The week’s news included; Amazon buys iRobot for £1.7bn, Crypto exchanges face £10bn competition lawsuit, Boutique retailer wins trademark lawsuit against Zara, Disney dethrones Netflix as largest streaming site.
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:
Opinion articles of the week:
- City A.M. – The tech recession isn’t a tragedy, it is a necessary correction for future growth
- Retail Gazette – Five ways Greggs is gunning for growth.
- Law Gazette – Merger activity likely to rise after post lockdown lull
- City A.M. – Automation isn’t about replacing staff with machines, it’s about focused work
1. BIDEN’S $700BN REFORM BILL PASSES
Last week, Joe Biden had his $700 billion climate change and social reform bill passed through the senate. The Inflation Reduction Act will bring major changes to fight climate change and improve the lives of Americans. $369 billion in new funding will go towards climate action. This includes money towards clean energy production, $60 billion to communities affected by climate change and $7500 in tax credits for electric car purchasers. The measures listed in the bill are expected to slash America’s carbon emissions by 40% within 8 years.
This marks the largest ever US investment in the fight against climate change. Other reforms include new plans to make some prescription medicines cheaper. This will partly be paid for via a new 15% minimum corporation tax rate for businesses generating profits of over $1 billion. While the bill has been scaled back from the proposed $3.5 trillion plan, this is still a landmark moment for the US. Sky News looks closer at the bill.
2. AMAZON BUYS IROBOT FOR $1.7BN
Amazon has agreed to purchase iRobot, the maker of Roomba, for $1.7 billion. Roomba is a robot vacuum cleaner that avoids room obstacles and targets dirt. Amazon will pay a 22% premium for iRobot but the company will undoubtedly complement Amazon’s home tech portfolio. Amazon already boasts its Alexa smart speaker as well as Ring doorbell. The tech giant evidently wants to gain a stronghold in household technology. The deal is still subject to regulatory approval.
3. CRYPTO EXCHANGES FACE £10BN COMPETITION LAWSUIT
The former chair of the UK Competition and Markets Authority has sued a number of cryptocurrency exchanges for £10 billion. Lord David Currie claims the decisions of Binance, Kraken, Bittylicious and Shapeshift to remove the BSV cryptocurrency from their platforms breached competition law. 250,000 BSV investors collectively lost £9.9 billion in 2019 when the exchanges delisted the currency. This was due to a dispute between Binance CEO Changpeng Zhao and BSV’s creator Craig Wright. Once Zhao removed BSV from Binance, Kraken, Bittylicious and Shapeshift also removed BSV, following encouragement by Zhao. Lord Currie says that this conduct was anticompetitive and is seeking compensation on behalf of investors. This marks the first cryptocurrency competition lawsuit in the UK.
4. BOUTIQUE WINS TRADEMARK CASE AGAINST ZARA
A boutique fashion retailer has won a trademark dispute against Zara. House of Zana was sued by the high street fashion giant who argued her business was too similar to their own. House of Zana sought to trademark its name and Zara opposed this. Zara claimed there was a “high degree of visual and oral similarities” between the brands and this would confuse consumers. The case went to tribunal where the founder of the boutique, Amber Kotrri, represented herself. She argued that consumers were unlikely to be confused between Zara and House of Zana. The tribunal agreed with Mrs Kotrri. They said the link between the two names and businesses was too insubstantial to result in the “exploitation” of Zara’s brand.
5. £300BN WIPED OFF UK BOND MARKET
A huge £297.5 billion has been wiped off the value of UK corporate bonds since the start of 2022. The value of UK corporate bonds tanked 13.3% in the first half of the year, down to £1.94 trillion. UK government bonds (Gilts) have experienced a similar decline, shedding £283.8 billion or 14.8% since the start of the year. This is primarily due to a market response to rising interest rates and inflation rates. Gilts are usually used as a safe haven from volatile equity markets for investors. This steep decline is an issue for those looking to diversify their investment portfolios as these traditionally stable investments are not remaining stable. Investors and fund managers are looking to other assets for stability.
6. DISNEY DETHRONES NETFLIX
Disney has now been crowned the largest streaming platform, and becomes the first company to usurp Netflix . The entertainment giant revealed it had secured 221 million subscriptions across its platforms, beating Netflix’s 220.67 million subscribers. This is an enormous achievement for Disney as its flagship Disney+ platform only launched in November 2019. While Netflix’s user numbers have been waning and it scrambles to generate more revenue, Disney+ added 14.4 million subscribers last quarter. No doubt this will be a painful moment for Netflix who has enjoyed the crown for over a decade. Whether Netflix can regain its momentum with its new changes remains to be seen.
7. MIKE ASHLEY SUES MORGAN STANLEY
Frasers Group owner, Mike Ashley, has sued investment bank Morgan Stanley for acting in bad faith regarding his stake in Hugo Boss. Frasers Group increased its stake in the German luxury retailer and holds a 30% stake in the company, most of which is held as put options. A put option is a derivative contract that gives a purchaser the right, but not the obligation, to sell an asset at a specified price and date. Ashley claimed Morgan Stanley attempted to force them to sell their put options by making a “margin call” on the shares. A margin call is a demand from a brokerage/bank requiring a customer to put more cash into their account. Customers are often required to sell assets to meet the demand. Frasers Group claims that this margin call was in bad faith and was unjustified. They claim Morgan Stanley made the call due to concerns about Frasers Group’s financial position and that Frasers was increasing its stake in Hugo Boss to force changes at the company. Frasers has said these concerns were “unwarranted speculation”. Ultimately, Frasers was forced to close and transfer some options and is now suing Morgan Stanley because of this.
8. JOHNSON & JOHNSON ENDS TALC LINE
Johnson & Johnson (J&J) announced that they will stop making and selling their talc-based baby powders from next year. The consumer goods giant has faced thousands of lawsuits from women who claim J&J’s talc powder contained asbestos and caused ovarian cancer. J&J has been fighting costly lawsuits from claimants and denies that its products are unsafe. Court evidence detailed that J&J was aware that its products contained asbestos as far back as 1971, but J&J denies these allegations. J&J set up a subsidiary, LTL Management, which took on all talc cases but this entity went into bankruptcy shortly after, pausing all lawsuits. Although J&J had previously rejected calls to end its talc line of products, last week, they announced a transition to cornstarch-based baby powder across the globe and an end to production and sales of talc products.
9. PWC FINED £2.5M
PwC has been fined £2.5 million by the Financial Report Council for failing to identify a huge £500 million fraud case within BT. The FRC found PwC failed to treat BT’s management with proper professional scrutiny and failed to gather sufficient evidence once fraud had been identified during its 2017 audit of the firm’s Italian arm.
The former partner leading the audit was fined £42,000. This was reduced from £60,000 as he admitted his failings and settled the FRC. PwC was fined £1.75 million, reduced from £2.5 million for agreeing to settle. For more information on the accounting scandal at BT, check out the Guardian’s article.
10. STUDENT LOAN INTEREST RATES CUT AGAIN
Student loan interest rates are due to be cut from 7.3% to 6.3% to protect borrowers from rising inflation. The interest rates on student loans were initially pegged to the rate of inflation. With inflation spiking to over 10% this would leave students with soaring repayment costs. In June, the Department for Education (DoE) announced that student loan interest rates would be slashed from 12% to 7.3%. Last week however, the DoE announced a further cut down to 6.3%. These rates will apply to undergraduate (Plan 2) and postgraduate (Plan 3) loans.