The week’s news included; Elon Musk’s overhaul of Twitter, $2.2bn Penguin and Simon & Schuster merger blocked, Glencore fined £275m for bribing African oil officials.
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:
- BBC News – Is it right to raise interest rates in a recession?
- City A.M. – Tech could get Britain’s net zero target back on track
- FT – Who killed the social media ad boom?
1. MUSK TWITTER CHANGES
Barely 72 hours after his takeover of Twitter, Elon Musk has culled most of the existing management. Musk dissolved the board of directors and appointed himself sole director of the company. This followed the firing of three senior executives on the day of the acquisition. Musk has now begun a huge overhaul of Twitter’s company structure which could see up to 2000 staff fired. This would amount to roughly 25% of Twitter’s workforce. Last Friday, Twitter staff across the world found themselves locked out of their systems followed by an email confirming that they had been sacked. Musk hopes the move will streamline the business and improve profitability. He is, however, facing legal action over the sackings. The Guardian looks closer at the pending lawsuits.
Musk will also introduce an $8 per month charge for users to retain or obtain “Blue tick” verification. Verification is currently used to confirm legitimate accounts belonging to celebrities, politicians and high-profile figures. The plans to charge for this verification and make it open to all has been criticised. Verified figures who don’t pay for this service will be left open to impersonation and potentially fraud. Musk is also considering expanding Twitter’s paid subscription plan. Elon Musk is clearly on a drive for profits, but this could end up alienating users and ultimately harm the platform.
2. PENGUIN – SIMON & SCHUSTER MERGER BLOCKED
The proposed $2.2 billion merger between book publishers Penguin Random House and Simon & Schuster has been blocked by a US court. Penguin is the largest publisher in the world and Simon & Schuster is a close competitor. Penguin has published the works of huge authors such as George Orwell, Virginia Woolf, Zadie Smith and Dan Brown. Combined with Simon & Schuster, the company would control nearly 50% of the publishing rights for blockbuster books, according to the US government. This led to the US Department of Justice (DOJ) filing a lawsuit to block the deal due to the potential weakening of competition. Last week, a court agreed with the DoJ that the deal would substantially lessen competition in the sector. Penguin has said it was disappointed and will appeal the ruling.
3. GLENCORE ENERGY FINED FOR BRIBERY
Glencore Energy UK has been fined £275 million for bribing African officials to gain access to oil. The subsidiary of mining giant Glencore paid £23 million through agents and employees to oil firm officials in Cameroon, Ivory Coast and Nigeria between 2011 and 2016. Glencore Energy UK was accused of paying or failing to prevent the payment of bribes. The company pleaded guilty to seven counts of bribery and was ordered to pay a fine of £182.9 million. An additional £93.5 million was confiscated from the company. The judge found “corporate corruption on a widespread scale”.
Glencore is no stranger to corruption charges as in 2018 the US DoJ investigated the firm for money-laundering and corruption breaches. In May 2022, Glencore settled a US lawsuit for $1.1 billion over bribery schemes covering officials in seven countries over a decade (see previous top 10).
4. INTEREST RATES RISE
Interest rates have risen to 3% for the first time in over 10 years. The Bank of England raised rates by 0.75%, the steepest single increase since 1989. This increase is designed to stem inflation and the Bank hopes inflation will decline by mid-2023. In the meantime, however, the Bank warned of the longest recession on record due to the cocktail of economic pressures. For households these rises are concerning. An average Household on a variable mortgage could see their rates soar by £3000 annually.
5. BP POSTS £7.1BN PROFIT
BP has posted a £7.1 billion profit for the third quarter of 2022. This is more than double the profits it made in the same quarter last year. The war in Ukraine has kept wholesale prices extremely high and oil companies are reaping the benefits.
These huge profits have led to renewed calls for an additional windfall tax on oil and gas companies. A 25% tax has already been levied but many commentators say the measures do not go far enough. Even Shell has said it is ready to face higher taxes given this extraordinary period. Check out our article exploring the merits of a windfall tax.
6. STRIKE ACTION
The summer of discontent looks to be extending into the winter. Although the RMT union called off train strikes for the week, UK airport staff have announced strike action during the Qatar World Cup.
The RMT Union confirmed that the planned railway strikes that were due to take place on 5, 7 and 9 November will no longer go ahead. Instead, the RMT will enter intense negotiations with Network Rail to resolve the issues. The dispute is primarily over pay and working conditions. Despite this, significant disruption to services is still expected as the announcement came too late for rail companies to amend timetables. Regardless, this marks the first time the RMT has called off a strike to enter further negotiations.
Workers at Heathrow Airport are set to strike for three days from 18 November. 700 staff are set to walk out including baggage handling, airside transport and cargo staff. The strikes will affect Heathrow terminals 2, 3 and 4. With the Qatar World Cup starting on the 20th of November, the disruption could severely hit football fans looking to travel for the competition. Workers are striking over inadequate pay. Heathrow experienced chaos throughout the summer as there was a shortage of staff to carry out key functions. This saw hundreds of flight cancellations and missing luggage items. Heathrow was ultimately forced to introduce passenger caps due to the shortage of staff and they will be keen to avoid a repeat of this in coming months.
7. TESCO LIDL IP DISPUTE
Tesco has successfully had its appeal allowed against Lidl’s trademark application which will see the supermarkets go to trial. Lidl sought to trademark a yellow circle with a blue background, including a logo with no text. Tesco claims this was submitted in bad faith as it is too similar to its own Clubcard logo. Last week, the court allowed Tesco’s appeal to bring the case to trial. See our previous top 10 for details on the dispute.
8. MADE.COM NEARING COLLAPSE
Online furniture retailer Made.com saw its shares suspended last week as it gave notice to appoint administrators. Made has already stopped taking new orders as it desperately seeks to find a buyer. No refunds will be issued to customers but it will try to fulfil existing orders. The company has just a few days to secure a buyer or it will formally enter administration and may have to liquidate the business.
Made.com was founded in 2011 and saw huge gains during the pandemic as people flocked to buy furniture online. In Q1 2021 the company achieved sales of £110 million and went on to be listed on the London Stock Exchange. Unfortunately for Made.com however, the cost of living crisis has hammered demand for its products. Made offers high end furniture but customers are cutting back so the company is lumbered with huge stock piles that they are unable to shift.
9. HOUSE PRICES FALL
House prices in the UK have fallen for the first time since July 2021. Prices sank by 0.9% in October, the largest monthly fall since June 2020. The decline has been driven by rising interest rates and fewer mortgage products, an issue exacerbated by the disastrous mini-budget. Mortgages are becoming increasingly difficult to obtain, reducing the demand in the market. Some analysts predict house prices could fall by as much as 8% over the coming year. Although first time buyers will appreciate cheaper prices, the significant increase in mortgage rates will likely wipe out any benefits. Check out our article explaining the impact of the mini-budget on mortgages.
10. MORRISONS SHUTS MCCOLLS STORES
Morrisons has said it will shut 142 McColl’s convenience stores putting 1300 jobs in jeopardy. The supermarket plans to close loss making stores and convert remaining stores into Morrisons Daily shops. The closures will amount to under 10% of the 1164 McColl’s stores currently operating. Morrisons says the stores set to close have no realistic prospect of a recovery. Morrisons agreed to buy McColl’s out of administration in May and got regulatory approval two weeks ago.