The week’s news included; Russia cuts European gas supply, Wagatha Christie case concludes, Instagram U-turns on reforms to take on TikTok, Frasers Group buys ISawItFirst .
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:
- The Fashion Law – Protecting Brands in the Metaverse: Issues for Companies to Consider.
- LawCareers.Net – How will technology change the legal sector?
- FT – How the Morrisons buyout turned into a nightmare for Goldman Sachs.
- BBC News – Why Premier League teams are flocking back to Asia
- City A.M. – We should question the mandate of the Bank of England – not its independence
1. RUSSIA CUTS EUROPEAN GAS SUPPLY
Russia has cut gas supplies to Germany and other European countries, sending gas prices soaring. European wholesale gas prices rose by 2% last week to €204.85 per mWh, the third highest price on record. By comparison gas prices last year were just €37 per mWh. Russia’s state energy firm, Gazprom, said limiting supply from the Nord Stream 1 pipeline was necessary to allow work on a turbine. Germany however, says that there was no technical reason to cut supply. Many have argued that Russia is using gas as a political weapon.
Germany relies on flows through the Nord Stream 1 pipeline for 40% of its Russian gas supply. Currently, the pipeline is operating at just 20% of normal capacity. The EU has already urged member states to reduce their reliance on Russian gas by 15% as it anticipated such cuts. We explored in our article why Western powers have such a significant economic interest in the war in Ukraine.
2. CMA INVESTIGATIONS
The Competition and Markets Authority has launched an investigation into Asos, Asda and Boohoo over alleged greenwashing. These companies have made claims about the sustainability of their fashion but there are concerns these claims are baseless. The CMA investigation will explore whether the language used makes the companies’ respective collections seem more green than they actually are. For example, George at Asda runs a “George for Good” range, Boohoo runs a “Ready for the Future” range and Asos has its “Responsible Edit” collection. As environmental, social and governance (ESG) issues become more important to shoppers, it is essential that they are not being misled by companies purporting to be “green”. This investigation is indicative of a wider ambition of the CMA to better regulate green claims and ensure the retail sector is not misleading customers.
Last week, the CMA also announced it would be investigating US satellite firm Viasat’s £5.4 billion acquisition of UK based rival Inmarsat. This would see the UK firm under the umbrella of the US firm but could reduce competition in the satellite market. Inmarsat operates 14 satellites currently in orbit and plans to launch 7 more. These satellites provide crucial internet services which help provide in-flight wifi as well as email and video conferencing.
3. KPMG FINED FOR CARILLION AUDIT
KPMG has been fined £14.4 million for providing false and misleading information in relation to its audits of Carillion and Regenersis. The Financial Reporting Council also ordered the Big Four auditor to pay £3.95 million in costs due to their conduct. KPMG gave both Carillion and Regenersis a clean bill of health despite severe issues which ultimately led to their respective collapses. The auditor was found to have forged documents in order to provide this healthier outlook of the companies. Four senior auditors were personally fined and banned from the accounting sector for between 7 and 10 years. A junior auditor was severely reprimanded by the FRC but did not receive a fine or ban.
4. WAGATHA CHRISTIE LAWSUIT CONCLUDES
Rebekah Vardy has lost her libel case against Coleen Rooney after a messy and damaging lawsuit. Wives of footballers Jamie Vardy and Wayne Rooney respectively had been engaged in a lawsuit over alleged defamation. Rebekah Vardy had sued Coleen Rooney for defamation after Rooney had accused her of selling stories about her and her family to the press. Rooney had undertaken her own investigative work on Instagram and publicised on social media that she found Rebekah was the source of the leaks. Vardy protested her innocence and filed a libel lawsuit against Rooney. The case ultimately went to a trial and the judgement was revealed last week. The court found that Vardy was an “untrustworthy witness” as much evidence was unreliable and key communications such as WhatsApp messages were suspiciously missing. The court ruled against Vardy, and because she took the case to trial, she now faces legal costs of roughly £3 million. The full judgement is available here.
5. INSTAGRAM BACKTRACKS ON REFORMS
Instagram has u-turned on its plans to introduce changes to its platform that would see it become more like TikTok. The social media platform sought to introduce a focus on video content, namely its Reels. Previously, Instagram users would primarily see photos posted by those who they follow. Instagram has been moving towards a TikTok model using Reels. Now, users see more video content from users who they do not follow. The platform’s algorithm decides what content the user may be interested in and brings this to users’ feeds. Earlier this month, Instagram said it would double down on this approach and move away from photos and shift towards videos via a full screen display. This shift faced a barrage of criticism from celebrities and influencers. They claimed Instagram was trying to copy TikTok and forgot why people primarily use Instagram, to view photos of friends. A petition even began to “Make Instagram Instagram Again”.
Instagram is owned by Meta and the company has been finding ways to challenge TikTok. TikTok has been downloaded 3 billion times and is the fastest growing major app. This is the first app other than Facebook, Instagram or WhatsApp to reach this milestone. Instagram has a reputation for mimicking features of other popular apps but in this instance this has failed. It’s back to the drawing board for Instagram if they want to take on TikTok. Check out our 2020 article exploring TikTok’s meteoric growth.
6. FRASERS GROUPS BUYS ISAWITFIRST
Mike Ashley’s Frasers Group has agreed to purchase fast fashion retailer ISawItFirst for an undisclosed fee. ISawItFirst is a UK based online retailer that boasts 5 million customers and posted sales of £74.7 million last year. This deal will bolster Frasers Group’s online fashion portfolio following its £20 million rescue of Missguided out of administration last month. Missguided was facing severe financial problems and last week confirmed that suppliers will receive under 2% of the £30 million owed to them.
Over the past few years, Frasers Group was the primary rescuer of failing brick and mortar retailers in the UK. Frasers Group, formerly Sports Direct International, has purchased House of Fraser, GAME, Jack Wills, Evans Cycles in recent years. The shift towards online retailers is now evident. Aside from ISawItFirst and Missguided, Frasers also bought Studio Retail out of administration for just £1 earlier this year.
7. VIRGIN MONEY TO LAUNCH BNPL PLAN
Virgin Money has announced plans to enter the BNPL space. The new service, Virgin Money Slyce, will offer a BNPL credit card allowing purchases over £30 to be spread over three, six, nine or 12 months. Any payment plans of three or six months will be fee and interest free. A fee of 7.5% and 10% of the purchase will be applied to nine month and 12 month plans respectively.
The BNPL space is becoming increasingly saturated. There are now a range of options for customers including Klarna, Affirm, PayPal as well as brand specific BNPL options offered by companies like Apple, Currys and Argos. Regulators are closely monitoring the sector as there are concerns customers are entering into unaffordable debt. The UK government has revealed plans to bring many BNPL products under the scope of FCA regulation. The sector is facing turbulence as the cost of living crisis is reducing consumer demand for products compatible with BNPL services. Whether Virgin Money can buck the trend remains to be seen.
8. LLOYDS SHUTS 66 BRANCHES
Lloyds Bank has announced that it will shut 66 branches between October 2022 and January 2023. The bank cited shrinking customer footfall for the decision. In some areas, visits to branches have fallen up to 85% due to the rapid growth in the use of telephone and digital services. Staff will be offered moves to other branches or business units. There will be no compulsory or voluntary redundancies as part of the branch closures. The bank promised that customers will still have at least one free ATM within half a mile of the closed branch and a Post Office within 1.1 miles. Lloyds will close 48 of its own brand branches as well as 18 Halifax branches. Over 5000 bank and building society branches have closed since 2015 and this trend appears to be accelerating.
9. NFL LAUNCHES STREAMING SERVICE
The US National Football League has launched its own streaming service. Fans can now subscribe to NFL+ which will offer preseason games which are currently unavailable on other platforms. NFL+ will be available for $4.99 per month or $39.99 per year. Many regular season and postseason games will be featured on the platform. Exclusive regular seasons games however, won’t be available on NFL+ but this could change in future. NFL Network shows and archived NFL films will be available on the platforms. A premium service will be available for $9.99 per month or $79.99 per year. This will include full and condensed game replays and special bird’s eye views of games. The NFL is following other US sporting bodies such as the NBA and MLB who both offer streaming services for out-of-market games. Sporting bodies are keen to capitalise on the booming streaming sector and secure new forms of income.
10. MCDONALDS HIKES PRICES
McDonald’s is raising the price of its cheeseburgers from 99p to £1.19. If there was ever a sign of a cost of living crisis, this is it. Since 2008 McDonald’s have kept a number of menu items under £1. Now, a range of menu items will be increasing in price between 10p and 20p. The company blamed the rapid rise in the cost of fuel, ingredients and wages. Inflation soared to 9.4% in June and the Bank of England warns it could reach 11% in the winter. McDonald’s said it had to make “tough choices” and noted that not all products will increase in price. Breakfast meals, McNugget boxes and meal size upgrades will all be increasing in price.