The week’s news included; Elon Musk completes $44bn Twitter takeover, Red Bull loses trademark dispute against Bullards, Tesco and Lidl enter trademark battle, Octopus Energy acquires Bulb.
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:
- Retail Gazette – How Frasers Group is plotting an online empire
- BBC News – Why lasers are being used to write inside diamonds
- City A.M. – The cost of doing business amidst the culture wars is an entirely new question of risk
1. RISHI SUNAK TAKES CHARGE
Rishi Sunak has replaced Liz Truss as leader of the Conservative Party and Prime Minister. After his competitors Penny Mordaunt and Boris Johnson dropped out of the race, he was swiftly appointed as the UK’s new leader. He becomes the UK’s fifth prime minister in just six years, and the third in three months.
In his first speech as PM he fashioned himself as the leader to bring stability. He warned of tough times ahead, probably meaning tax rises and public spending cuts. There is speculation this could amount to roughly £50 million, going some way to balancing the books. Overall, markets responded positively to Rishi Sunak’s appointment as they anticipate a fiscally sound approach from the new man in charge.
Questions have been raised however, over his appointment of Suella Braverman as Home Secretary. Just six days prior, Braverman had been sacked for serious breaches of the ministerial code and data security. Already, Sunak is facing calls to replace her.
2. ELON MUSK TAKES OVER TWITTER
Elon Musk has successfully completed his $44 billion takeover of Twitter. There was speculation that the deal would no longer go ahead as Musk complained of inaccurate user numbers. The two sides were due to meet in court if the deal was not completed by 28 October. Last Friday however, they got the deal done and Musk tweeted “the bird is freed”.
Musk has been critical of Twitter’s crackdown on certain speech and considers their actions as a form of censorship. Under his ownership, he plans to cut content moderation policy and uphold freedom of speech, as he sees it. Details on the changes have not been provided as Musk confirmed a new moderation council will be established to determine the details. This council will have “widely diverse viewpoints” according to Musk. There is speculation that prominent public figures that were banned from Twitter including Donald Trump, Katie Hopkins and Alex Jones could return to the platform.
Barely a few hours after completing the deal however, Musk sacked three top figures at Twitter. CEO Parag Agrawal, CFO Ned Segal, and legal affairs and policy head Vijaya Gadde. The three executives will receive a total of $200 million in compensation.
3. RED BULL LOSES TRADEMARK DISPUTE
Red Bull has lost its trademark dispute against gin maker Bullards. Bullards had sought to register its name as a trademark but Red Bull lodged a challenge against the application. Red Bull also demanded that Bullards remove certain goods from their trademark application including energy drinks and non-alcoholic beverages. The energy drink giant thought that consumers would get confused by the use of “Bull” and think that Bullards is associated with Red Bull. The Intellectual Property Office rejected Red Bull’s assertion. They deemed that Bullards was not a logical extension of Red Bull so consumers are unlikely to get confused. Bullards is a UK based gin maker founded in 1837. After a takeover in 1963 it stopped using the Bullards name until 2015.
4. TESCO LIDL LEGAL ACTION
Tesco has resumed its counterclaim in a trademark dispute lawsuit against Lidl. In June, Lidl sued Tesco for its Clubcard logo, arguing it was too similar to its own. Lidl sought to trademark a logo which features a yellow circle on a blue background. One of the submitted logos, however, does not include Lidl’s name on it and simply includes the circle on the blue background. At first instance, Lidl presented a survey showing that customers identified the yellow circle on a blue background with Lidl. Tesco says this trademark application was submitted in “bad faith”, as Lidl’s submission was an unused trademark that has never been seen by the public. The two sides are set to meet in court in 2023. We will continue to follow this case as it develops.
5. PFIZER AND FLYNN APPEAL FINE
Pfizer and Flynn are appealing their £70 million fine for overcharging the NHS for life-saving epilepsy drugs. The two pharmaceutical giants were the dominant suppliers of Phenytoin, the generic version of Epanutin. The companies hugely inflated the prices the NHS was forced to pay. Pfizer charged as much as 1600% more than the branded Epanutin. Flynn then bought the drug from Pfizer and resold the capsules at as much as 2600% higher than Pfizer’s previous prices. The NHS paid just £2 million for the drug in 2012 but ended up paying a whopping £50 million in 2013 due to the price hikes.
Earlier this year, the Competition and Markets Authority fined the pair £89 million but this was reduced to £70 million on appeal. Pfizer was fined the lion share, £63 million, while Flynn was fined £7 million. Both firms are now appealing this fine to the Competition Appeal Tribunal. Flynn claims that the price hikes “were in line with” other anti-seizure medicines. The CMA has said it will defend its decision.
6. OCTOPUS BUYS BULB
Octopus Energy has successfully bought collapsed energy retailer Bulb and will take on its 1.5 million customers. Bulb collapsed in November 2021 amid soaring wholesale prices. It was subsequently placed into “special administration” meaning that it was operated by the government. This ensured that Bulb customers saw no disruption to their energy supply while the energy regulator, Ofgem, sought to find a buyer. The deal with Octopus will see 650 jobs saved and prevent further government spending on Bulb’s operations. The bailout of Bulb had been the largest since the 2008 financial crisis and was expected to cost the taxpayer up to £4 billion in total. Under the Octopus deal, the government will receive a share of profits, if any, made from Bulb’s operations for up to four years. Again, the transfer should be seamless, and Bulb’s customers should see no disruption to their service.
7. EY LOSES NATWEST
Natwest is dropping EY as its auditor, a huge blow for EY ahead of its global split of its audit and consulting business. EY has been dropped from the competitive tender process and will lose out on the £40 million annual contract. Over 10 years this will cost the auditor a huge £400 million. The Financial Times explores the matter in more detail.
EY’s separation of its audit and consultancy businesses is to help combat conflicts of interest and improve the quality of audit work. The process is underway but not all jurisdictions are on board. The Israeli arm of EY announced that it will not participate in the split of the businesses. The entity said it does not see the benefits of separation and believes a better service can be provided as a unified entity. EY’s Greater China business also opted out of the plan to split in September. These decisions, however, do not affect the separation of businesses in other jurisdictions which shall go ahead as planned.
8. UK BOND MARKET DECLINE
2022 has proved a torrid year for UK bond markets. Since the start of the year, £1.3 trillion has been wiped off the value of UK bonds. This is causing problems for pension funds who are heavily exposed to typically stable bonds such as UK government bonds (gilts). This year, Gilts have tanked 26.4% while index-linked Gilts have fallen by a huge 36.2%. These declines amount to a loss of £882 billion in the value of Gilts. Even UK corporate bonds have shed £514.5 billion this year. Markets have settled since Rishi Sunak came into office but there is still a mountain to climb to reverse the losses sustained in 2022.
9. CREDIT SUISSE JOB CUTS
Credit Suisse has announced that it will cut 9000 jobs as it posted a huge CHF4.03 billion (£3.52billion)l loss in the last quarter alone. The banking giant has been plagued by controversy over the past few years. In 2020, the bank was embroiled in an espionage scandal which saw the departure of its former CEO Tidjane Thiam. Credit Suisse was also heavily exposed to the collapse of Greensill Capital and Archegos Capital (see insight article). The bank will now seek to restructure itself, shedding nearly 20% of its workforce. Within five years, the bank will seek to reduce its headcount by 9000 to 43000. 2700 of these jobs will be cut this year.
Last week, Credit Suisse also settled a tax fraud case in France for €238 million. Credit Suisse was accused of helping clients avoid paying tax on their wealth. The bank allegedly helped clients evade paying around €100 million to the French government.
10. ADIDAS CUT TIES WITH YE
Adidas has cut ties with Kanye West following controversial comments by the rapper and entrepreneur. West had been adamant that he would retain his business with Adidas while a range of other companies cancelled their agreements with him (see previous top 10). Adidas said that “Kanye West’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.”
Kanye West struck a deal with Adidas in 2016 to sell his “Yeezy” branded products and pulled in over $1 billion in annual sales. Now, Adidas terminated their agreement and will take a huge $246.5 million loss on the deal. Adidas will, however, continue to sell Yeezy designs without the branding.
