorded video, Lloyds sued for £1.5 billion over Libor scandal, Russian Burger King operator refuses to shut down.
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:
- Forbes – Why Owners Of U.S. Sports Teams Have The Advantage In Chelsea Football Club’s Global Bidding War.
- BBC News – How Ikea tweaked its products to woo India’s shoppers
- City A.M. – Abramovich’s toxic Chelsea FC legacy must make us rethink ownership in our communities
1. P&O FERRIES JOB CUT CONTROVERSY
P&O Ferries fired 800 staff without notice through a pre-recorded video last week, sparking outrage and threats of legal action. A clip of the video call was leaked and staff were told that they were redundant and their employment was terminated with immediate effect. Staff protested and refused to leave ships but were removed by security. The staff will be replaced by agency workers, and P&O said its business would not be viable without the changes.
The company is likely to face legal action. The RMT Union has staunchly criticised the decision. Many commentators have said P&O has breached basic employment laws that require consultation with staff. Where a company plans to dismiss more than 20 employees a consultation period of up to 45 days must be held. Although P&O was hoping to save money through the changes, the legal saga that will likely follow could be significantly more costly. BBC News explores the legality of these sackings.
2. ANTITRUST LAWSUIT AGAINST AMAZON DISMISSED
Last week, a US court dismissed an antitrust lawsuit against Amazon. The tech giant was accused of breaching antitrust laws by banning third-party sellers from offering better prices for their products off Amazon’s platform. The Washington DC attorney general filed a complaint last year and Amazon filed a motion to dismiss it. Now, the Superior Court of the District of Columbia dismissed the motion although a reason was not given. The attorney general’s office is considering its options.
3. AUSTRALIAN COMPETITION REGULATOR SUES META
Australia’s competition regulator has sued Meta for allegedly allowing misleading cryptocurrency advertisements on Facebook. The Australian Competition and Consumer Commission has said that Meta was aware of, and therefore responsible for the publishing of false and deceptive ads, as they failed to take sufficient steps to deal with the problem. Many ads included fake endorsements from renowned business figures. While Facebook itself generates huge ad revenues, some of which derived from these scam ads, users on Facebook have collectively lost millions due to these cryptocurrency scams.
4. LLOYDS SUED FOR £1.5 BILLION OVER LIBOR SCANDAL
The owner of a collapsed property firm has sued Lloyds Banking Group for £1.5 billion claiming their involvement in the Libor scandal caused the collapse of his firm. The London Interbank Offered Rate (LIBOR) is the rates at which banks lend to each other. A scandal erupted when it transpired bankers had been rigging the Libor rate. Ardeshir Naghshineh was the former owner of now collapsed firm Targetfollow, a property investment firm which owned 27 properties including Centre Point. Naghshineh said that he would not have taken out loans and interest rate derivative products linked to Libor had he known the Libor benchmark had been rigged. He claims that Lloyds made a misrepresentation that the products were of good value despite the fact that in reality they were being fraudulently manipulated. Lloyds argues that Naghshineh’s claim lacks any credibility. Lloyds was already fined £105 million in 2014 for failings with regards to Libor.
SONIA (the Sterling Overnight Index Average) has now replaced Libor as the industry standard benchmark in the UK. It is considered to be more robust and less risky. Libor was an assessment made by banks of what they believed they could borrow from other banks, so the subjective element was more open to abuse. Conversely, SONIA is based on the real market data of rates that banks have paid, as opposed to a subjective assessment.
5. ARM TO CUT STAFF
UK computer chip maker Arm Holdings has announced plans to cut 15% of its workforce. The company employs 6400 globally and most cuts will affect its UK and US staff. Arm said the cuts were necessary to ensure it is meeting “the right balance between opportunities and cost discipline”.
Arm licences its chips to brands such as Apple and Samsung who use them in their products. The company was due to be sold to US rival Nvidia for $40 billion but the deal collapsed due to a plethora of regulatory challenges. Arm owner SoftBank pulled the plug on the deal and said it will instead seek to list Arm.
6. BANK OF ENGLAND RAISES RATES
The Bank of England raised interest rates last week to 0.75%, the highest level since March 2020. This marks the third consecutive meeting where the Bank’s Monetary Policy Committee (MPC) has raised rates. This rate hike is designed to help limit rising inflation driven by Russia’s invasion of Ukraine and rising gas prices. The Bank predicts that inflation could rise as high as 8% later this year. The MPC voted in favour of raising rates by 8 votes to 1.
7. NORTON LIFELOCK & AVAST MERGER COULD FACE CMA INVESTIGATION
The Competition and Markets Authority (CMA) has warned Norton LifeLock’s proposed £6 billion takeover of Czech cyber security rival Avast could be subject to an in-depth investigation. Avast, which is listed on the UK’s FTSE 100 stock exchange, is considered a close competitor of Norton LifeLock by the CMA. Therefore, the regulator foresees a potential reduction in consumer choice, if the deal was to go ahead. Both companies are submitting proposals to the CMA to allay concerns and avoid an in-depth investigation.
8. BURGER KING UNABLE TO SHUT DOWN IN RUSSIA
The owner of Burger King, Restaurant Brands International (RBI), is facing difficulty in Russia as its Burger King store operator refuses to close. RBI had announced that it would shut down its operations in Russia in response to the invasion of Ukraine. Burger King in Russia is run through a joint venture between RBI and other partners. One of these partners is VTB Capital, an affiliate of Russia’s financial giant VTB Bank which has been sanctioned by the US, UK and EU countries. Following RBI’s announcement, the main operator refused to close stores. In response, RBI has withdrawn all corporate support for the Russian business, seeing operational, marketing, supply chain and new financial support being cut.
Marks and Spencer, Marriott and Accor are also affected in the same way. As with Burger King, they have local partners in Russia who have ownership of the stores’ operations and so the brand owners cannot unilaterally shut them down. Additionally, their complex franchise deals make withdrawal from Russia very difficult. M&S has 48 shops still open Marriott and Accor have 28 and 57 hotels open respectively.
9. SPOTIFY – BARCELONA SPONSORSHIP DEAL
FC Barcelona has announced that Spotify will become its main sponsor. The deal will see its iconic Camp Nou stadium renamed to Spotify Camp Nou from this summer. Furthermore, both Barcelona’s men’s and women’s teams will bear the Spotify logo as part of the four year deal. The deal is estimated to be worth €280 million. This is similar to Barcelona’s deal with Rakuten which was worth €240 million but did not include stadium name rights. Barcelona has been in severe financial trouble over the past year. It posted a huge €481 million loss last financial year. The club is over €1 billion in debt and were forced to slash their player wage bill. This saw them release one of the best players of all time and their club legend Lionel Messi.
10. TM LEWIN FACING COLLAPSE
TM Lewin is on the brink yet again as it warns it may collapse. This would mark the second collapse into administration in two years for the retailer. Lenders are reportedly planning to bring in advisors to help steady the ship.
TM Lewin has been battered by the pandemic and the consequent change in work culture. Last year, the company shut down 66 stores and cut 600 jobs as demand for formal wear vanished instantaneously. Although the firm was bought out of administration, increased hybrid working and relaxation of dress codes has seen demand for formal wear remain significantly lower than before the pandemic. TM Lewin was founded in 1898.