Commercial Awareness Update 7th December 2018

1) CAMBRIDGE ANALYTICA FINE

Facebook has appealed against a fine imposed on it by the UK's data watchdog after the Cambridge Analytica scandal. The social network says that because the regulator found no evidence that UK users' personal data had been shared inappropriately, the £500,000 penalty was unjustified. Last month, the watchdog said Facebook's failure to make suitable checks on apps and developers amounted to a "serious breach of the law".

It has acknowledged the appeal.

This was the last day on which the US firm could challenge the Information Commissioner's ruling.

Analysis

Sir Humphrey, the civil servant in Yes Minister, described Facebook’s decision to appeal as "brave".

Amidst the barrage of accusations the social media firm has been recently subjected to, picking a fight with the UK regulator over an issue which was beginning to fade into the background seems reckless.

After all, the social media giant admits that it got a whole lot of things wrong in the Cambridge Analytica affair, in particular allowing the data of friends of people who took part in a personality quiz to be scraped.

But Facebook feels that the Information Commissioner's Office conducted a poor investigation, deciding that one million UK users had suffered harm and then finding that the researcher Dr Aleksandr Kogan did not pass their data on to Cambridge Analytica.

Some data protection experts think the company has a point.

Mark Zuckerberg and his company appear determined to fight back against what they see as a flawed process but the appeal is a gamble.

The stakes are also high for the Information Commissioner Elizabeth Denham. She made the unusual decision to go public with her intention to impose a fine before receiving representations from the company.

If Facebook's appeal succeeds, her authority as a regulator will be seriously undermined.


2) BREXIT: WITHDRAWAL

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The UK should be able to unilaterally cancel its withdrawal from the EU, according to a top European law officer.

The non-binding opinion was delivered by the European Court of Justice's advocate general.

A group of Scottish politicians has asked the court whether the UK can call off Brexit without the consent of other member states.

The Court of Justice (ECJ) will deliver its final ruling at a later date.

Analysis

While the advocate general's opinions are not binding, the court tends to follow them in the majority of its final rulings.

The anti-Brexit politicians and campaigners who have brought the case hope it will give MPs an extra option when considering whether to approve Mrs May's draft deal or not, because it could keep alive the prospect of calling off Brexit - potentially through another referendum.

The ECJ statement said the advocate general had proposed that the Court of Justice should "declare that Article 50 allows the unilateral revocation of the notification of the intention to withdraw from the EU".

It added: "That possibility continues to exist until such time as the withdrawal agreement is formally concluded."

The UK is due to leave the EU on 29 March next year, but the deal negotiated with the EU has to be backed by a majority MPs if it is to come into force.

Welcoming the advocate general's opinion, SNP MEP Alyn Smith, one of those who brought the case, said it showed that "we now have a roadmap out of the Brexit shambles", and that parliament was not necessarily facing a choice between accepting Mrs May's deal or leaving the EU with no deal.

He added: "There are other options, and we can stop the clock."

3) HUAWEI CFO ARRESTED

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Huawei’s chief financial officer has been arrested in Canada in a probe by the US into alleged violation of sanctions against Iran, reigniting tensions between Washington and Beijing just days after Donald Trump and Xi Jinping tried to resolve their trade conflict at the G20 summit.

Canadian officials on Wednesday said that the US was seeking to extradite Meng Wanzhou, the daughter of Ren Zhengfei, founder of the Chinese telecoms group, after her arrest on Saturday in Vancouver. Ms Meng, who became one of Huawei’s four deputy chairpersons this year, will face a bail hearing on Friday.

The arrest sparked an immediate response from Beijing, which urged the US and Canada to release Ms Meng. The Chinese embassy in Ottawa said that China “firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim”.

Analysis

Her arrest, which comes after recent moves by western governments to curtail Huawei on security grounds, added to investor concerns over heightened trade tensions between Washington and Beijing.

In China, the benchmark CSI 300 index of stocks dropped 2.2 per cent while in Europe, key market indices were sharply lower. The Euro Stoxx 50 index was down 2.2 per cent in morning trading while the FTSE 100 was 2.7 per cent lower.

Futures market trading indicated that on Wall Street, the S&P 500 was expected to open about 1.7 per cent down and Nasdaq 2.2 per cent weaker.

Huawei has been in the sights of US security officials, and the latest move comes as the Trump administration takes an aggressive stance towards China. In a speech in October, Mike Pence, the US vice-president, put China on notice that Mr Trump was prepared to take a harder stance against Beijing than his predecessors.

4) TESCO EXECUTIVES ACQUITTED

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A high profile trial over a £250m accounting scandal brought by the Serious Fraud Office against two former Tesco executives collapsed dramatically after the two men were acquitted.

On Thursday, a jury at Southwark Crown Court was told that Chris Bush and John Scouler had been acquitted by the Criminal Court of Appeal after judges backed the ruling of the trial judge, Sir John Royce, that they had no case to answer. The prosecution case, which lasted two months, finished last week.

The SFO had appealed against his decision to the Criminal Court of Appeal. Sir John told the jury that the prosecution case had been “so weak” in certain areas it should not be left before the jury’s consideration.

Analysis

The collapse of the trial of the two former Tesco directors accused of false accounting will cause more embarrassment for the Serious Fraud Office (SFO) and also call into question an earlier deferred prosecution agreement (DPA) between the supermarket and the fraud-busting agency.

Alison Geary, counsel in the white collar defence team at international firm WilmerHale, said: ‘This throws into stark relief the very different considerations between concluding a court approved DPA with a company and prosecuting individual executives. It should not be assumed that the prosecution of individuals will inevitably follow the conclusion of a DPA.’

Maria Cronin, partner at Peters & Peters, said the acquittals are likely to cause companies to ’reconsider the potential advantages of DPAs’.

She added ‘It is notable, that, to date, the SFO has had little success in securing convictions against individuals following a DPA.’ ‘That the judge considered that the SFO’s case was unsupported by evidence is extremely concerning,’ Cronin said.

5) OPEC OUTPUT CUT

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Oil prices fell almost 5 per cent on Thursday to below $59 a barrel as Saudi Arabia signalled that producers were working towards a deal to cut output that could fall short of market expectations.

Khalid al-Falih, the kingdom’s energy minister, told reporters ahead of a meeting of oil ministers in Vienna that Opec and allies outside the cartel including Russia were still working towards a deal by Friday. But he said the preference for Saudi Arabia — Opec’s de facto leader — was for a “sufficient cut but not overly large” adding that 1m barrels a day between Opec and non-Opec countries “would be adequate”.

Analysis

At the June meeting of oil ministers, Saudi Arabia pledged to relax oil curbs that had been in place since January 2017, to compensate for a drop in Iranian exports as sanctions kicked in, taking its output above 11m b/d. But worries about a global economic slowdown that could hit oil demand and see the swelling of crude stockpiles again, has concerned big producer countries that rely on export revenues to fill government coffers.

Usama Kubo

Commercial Awareness Director

Commercial Awareness Update - 23rd November 2018


This year, the Law Society has launched a new Commercial Awareness project. The aim of this project is to foster an understanding and awareness of world affairs within the SOAS Community. We hope to develop an interactive environment for fellow students to learn and discuss ongoing affairs that shape the world today.

We will be achieving this through the events that we will be hosting throughout the year and regular updates that we will be sending out.

As this is a new project, any constructive feedback will be much appreciated.




1) UWO TEST CASE – NCA GETS THE GREEN LIGHT

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The National Crime Agency ("NCA") had issued a UWO against Mrs A on 28 February 2018 requiring her to explain how she afforded two British properties worth £22m.

The NCA has six months to investigate the source of funds used to acquire the items, which were being valued for Hajiyeva’s daughter.

Analysis

UWOs are a new tool to help investigators crack down on the £90bn tide of “dirty money” flooding into London by forcing suspected corrupt government-linked officials to prove their wealth is legitimate. The introduction of UWO’s may have far-reaching ramifications such as the infringement on people’s right to privacy. It is unclear whether this is the beginning of a floodgate UWO era. Nonetheless, it seems that the NCA is eager to crack down on large-scale corruption; debuting with a multi-million-pound case is rightfully befitting.

2) BREXIT DEAL: WHAT’S NEXT?

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Theresa May has a draft divorce deal with the EU that sorts out how and when we leave andgives the outline of what the relationship will be like for decades to come. The PM secured her cabinet's backing for the deal after a five-hour meeting, but Brexit Secretary Dominic Raab has just resigned over it.

She has also faced a backlash from Tory Brexiteers and her Democratic Unionist Party (DUP) backers, amid suggestions of moves to force a no-confidence vote. Labour will announce later whether or not it will back the deal.

Analysis

Amongst many, Leader Jeremy Corbyn said he did not believe the agreement - set out in a 585- page document - was in the national interest. Speaking on Thursday morning, the president of the European Council, Donald Tusk, said he still saw Brexit as a "lose-lose" situation. But he added: "As much as I am sad to see you leave, I will do everything to make this farewell the least painful possible, for you and for us." Mr Tusk also confirmed that "if nothing extraordinary happens", an emergency EU summit will take place on 25 November to "finalise and formalise" the Brexit agreement.

In line with predicted economic instability, the pound and shares in housebuilders and banks have fallen sharply after cabinet ministers Dominic Raab and Esther McVey quit over Prime Minister Theresa May's draft Brexit deal. The Brexit fiasco has thus far proven to be detrimental to the UK’s economy and financial stability.

3) OIL PRICES TUMBLE BY MORE THAN 4%

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Oil prices tumbled more than 4 per cent on Tuesday to eight-month lows as global producers and traders weighed the prospect of supplies overwhelming demand amid worries about a slowdown in economic growth.

Prices spiraled further lower after Opec’s research arm again reduced its forecast for 2019 oil demand growth in another sign Saudi Arabia and its partners inside and outside the cartel might be forced to curb supplies to bring the market into balance.

Analysis

Productions need to be cut due to oil market oversupply and saturation. Opec said on Tuesday in its monthly market report that world oil demand was forecast to grow 1.29m barrels a day next year, about 70,000 b/d lower than last month’s forecast and down on the 1.45m b/d it forecast in July.

Khalid al-Falih, Saudi Arabia’s energy minister, said on Monday that Opec and its partners outside of the cartel had conducted an analysis that showed that a 1m b/d drop in oil supplies from October levels was required to balance the market.

4) SKILLS SHORTAGE IN THE UK

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Britain’s employers have warned that severe skills shortages are holding back the economy after the latest official figures showed the biggest fall in the number of workers from eastern Europe since modern records began. The British Chambers of Commerce and the Federation of Small Businesses urged the government to deliver a post-Brexit migration system to meet their needs amid signs that the fall in unemployment in recent years was putting upward pressure on wages.

Analysis

In order to avoid a regressing economy, firms who employ a large share of migrant workers need to think now about adjusting to a lower migration environment, in terms of the workers they employ, what they produce and how they operate.

Usama Khalab,

Commercial Awareness Officer