Volume 19, April-June 2018

REGULETTERA Quarterly Newsletter

Inside this IssueCompetition Regulation TakesHold in Africa ............................. 2

Google Penalised for InfringingConduct ...................................... 4

Air NZ Fined in Air CargoCartel ......................................... 5

Greenlight to Bayer/Monsanto .... 8

Renault-Nissan Alliance on Hold .... 9

India-dedicated InvestmentFund Launched ........................ 12

Net Neutrality Officially Ends ... 13

US Banks:�Too Big to Fail� justShrank ...................................... 15

Special Articles

South Africa: A Citizen in theGlobal Village of CompetitionLaw� Stephen Langbridge ........... 3

The Amex Ruling Cementsthe Domination of BigCompanies� Barry Lynn ........................... 7

UK�s Retailers are too Quickto Blame Business� John Kay ............................14

Facebook Should Be aNonprofit� Kara Alaimo .......................19

Bayer-Monsanto DealCleared but Conditions Apply

Recently the Competition Commission of India (CCI) cleared the acquisitionof Monsanto by Bayer, with conditions. Earlier, CUTS International had

sent comments, requesting CCI to look into the dynamic nature of the marketand adhering to the global value chain approach.

The submission flagged the growing trend of vertical integration in bothupstream and downstream of the global food value chain. Further, with the useof internet of things and Big Data, the structural dimension of the market ismoving towards building super-platforms for one-stop solution, exposing it tonewer competition concerns typical to digital platforms. This demandsassessment of not only �horizontal� relationsbetween the market competitors but also�vertical� interactions between differentsegments of the global food value chain.

Furthermore, the bundling of agro-chemicals with genetically engineered andhybrid seeds, strategic use of intellectualproperty rights etc. were part of the �game�that CCI must keep in mind while reviewing.

Recognising competition as driver forinnovation, CUTS submitted that the CCImust also review the possible impact of the deal on innovation in the market. Itwas argued that post-acquisition only three global integrated players would remainto compete in an industry with very high barriers to entry.

Bestowing importance to agro-biodiversity for sustainable agriculture andfood security, CUTS argued that the consolidation in seed industry would leadto reduction of agro-diversity due to decreasing varieties of seed supply. Thiswould also decrease consumers� choice and loss of opportunities to thoseagriculturists who could have earned more due to varietal distinctiveness. CUTSadvocated for inclusion of �public interest� (e.g. food security, farmers� welfareetc.) into the competition analysis viewing the nature of the products involved.

Except the agro-biodiversity aspects and inclusion of public interest concerns,the CCI did take into account almost all the aspects that CUTS submitted. Itassessed horizontal and vertical overlaps resulting from the deal and the resultantpossible conglomerate effects due to complementary product portfolios of thecombining entities.

As remedy, the CCI proposed various conditions for allowing the acquisition.When Bayer undertook to abide by such conditions, the deal was allowed. Suchconditions include: divestments; adhering to fair, reasonable and non-discriminatory licencing polices; not to bundle any of its products; maintainingnon-exclusive distribution channels etc.

The American Antitrust Institute, which had similar concerns that of CUTS�,has been sceptic that such remedies would not be effective in highly concentratedmarkets. It may not replace the competition lost by a merger. Hence, it advocateddisallowing the deal, altogether. Interestingly, the US Department of Justicehas also cleared the deal after Bayer settled for significant divestitures.

Now it need to be seen how CCI monitors and ensures that the proposedremedies are implemented by Bayer, consequently keeping the market competitive.

2No.2, 2018

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MACRO ISSUESCompetition Law to Check IP AbuseIndia, Brazil, South Africa and

China (IBSAC) have urged all WorldTradeOrganisation (WTO)members toshare their national experiences on howcompetition law and policy can be usedto deter practices such as collusivepricing which prevent generics fromentering markets and raise prices ofmedicines.The four countries, in a paper

circulated at an on-goingTRIPsCouncilmeeting in Geneva, said that abuse ofIP rights can be checked throughcompetition law and countries mustlearn from each other, according to anofficial aware of the discussions at themeeting.The debate, initiated by IBSAC

focussed on how to enhanceunderstanding of various approachesin the use of competition law and policyto prevent or deter anti-competitivepractices. (BL, 08.06.18)

ExpandingConsumerProtectionRoleThe Singapore Parliament passed

a bill expanding the CompetitionCommission of Singapore�s (CCS)regulatory powers. In addition toadministering and enforcingSingapore�s Competition Act, theregulatory body will now administerconsumer protection and unfair tradepractice laws as well.As a result of the change, the

formerly named CCSwill be known asthe Competition and ConsumerCommission of Singapore (CCCS),signaling an expansion of the body�spower over Singapore�s trade practices.With a population of roughly 5.6

million, the city-state is recognised asa thriving global financial hub andoffersa worthwhile opportunity for productmanufacturers looking to expanddistribution into Southeast Asia.

(www.klgates.com, 25.05.18)

Responding toMarket ImperfectionsThe Angolan parliament

unanimously approved a newCompetition Law, intended to respondto �existing situations of marketimperfection�in theAngolan economy,introducing �principles and rules ofsound competition in morality andethics.�

CompetitionRegulation

Takes Hold in Africa

The top ten economies byGrossDomestic Product (GDP) in

Africa all have active competitionregulation, save for Angola andNigeria but those countries are inthe process of establishingcompletion law regimes,whichareexpected to be up and runningsoon.

The Federal Competition andConsumer Protection Bill of 2017was recently passed by the Houseof Representatives of Nigeria andNigeria�s Senate, which was nowonly awaiting presidential assent.And the Angolan NationalAssembly recently voted in favourof the Draft Bill on Competition,which will establish Angola�sCompetition RegulatoryAuthority.

Africa�s top economies,including Egypt, Algeria, SouthAfrica, Morocco, Ethiopia, Kenyaand Tanzania, all had competitionregulation. About 20 countriescurrently have functionalcompetition law regimes, severalmore have enacted legislation buthave no enforcement structures inplace, and approximately 18countries in Africa have nocompetition legislation.

(www.businessghana.com, 18.04.18)

The new law creates a CompetitionRegulatoryAuthority (ARC),whichwillbe autonomous and have supervisorypower over competition and priceregulation. The specific structure of theARC is still to be decided.The new law regulates private

enterprises, cooperatives, and state-owned companies, and reflects themain tenets of international commerciallaw. It also defines illegal practices thatmay hinder free competition inmarkets,and potentially damage the economyand society. (http://snip.ly/blufs, 20.04.18)

Boosting Leniency ProgrammesArgentina�s newAntitrust Lawwas

approved on May 09, 2018. The newlaw introduces five significant changesthat companies should consider whiledoing business in Argentina:� Creates a self-regulated AntitrustCourt entitled to impose sanctions,approve or prohibit economicconcentration transactions.

� Updates penalties for breachingantitrust laws.

� Creates a leniency programme.Adopts the �leniency-plus� approach.

� Establishes an ex-ante controlsystem for economic concentrations,most widely adopted internationally.

� Increases the thresholds to notifyan economic concentrationtransaction, whichwill significantlyreduce the number of operationssubject to approval. (CPI, 14.05.18)

Closer to Antitrust PracticeAn amendment to the Restrictive

Trade Practices Law of Israelsponsored byMinister of the Economyand Industry Eli Cohen and theAntitrust Authority passed firstreading in the Knesset.The main aim of the amendment is

to strengthen the deterrent power andthe effectiveness of the AntitrustAuthority and to focus its activity onpromoting competition and reducingthe cost of living.The amendment seeks to update

the law to take account of substantialchanges that have taken place in theIsraeli economy since it was enacted30 years ago, and also to bring Israelilaw closer to international antitrustpractice. (www.globes.co.il, 22.05.18)

City

Press

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MACRO ISSUES

South Africa: A Citizen in theGlobal Village of Competition Law

Stephen Langbridge*

Now in its 19th year, the SouthAfrican authorities haveenjoyed a leading status amongst developing

competition law jurisdictions. The authorities have beenrecognised by peers in other jurisdictions, global bodiesand practitioners, for their pioneering role in developmentof a comprehensive body of competition law and policy,often punching above their weight category, particularly inrelation to the role of competition law in socio- anddevelopment economics. Some have taken fright at thesuggestions advanced which appear to promote the well-being of local businesses and the public interest aboveconsumer welfare as the true-north of anti-trust.

This development of law and policy as well as the well-earned status does not come about simply by practicing inone�s back garden. There areMoU�s enshrining cooperationwith the EC, Brazil, Russia, India, China,Mauritius, Kenyaand Namibia. In addition, SouthAfrica has membership ofthe SADC, African Competition and BRICS fora. Theauthorities have also benefitted greatly from their activeparticipation in ICN andUNCTADnetworks and their staffcontinue to receive extensive training from leading worldauthorities and experts. The authorities learn from othersand take an active lead in passing on their experience andchallenging orthodox views.

While that may sound laudable, one might well askwhat are the benefits and likely future implications

within SouthAfrica of the global participation? One aspectwhich stands out, is the acknowledgment by governmentin South Africa of the role of competition law as a criticalpolicy tool, alongside other trade and industrial policies, indeveloping an inclusive economy poised for long termdevelopment and regional growth. International influenceand participation can trickle down or pass through viacompetition policy.

Proposed changes from the studies and interactions havefound their way into the draft CompetitionAmendment Billin South Africa. The amendments propose to redress twomain features in the economy: excessive concentrations ofownership and control and the need to open up ownershipand opportunity for a greater number of South Africans,

* Corporate Law Attorney in Sandton, South Africa. Abridged from an article appeared in www.competitionchronicle.com on June19, 2018

but at the same time recognising that economies of scale insome markets are necessarily efficient and thus certaininterventions are unlikely to be beneficial there.

Responses to and criticism of the proposals in theAmendment Bill have been received from awide range

of quarters, both local and international andwill be evaluatedby government. One aspect which is clear to any observerof the consultative process being followed by the lawmakersis that there will be change to the existing regime to deal withthe identified objectives.

A difference in approach between authorities to the role ofpublic interest inmerger review is not at the expense of otherforms of co-operation and commonapproach tomulti-nationaltransactions by the Commission. These may involve acommon view onmarket definition and newer concerns suchas the impact of innovation in competitive markets.

We should also recognise the global co-operation andparticipation by the SouthAfrican agency with other

agencies may enable enforcement against anti-competitiveconduct in global cartels. Local authorities should bewareof the seemingly attractive option of transplanting the viewsand findings of other authorities into the South Africancontext. Peculiar facts specific toSouthAfrican firms,marketsand regulations, as well as differences in the casting andapplication of relevant law create a danger of wastedresources through attempts to trying to apply anothercountry�s evidence and findings in South Africa.

The Competition Act is first and foremost national in its focus. Although the Act makes referenceto international law obligations, participation in world markets and the role of foreign competitionin the Republic, to look at the role of South Africa in competition law�s global village, the key is notto be found in that language, but rather in the continuing development and application of SouthAfrica�s competition policy.

www.com

petitionchronicle.com

4No.2, 2018

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MACRO ISSUES

AntitrustCaseagainstGazpromEndsTheECCompetitionCommissioner

Margrethe Vestager stuck with hercontroversial decision not to fineGazprom on charges that it abused itsdominance to rip off consumers inCentral and Eastern Europe. Instead,the settlement will seek to changeGazprom�s behaviour through a set oflegally-binding commitments.Gazprom agreed to change how it

negotiates gas prices with countries inCentral and Eastern Europe, in an effortto create a more competitive market.Customers will now have the right toask for a price review if they believethey are paying Gazprom higher pricesthan on Western European gas hubs.If a deal is not struck within 120 days,an arbitrator overseen by the EU willthen impose a competitive gas price.Gazprom also agreed to drop

clauses restricting customers� ability tosell gas across borders and createopportunities for more gas to flow tothe Baltic states and Bulgaria.

(www.politico.eu, 24.05.18)

CD Pharma Abused its DominanceTheDenmarkCompetitionCouncil

found that Swedish pharmaceuticaldistributor CD PharmaAB had abusedits dominant position in Denmark bycharging excessive prices.Excessive pricing cases are among

the more unusual in competition lawand are notoriously complex given the

difficulty of proving that a price isexcessive. CD Pharma is apharmaceutical company thatdistributes Syntocinon, a labourinducing drug.The Competition Council found

that CD Pharma had abused itsdominant position in contravention ofSection 11 of the Competition Act andArticle 102 of the Treaty of theFunctioning of the European Union bycharging the excessive price of Dkr945per package of Syntocinon.

(Lexology, 05.04.18)

Appeal against Pfizer DismissalThe Australia�s Competition and

Consumer Commission (ACCC) hassought Special Leave from the HighCourt to appeal the Full Federal Court�sjudgment ofMay25, 2018which upheldthe dismissal of allegations againstPfizerAustralia Pty Ltd (Pfizer) by thetrial judge.The ACCC alleges that Pfizer

misused its substantial market powerand engaged in exclusive dealingconduct for an anti-competitive purposein breach of the Competition andConsumerAct 2010.TheFullCourt found that Pfizer took

advantage of its substantial marketpower. However, the Full Court did notaccept theACCC�s argument that Pfizerhad engaged in conduct for theproscribed purpose of deterring orpreventing competitors from engagingin competitive conduct or for thepurpose of substantially lesseningcompetition. (ACCC, 25.06.18)

NationalCricketBoardunderScannerThe Competition Commission of

India (CCI) is reportedly investigatingtheBoard ofControl forCricket in India(BCCI) for abusing its dominance byexcluding a downstream competitorfrom bidding on cricket media rights.The decision has come on a

complaint filed by Pan IndiaInfraprojects. In a14-pageorder, theCCIsaid there is prima-facie a case of abuseof dominant position by the BCCIwhich is in violation of competitionnorms.�Thus, it appears that BCCI has

abused its dominant position in themarket of organisation of professionaldomestic cricket leagues in India byexcluding the informant (Pan IndiaInfraprojects) or any of its groupcompanies fromparticipating in tendersformedia rights for IPL,� the order said.

(ET, 06.06.18)

Telefónica Hit by Heavy FineThe SpanishNationalAuthority for

Markets and Competition (CNMC) hasfined Telefónica 8.5mn for breachingits obligations as a wholesaler ofbroadband and terminal leased lines.In a statement, CNMC says that the

Basque government awardedTelefónica part of a contract, a bid forwhich could not have beenmatched bythe cable operator Euskaltel.Had Euskaltel offered the same

amount, it would havemade a negativereturn. Telefónica can appeal the finewithin two months of its notification.

(www.broadbandtvnews.com, 09.05.18)

ABUSEOFDOMINANCE

Google Penalised for Infringing Conduct

The European Commission (EC) is geared up tofine Google in a second anti-trust case of abusing

its dominance via Android mobile operating systemthat could lead up to US$11bn in penalty.

The EU investigation has found that Googleimposed illegal terms on Android device makers�which harmed competition and cut consumerchoice�. Android is used in more than 80 percent ofthe world�s smartphones and is vital to the group�sfuture revenues as more users search on their mobilegadgets.

The EU began the anti-trust case in 2016, accusingGoogle of imposing licencing conditions for theAndroid OS. Google could be fined up to US$11bnbut the actual penalty may be less. (IANS, 07.06.18)

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State Loan for Alitalia ProbedThe European Union (EU) is

investigating whether 900m inbridging loans toAlitalia from the Italiangovernment were illegal under thebloc�s state aid rules.The Italian airline filed for

bankruptcy on May 02, 2017 and wasprovided with two loans from thenational government � 600m in May2017 and a further 300m in October2017.Margrethe Vestager, EU

competition commissioner said: �Thecommission has a duty to make surethat loans given to companies byMember States are in line with the EUrules on state aid. We will investigatewhether this is the case forAlitalia.�There is no deadline to complete

the investigation. Any illegal state aidwould need to be repaid. (FT, 24.04.18)

Hotel Booking Sites Face ActionHotel booking sitesmust review the

way they rank and display rooms, theUK�s competition watchdog has said.Some sites may be making misleadingclaims about discounts, theCompetition and Markets Authority(CMA) said.The CMA has been investigating

whether sites aremisleading consumerssince October and identified a numberof areas of concern. The CMA did notname the companies it wasinvestigating, but leading sites includeExpedia andBooking.com.The CMA said details on the sites

about how many people are looking ata room, howmany are left and how longa price is available can create a falseimpression of availability or rushcustomers into making a bookingdecision. (TG, 28.06.18)

LG Accused for Smartphone PricingThe FederalAntimonopoly Service

(FAS) of Russia has fined LGElectronics RUS, a subsidiary of LGcorporation, US$39,200 forcoordinating smartphone prices.The electronics company was

monitoring retailers with the use of aspecial programme for the control ofprices for certain LG smartphones.

MICRO ISSUES

Moreover, the LG subsidiary regularlyreceived reports on prices fromretailers, which also used �price robots�for the price control scheme, thewatchdog announced.The amount of fine was mitigated

by the fact that the LG subsidiarystopped conducting unlawful activitybefore the launch of the case andassisted the FAS during theinvestigation. However, the lengthyperiod during which the violation wastaking place was also taken intoaccount. (CPI, 24.06.18)

Petroleum Contracts Under LensThe European Commission (EC)

has opened an investigation intorestrictions to the free flow of gas soldbyQatar Petroleum in Europe. The aimof the investigation is to establish ifthe sale of gas by Qatar Petroleumcontracts contain any anticompetitiveagreements or concerted practices,such as denying the importer of the gasin one territory the right to resell intoanother territory.In response, Qatar Petroleum issued

the following statement �QatarPetroleumwishes to stress that it givesthe highest importance to compliancewith regulatory authorities in allgeographical areas inwhich it operates.Qatar Petroleum looks forward toworking with the EuropeanCommission to address any queries orconcerns theymay have in this regard.�

(FT, 21.06.18)

HP�s Russian Subsidiary GuiltyThe FederalAntimonopoly Service

(FAS) has finedRussia�s subsidiary ofHewlett-Packard (HP) companyUS$40,000 for violation of competitionlegislation.As the FAS found, several computer

companies signed an anti-competitiveagreementwhich resulted in price fixingat an open e-auction for the computers�system units supply for the CentralElection Commission of Russia. Thebusiness activities of the firms wereillegally coordinated by the RussianHPsubsidiary.

(www.therecycler.com, 18.06.18)

MTV Admits to CollusionThe Competition Commission of

South Africa has urged mediacompanies implicated in the 2011mediacollusion investigation to pay theirparts of the settlement.MTV Networks Africa has agreed

to a package of remedies totalingUS$1.14mn for its involvement in aSouthAfrican advertising cartel.The company is one of 28 media

companies that have been referred tothe Competition Tribunal forprosecution. The matter relates to aninvestigation that was initiated by theCompetitionCommission in 2011.It found various media houses

including Primedia and Media24 hadagreed to offer similar discounts toadvertising agencies that placed adswith certain members. (CPI, 20.05.18)

PRICE FIXINGPRICE FIXINGPRICE FIXINGPRICE FIXINGPRICE FIXING Air NZ Fined in Air Cargo Cartel

Air New Zealand (Air NZ) has been penalised US$15mn by an AustralianCourt for its part in a global air cargo cartel as part of an ongoing case by

theAustralianConsumer andCompetition Commission(ACCC) involving 15 of theworld�s leading airlines.

The latest case involvedan illegal agreement by AirNZ with other airlines to fixthe price of fuel andinsurance surcharges on airfreight services from HongKong, and insurance and security charges from Singapore, to various locations,including Australian airports, between 2002 and 2007.

The Federal Court ordered Air NZ pay a US$11.5mn penalty for pricefixing fuel surcharges, plus US$3.5mn for price fixing insurance and securitysurcharges. Air NZ has also agreed to pay US$2mn towards the ACCC�s legalcosts. (JP, 27.06.18)

www.phys.org

6No.2, 2018

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Internet firms have revolutionised the way in which business is conducted,across the globe and in India. Innovative technologies have benefited theeconomy and all stakeholders through a reduction in the dependency on cash (e-wallets) and by facilitating ease of access to services (online bookings).

Mergers and acquisitions (M&A) in the digital economy require antitrustauthorities to scrutinise transactions on a holistic understanding of the market.Further, disruptive technologies that challenge the traditional markets must beanalysed carefullywhile keeping inmind their pro-competitive effects and benefitsto consumers.

CCI�s decisional practice relating to e-commerceThe Competition Commission of India (CCI) has played a key role in enablingbusinesses in the digital economy to thrive and grow while ensuring thatinnovation of the internet economy is not hindered. If the key objective of amerger is to acquire access to new data, whichwould result in higher concentrationof data post-combination, this could potentially result in market foreclosure andcreation of entry barriers, andwould become a competition law concern. However,the regulator must evaluate the merger in terms of sufficiency of choices forconsumers, innovation and improved quality products and services, whilemaintaining a fine balance in order to not impedeM&Aactivity.

CCI has assessed several transactions relating to e-commerce marketplaces suchas investments in Snapdeal and BigBasket, and the consolidation of Flipkart andeBay India. CCI observed that the e-commercemarketplaces offer better servicesto consumers in terms of discounts, more product offerings and doorstep delivery.This availability of choice to consumer and presence of multiple players hassignificantly contributed to the regulator concluding that investment andconsolidation in the e-commerce market are not detrimental to competition.

Ongoing consolidation (Amazon�s proposed bid to acquire a majority stake inFlipkart) will lead to interesting regulatory outcomes and CCI is likely to continueto test mergers using traditional tools of analysis while applying these to thespecific factual matrix of the digital economy.

Guidance from global experienceIn 2005, Myspace was acquired by News Corp. for US$580mn, followed by aUS$900mn advertising deal with Google in 2007. However, post the entry ofFacebook, Myspace lost its relevance as the customers shifted to Facebook, andit was ultimately sold for US$35mn in 2011. This demonstrates the transitory anddynamic nature of the market, where the new entrant/innovator/has the ability to

alter market dynamics. Globally, therehas been increased interest in antitrustissues with respect to technology firmsand the approach of other antitrustregulators is of significant relevance intoday�s inter-connected world to theCCI.

One such instance was Facebook�sacquisition of WhatsApp that wasconsidered and approved by theFederal Trade Commission and theEuropeanCommission (which reviewedthe transaction as it met thejurisdictional thresholds of Cyprus,Spain and UK), but despite theacquisition affecting a combinedamount of 1.7 billion users, it escapedthe scrutiny of competition regimesbased on turnover, such as, India� asdigital companies tend not to have highturnover due to provision of freeservices.

Data can have pro-competitive and anti-competitive effects. When databecomes a source of market power, itcan lead to a situation of a dataadvantage to the established playersto the detriment of smaller or newerentrants. Conversely, data can addressinformation asymmetry by increasingtransparency.

The flip side of this is transparentmarkets aremore prone to cartelization.Given that it is data and not marketshares or turnoverwhichwill be the keyin futuremergers of this ilk, competitionregulators are increasingly amendingtheir merger control regimes to adaptto the unique situation of the digitaleconomy.

It may be time for CCI to considerseveral alternatives (transaction value,users, data, etc.) to review mergerthresholds for the digital economy toavoid a Facebook/WhatsApp-likesituation.

MICRO ISSUES

How CCI should look at M&A Deals in Digital EconomyNisha Kaur Uberoi*

* Partner and National Head, Competition Law at Trilegal. The article appeared in the Livemint on April 12, 2018

M&A deals in the digitaleconomy requireantitrust authorities toscrutinise transactions ona holistic understandingof the market

7No.2, 2018

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In 1776, Adam Smith published TheWealth of Nations, in which heattacked monopolies and argued thatmarkets governed by the decisions ofindividual buyers and sellers makepeople and societies richer and freer.When Americans declared theirindependence from the UK that sameyear, a main grievance was that theyhad been exploited andmanipulated bythe British East India Company tradingmonopoly.

Over the next two centuries, theUSbuiltits political economy around the ideathat markets are structured to putindividual buyers and sellers in charge,not large intermediaries. A splitSupreme Court overturned that. Thecourt held, 5-4, that markets can havetwo �sides�, then used this reasoningto wedge giant middlemen backbetween sellers and buyers.

Unless Congress acts to reverse it, thedecision in Ohio v American Expresswill make it harder to bring even themost rudimentary forms of antitrustcomplaints. This is likely to translateinto higher prices and less choice. Thedecision would also shift control overmarkets away from individual buyersand sellers to companies, includinginternet platforms such as Google andFacebook that bring them together.

The Amex case started when theDepartment of Justice sued the

credit card company for retaliatingagainst merchants that steeredcustomers towards other cards thatcharge retailers less. These �swipe� feestotal US$42bn a year.

The lawsuit comes out of a long-heldUS approach to markets. Companiesthat provide vital transport, bankingand communications services areregulated in a different way to thebuyers and sellers. The basic goal has

MICRO ISSUES

The Amex Ruling Cementsthe Domination of Big Companies

Barry Lynn*

* Executive Director, Open Markets Institute. The article appeared in the Financial Times on June 27, 2018

been to ensure these service providers do not exploit their powerful position asmiddlemen either to gouge their customers or steal business from sellers whodepend on them to reach markets.

To prevent such abuses of power, the US has at times regulated the prices thatmiddlemen can charge. It has also sought to promote greater price competitionamong them, as the DoJ lawsuit was attempting to do. In some cases, the US hasprohibited suchmiddlemen from �vertically integrating� into lines of business thatput them into competition with their own customers.

TheAmex ruling initially appears to stand in this tradition, stating that �a two-sided platform offers different products or services to two different groups

who both depend on the platform to intermediate between them�.

But then themajority strikes out on its own and declares that �credit-card networksare best understood as supplying only one product � the transaction � that isjointly consumed by a cardholder and a merchant�.

The decision to treat merchants and cardholders as a single market meansAmexcan continue to charge what it likes. But there is a bigger danger that stems fromthe idea that a market can have �two sides�. The ruling appears to bless the effortsof companies such as Google, Amazon and Facebook to dominate dozens ofmarkets, including movies, news andmusic.

Rather than being required to serve sellers and buyers, these platforms will befree to manage these markets in pretty much any way they wish. As long as theycan argue that their decisions serve the interest of the �consumer�, it does notmatter what happens to the sellers.

If the court were to apply this reasoning to transport, it would find that, becausea railroad connects Iowa farmers to Chicago grain buyers, it can treat the farmershowever it wants, unless those farmers can prove that the railroad�s actions harmbuyers in Chicago.

The East India Company is back, this time supercharged with the data it hascollected on all of us. Given the global reach of Google, Amazon and the othermiddlemen of the 21st century, the effects will be felt around the world.

Thisdecision willmake itharder tobring evenbasicantitrustcomplaints

FinancialTimes

8No.2, 2018

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RESTRUCTURING

Infratel-Indus Form a Tower GiantBharti Infratel Ltd, the tower arm of

India�s largest telecom operator, andIndus Towers agreed to merge theirbusinesses to create the world�s largesttower company outside China.The combined entitywill ownmore

than 163,000 towers, second only toChinaTower.Themerged companywillbe listed on the stock exchanges asBharti Infratel is a publicly tradedcompany.Once the merger is completed,

Airtel, which currently owns 53.5percent stake inBharti Infratel,will holdbetween 33.8 percent and 37.2 percentin the merged entity, while VodafoneIndiawill ownbetween26.7 percent and29.4 percent.Airtel andVodafone Indiawill have equal rights in the mergedentity. (Mint, 25.04.18)

Building a NewMedia PowerhouseUS antitrust regulators

conditionally approved Walt Disney�sproposed US$71.3bn purchase of key21st Century Fox assets, boosting thechances for the tie-up to create a newmedia-entertainment powerhouse.The US Department of Justice

approved the deal subject to Disneyselling 22 regional sports networks nowowned by Fox.In reviewing Disney-Fox, the

Department of Justice said that an assetsale was needed because Disney and

Fox currently compete to sell cablesports programming in local marketsaround the US. The deal would havemeant higher prices for thesedistributors, the agency said.

(NYT, 28.06.18)

Tata Steel-Thyssenkrupp Seal DealGermany�s Thyssenkrupp and

India�s Tata Steel signed a finalagreement to establish a long-expectedsteel joint venture, the European steelindustry�s biggest shake-up in morethan a decade.Based in the Netherlands, it will be

the continent�s second-largeststeelmaker afterArcelorMittal. It formsthe core of Thyssenkrupp CEOHeinrich Hiesinger�s plan to turn hissteel-to-submarines conglomerate intoa technology company.The joint venture will not only

address challenges of the Europeansteel industry but is also the onlysolution to create significant additionalvalue of around 5bn for bothThyssenkrupp and Tata Steel due tojoint synergies which cannot berealised in a stand-alone scenario.

(IE, 30.06.18)

Gray TV to buy RaycomMediaBroadcasting company Gray

Television will acquire privately heldRaycomMedia in a cash-and-stock dealvalued at US$3.65bn.

The combined company will have142 full-power television stationsserving 92 markets, the third largestportfolio of stations andmarkets in theUS. The combined company will havea presence in 24 percent of UShouseholds, compared to an estimated65 percent for Sinclair�s estimated62 percent, after acquiring Tribunemedia.Raycom President and CEO Pat

LaPlatneywill becomeGray�s presidentand co-chief executive officer, andcurrent Gray CEO Hilton Howell willbecome executive chairman and co-chief executive officer after the dealcloses. (WSJ, 25.06.18)

Creating Frozen Food JuggernautConagra Brands, announced plans

to acquire Pinnacle Foods in a cash-and-stock deal valued at aboutUS$8.1bn that furthers Conagra�stransformation under CEO SeanConnolly and its push into frozenfoods.The purchase will give Conagra

more exposure to one of the few brightspots in the grocery store: frozen foodsales are growing after years of decline.Evenmillennials, known for their foodietastes, are embracing frozen meals,which are convenient and lessexpensive than takeout.More than half of Pinnacle�s

revenue comes from frozen brandsincludingBirdsEye,VandeKamp�s andtheGardein line of vegetarian products.

(Bloomberg, 27.06.18)

Nod toWalmart-AdventBrazil�s antitrust watchdog Cade

approved buyout firm AdventInternational�s acquisition of WalmartInc�s Brazilian operations, and soughtno additional asset sales.Earlier in June2018,Walmart agreed

to sell an 80 percent stake of its Brazilinunit to Advent, partially exiting anunderperforming business andrecording a noncash charge of roughlyUS$4.5bn.Advent plans to convert

unprofitable hypermarkets into cash-and-carry wholesale stores and expandbrands developed byWalmart in Brazilsuch as Maxxi and Todo Dia.

(Reuters, 22.06.18)

Fox�s Sky Bid ClearedThe UK plans to approve a proposal by Murdoch�s 21st Century Fox Inc. toacquire Sky Plc, the largest pay-TV provider in the country. The move givesFox the clearance it needs to continue pursuing the transaction � but it is no

done deal.Comcast Corp. has

submitted a higher bid for Sky,and UK authorities want toensure that Fox divests the SkyNews business if it completesthe takeover. The decision givesfresh life to Murdoch�s secondattempt to buy Sky, part of atransatlantic battle for media

assets that includes Walt Disney Co. and Comcast.Fox is trying to acquire the 61 percent of Sky it does not already own,

while also fending off the Comcast bid. The US cable giant has made an offerthat is 16 percent higher, but Fox now has the OK to increase its bid ofUS$15.6bn. (Bloomberg, 05.06.18)

9No.2, 2018

EGULETTERR

RESTRUCTURINGEnhancingGlobalPayoutCapabilitiesPayPal has agreed to acquire

Hyperwallet, a leading global payoutplatform, forUS$400mn in cash, subjectto certain adjustments.The acquisition of Hyperwallet

enhances PayPal�s payout capabilities,improving the company�s ability toprovide an integrated suite of paymentsolutions to ecommerce platforms andmarketplaces around the world.According to Internet Retailer,

marketplace sales accounted for morethan 50 percent of global online retailsales in 2017. The transaction isexpected to close in the fourth quarterof 2018. (WSJ, 19.06.18)

Microsoft Joins Education Start-upMicrosoft has acquired Flipgrid, a

video discussion platform used bymore than 20 million teachers andstudents around the world. Flipgrid isa platform that allows students todiscuss and reply to topics with videoclips at home or in the classroom.Themove showsMicrosoft remains

eager to win share in education, whereGoogle�s Chromebooks have becomepopular. Microsoft is making Flipgridfree of charge. Schools that alreadyhave subscriptions will receiveprorated refunds.The acquisition comes 1½ years

after Microsoft announced apartnership with Today, Flipgridintegrates with many Microsoftproducts, including Teams for chattingwith other people and OneNote fortaking notes. (CNBC, 18.06.18)

Google and Carrefour Partner UpFrench retailer Carrefour has

announced a strategic partnership withGoogle that will enable newdistribution models and commerceexperiences for shoppers in France.The partnership centers around

three initiatives: A new buyingexperience from Carrefour acrossGoogle platforms; the opening of aninnovation lab in Paris this summer inpartnership with Google Cloud; and atraining programme to accelerate thedigital transformation of CarrefourGroup.The partnership enables Google to

deliver its technology and skills inAI,cloud and new consumer shopping

interfaces toCarrefour,while the retaileroffers its product expertise andknowledge in logistics and sales.

(CPI, 12.06.18)

Uber is Sizing up Bike-ShareUber is launching a bike-sharing

service in partnership with JUMP, astartup that recently received the firstand only permit to operate docklessbike-sharing in San Francisco.JUMP�s contract with the San

Francisco Municipal TransportationAgency enables it to launch 250 of itsdockless, electric bikes in SanFrancisco. After the first nine monthsof the programme, the SFMTA mayallow JUMP to add an additional 250bikes to its fleet.Called Uber Bike, Uber customers

will be able to book JUMPbikeswithintheUber app. To be clear, the bikes willnot be brought to people. Instead,riders are responsible for going to thelocation of the bike.This partnership is a great way to

get a much larger audience on bikesand help them understand theirtransportation options. This is Uber�sfirst foray into the bike-sharing game.

(CPI, 10.06.18)

CoinbaseAcquires Keystone CapitalThe cryptocurrency service

Coinbase acquired Keystone CapitalCorp, a California-based financial firm,in a move that will clear the path for itto operate as a registered broker-dealer.

The acquisition puts the SanFrancisco-based company on a firmerregulatory footing with the Securitiesand Exchange Commission, andpositions it to offer both traditionalequities and a broader range ofblockchain-based securities.While Coinbase is the largest US

cryptocurrency exchange, it currentlyoffers only four types of virtualcurrency, including Bitcoin andEthereum.The limited selection reflectsthe company�s cautious approach at atime when the SEC had indicated itregardsmost digital tokens as securitiesthat must be registered. (NBC, 11.06.18)

Sony in Deal for EMISony would pay about US$2.3bn

to gain control of EMI to become theworld�s largest music publisher in anindustry that has found new life on theback of streaming services.The deal is part of Yoshida�s

mission tomake revenue streamsmorestable with rights to entertainmentcontent � a strategy that follows amajor revamp by his predecessorwhichshifted Sony�s focus away from low-margin consumer electronics.The music business has enjoyed a

resurgence over the past couple ofyears, driven largely by the rise of paidsubscription-based streaming services.Sony is trying to get hold of moreintellectual property in theentertainment industry.

(CPI, 23.05.18)

Renault-Nissan Alliance on Hold

The partnership between French carmaker Renault and Japanese carmakerNissan is temporarily put on hold, as both manufacturers are reviewing

the ownership structure of itsalliance.

As a result, the partnershipwould not see the day if lightuntil 2020. The carmakers areexamining ways to consolidatethe Renault-Nissan-Mitsubishialliance.

In March 2018, Renault-Nissan Chairman Carlos Ghosn announced that both companies will sharetechnology, resources, man-power and direct these towards research on new-energy vehicles, autonomous driving and car-sharing services.

Both the manufacturers already share platforms and technology. Ghosnhad revealed the alliances plan to double their synergies to 10 billion Euros by2022.However, all thesewere part of the initial discussion andnothing concretecame out of it. (www.auto.ndtv.com, 27.05.18)

10No.2, 2018

EGULETTERR

RESTRUCTURING

When Donald Trump swept to power 18 months agoand started attacking companies, business leaders

cowered. No longer; or at least, not as much.

Consider the case ofAT&T. Formore than a year, the telecomscompany battled the US Department of Justice (DoJ) over itsplanned US$85bn purchase of Time Warner. The DoJ aguedthis vertical merger was anti-competitive;AT&T insisted thatthe media landscape is changing so fast that competitionwould be best preserved if incumbents were allowed toconsolidate to do battle with digital giants such as AmazonandNetflix.

In my view, there are strong legal arguments on both sides.And American law complicates the issue because antitrustdecisions generally focus on whether deals will lead to higherconsumer prices. That is crazily outdated: many techcompanies now barter services for data, without collectingmoney, and the dangers posed by monopolies no longerrevolve purely around economics, but also information control.

However, the judge in the AT&T case, Richard Leon,seemed untroubled by shades of grey. He ruled on

Tuesday that the AT&T deal could proceed, without anyconditions at all, in a 172-page ruling that excoriated the DoJ�scase.

This is a watershed moment for antitrust law. But it maycontribute to a turning point in the dance between businessand theUSpresident.Here�swhy:Trumpwarned in 2016duringa campaign policy speech that theAT&Tbid is �a deal that wewill not approve in my administration because it�s too muchconcentration of power�.

Nobody has proven in public that political pressure fromTrumpswayed the DoJ; Makan Delrahim, who heads antitrust

* US Managing Editor, Financial Times. Abridged from an article appeared in the Financial Times, on June 15, 2018

AT&T Ruling Reinforces Judicial IndependenceGillian Tett*

enforcement, vehemently denied he was actingat the behest of the president.

But one thing that is crystal clear is that thejudge was not cowed by Trump. To put itanother way, the DoJ lost badly; but the conceptof an independent judiciary emerged victorious.

That will embolden companies tomakemoredeals. US companies have already

unleashed plenty of mergers and acquisitionsthis year. Borrowing is (still) dirt-cheap, moneyis being repatriated from overseas, the privateequityworld hasmoremoney than it knowswhatto do with, and corporate executives arescrambling to respond to digital disruption.

GlobalM&Ahas already toppedUS$2tn this year, a record.

But even amid this boom, some companies have beensitting on the sidelines, nervous about the seeminglycapricious nature of the policy climate. Now theymay feelready to act.

However, the decision is likely to have anotherconsequence: it will encourage business to become a littlemore blase aboutTrump�s threats.When he first took office,his unpredictable attacks on companies (and everyoneelse) left many executives frozen in horror. But this shockhas slowly, but surely, subsided over time.

That does not mean that business considers Trump�sactions to be �normal�, or his threats desirable. But

these daysmany executives seem to treat theWhite Housemelodramas as if they existed in a parallel universe. Cabletelevision may breathlessly track Trump�s tweets, butbusiness leaders view itmore like a reality television show,somewhat divorced from the �real�economy.

This stance may be dangerously naive. Trump hasunleashed so many attacks on US institutions, includingthe courts, that there is a risk hewill undermine them in thelong term. It is not healthy that morale at the DoJ is at arock-bottom low. And the White House drama may yethave practical � damaging � actions in areas such as trade.

But what business leaders learnt this week was thatTrump�s bark is not always followed by a bite. Leon�sruling was not swayed by presidential threats. TheAT&Tcase shows that America still only has one king: the law.That merits a loud cheer � no matter how worried youmight feel about the power of big tech, orAT&T�s abilityto make this debt-laden deal work.

The TimeWarner decisioncould alter thedance betweenbusiness and theWhite House

The

EconomicTimes

11No.2, 2018

EGULETTERR

CORPORATE ISSUES

* City Editor, Financial Times. Abridged from an article appeared in the Financial Times, on May 22, 2018

How tough can life really be at the top of a �Big Four�auditing firm?You inhabit aworldwhere not onlymust

customers by law buy your product, but, happily, onewherethe most lucrative also seem wedded to dealing with onlythe biggest practices � whether out of snobbery, the needfor international audit coverage, or just the nebulous sensethat investors might otherwise disapprove.

The one nightmare you have is that a giant accountingscandal could somehow bring retribution. Your size andreach makes you a tempting target. But even here, thatsame oligopoly rides faithfully to the rescue. Since thedemise of Arthur Andersen � the fifth pillar of what wasuntil 2002 the big five accountants � the authorities havehelpfully thrown a cordon sanitaire around the survivors,fearing the descent into an even more dominant big three.

It is why when KPMGwas found to be peddling illegal taxschemes in the US in 2005, it was let off with no more thana slap on the wrist by the authorities. Or why the whole bigfour�PwC, EY, KPMG andDeloitte� emerged from thefurnace of the financial crisis with just a minor singeing.

There is, however, one nagging blot on this landscape.Each successive scandal raises the same awkwardquestions. Does this comfortable structure really promoteaudit quality?And by allowing a fewgiant firms to dominatethe profession; has control of this systemically importantindustry been handed to a few self-interested actors �concerned mainly with preserving their own privilegesrather than promoting the public good?

The collapse of the British outsourcing firm Carillion isthe latest scandal to cause these worries. Despite

absorbing expensive advice and assistance from all of thebig four at a princely cost of £51m over a decade, its failurehas been dominated by allegations of financialmisreporting.How did the auditors, the giant KPMG, express no concernover reported profits of £150m justmonths before it emergedthese were illusory?

Markets only function when participants perceive somethreat to their position if they fail to perform or innovate.Yet in auditing, the moat between the big four and the restis only widening, despite recent moves designed to reduceconflicts and spark more rivalry. Brought in after the crisis,these oblige quoted companies periodically to re-tenderaudits.

The �Big Four� Auditors Have Life Far Too EasyJonathan Ford*

In March, Britain�s fifth-biggest firm, Grant Thornton,announced it would no longer tender for audits of FTSE350 companies. It said that all retendered contracts weresimply being passed reflexively around the big four.

Add to all that the regulator�s well-known �light touch�approach to the top firms, and you have a situation wherebig four partners may no longer feel they have to look overtheir shoulders. That makes them vulnerable to theblandishments of a high-paying client, whose boss has alife-changing bonus riding on its next figures, and somedaring calculations to push. Rather than holding themselvesand clients to the most exacting standards, the oligopolistscan use their influence to shrug off liability, introduce overlycomplex disclosures and procedures that need heavyinvestment, and find ways to introduce �tick box� formulasinto what should be principled rules.

Would break-ups change all this? Potentially yes, ifinvestors were also prepared to step up and be both

more demanding of audits, and rewarding of quality. Thepresent arrangement, in which the company chooses thesupplier of the audit rather than the (passive) investor, isunhealthy, leading to the sort of conflicts which bedevil,say, the US health insurance market.

The practical challenges are not insuperable. The big fourclaim theirs is a special market that needs scale because ofthe global demands. But there is little difference to legalservices. And there are plenty of international law firms.Nor is it impossible for Britain to act unilaterally. The bigfour are global alliances built on national partnerships. Britaincould catalyse wider action by leading the way.

Making life uncomfortable for masters ofaccounting world is in the public�s interest

TheFinancial

Times

12No.2, 2018

EGULETTERR

INVESTMENT & DISINVESTMENT

FDI Inflows to India Decline in 2017Foreign Direct Investment (FDI) to

India declined toUS$40bn in 2017 fromUS$44bn in the previous year, saidUNCTAD�SWorld Investment Report2018.�FDI inflows to South Asia

contracted by four percent toUS$52bn,owing to a drop in inflows to India�the report said. As per the UNCTAD,the foreign inflows to India decreasedfromUS$44bn in 2016 to US$40bn in2017.Cross-border M&A sales,

however, rose from US$8bn toUS$23bn driven by a few large deals inextractive and technology relatedindustries.The report said the Petrol Complex

Pte Ltd (Singapore), owned byRosneftegaz (Russian Federation)acquired a 49 percent stake of EssarOil Ltd, the second largest privatelyowned Indian oil company, forUS$13bn. (BS, 07.06.18)

China in Africa !China is scaling back investment

in Ethiopia in the face of rising foreignexchange shortages and governmentdebt, highlighting the fragility of theAfrican nation�s economy as the newPrime Minister prioritises politicalreform to quell three years of deadlysocial unrest.For much of the last decade

Ethiopia has been a leading investmentdestination in sub-Saharan Africa,particularly for China. But Beijing�swaning enthusiasm for the region�sfastest-growing economy reflects the

challenges facing Abiy Ahmed, theprime minister, as he juggles demandsfrom a public hungry for bothdemocracy and development andmyriad vested interests.Business people, diplomats and

bankers said Chinese entities, whichhave loaned more than US$13bnbetween 2006 and 2015 for everythingfrom roads and railways to industrialparks, were now taking a �morecautious approach� to Ethiopia.

(FT, 03.06.18)

TradeWarUndermines InvestmentsOne of Europe�s leading

industrialists has warned that the USdecision to slap tariffs on steel andaluminium and the growing prospectof a trade war will force businesses toquestion theirinvestment plans.Jacob Wallenberg, whose family

controls companies such as Ericssonand Saab with combined revenues ofmore than US$130bn said that the USaction risked undermining both globalsupply chains and the rules-basedsystem of international trade.His words carry weight as the

Wallenberg family is one of Europe�sbiggest investors as well as being along-time proponent of free trade,owning stakes in everything from stockexchange Nasdaq and drugmakerAstraZeneca to airline SAS andconsumer appliance group Electrolux.Electrolux was the first company to

demonstrate the potential fallout fromDonald Trump�s new tariffs when inMarch it put on hold a US$250m

investment in a cooking factory inTennessee.Wallenberg, who chairs the family

investment vehicle, Investor, as wellas beingDeputy Chairman of EngineerABB and telecoms group Ericsson,drew parallels with Brexit. He alsosounded the alarm over global supplychains where finished products aremade up of parts drawn fromnumerouscountries around the world.

(FT, 04.06.18)

Driving Cross-border InvestmentRising trade tensions are dragging

down long-term cross-borderinvestment by companies around theworld, UN figures showed. Globalforeign direct investment fell by 23percent in 2017 and is expected to growonly modestly, if at all, this year, theUN said in its latestWorld InvestmentReport.Threatening this year�s picture are

the growing prospects of a trade warbetween the US and China and the EU.The US imposed steel and aluminiumtariffs on the EU, Canada andMexico.It is due to release lists of tariffs andinvestment restrictions against Chinaand is also threatening to imposeimport taxes on the US$190bn of carsbrought into the US from overseasannually.FDI � a measure that includes

acquisitions and investments infactories by foreign companies � hasnot yet recovered to the peak it hitbefore the global financial crisis adecade ago. (FT, 06.06.18)

India-dedicated Investment Fund Launched

The Industrial and Commercial Bank of China, a top state-runChinese bank has launched China�s first India-dedicated publicly

offered investment fund, urging the Chinese to invest heavily statingthat the Indian economy is entering the �golden age of economic take-off�.

The move, regarded as significant by observers to boost investmentsin India, comes just about a fortnight after the first ever informal summitbetweenPrimeMinisterNarendraModi andChinese President Xi Jinpingat Wuhan, where the two leaders sought to give a new direction to thebilateral ties to tap their economic potential.

The fund, named as the Industrial and Commercial Bank CreditSuisse India Market Fund, will �invest in exchange-traded funds listedon more than 20 exchanges in Europe and the US that are based on the Indian market.� (ToI, 14.05.18)

13No.2, 2018

EGULETTERR

SECTORAL REGULATIONBreaking up Electricity MonopolyIsrael�s government approved a

reform to open the electricity sector tonew competition and break up themonopoly held by its state-ownedpower utility.The government, togetherwith Israel Electric Corp (IEC) and itsworkers, agreed on sweeping changesto end a 22-year stand-off.The move requires that a new law

be drafted in Parliament. IEC,which fordecades has managed every aspect ofelectricity from running power plantsto connecting households, agreed tosell five of its power stations over fiveyears and form a subsidiary to managetwo yet-to-be-built power stations.System management and planning

will be taken away from the utility andsold to a different government-ownedcompany. (Reuters, 18.05.18)

NewData Protection Rules in EffectThe General Data Protection

Regulation (GDPR) that gives citizensof theEuropeanUnion (EU)more rightsto control their personal informationcame into effect. With the newregulations in force, companiesworking in the EU, or any associationor club, must now get express consentto collect personal information, or facehefty fines.At a time when several technology

companies have come under thescanner for misuse of personal data ofusers, the new EU legislation, passedinApril 2016, is seen as an attempt bythe European lawmakers to restrict thepowers of the technology companies.The new regulations give the users

of tech companies the right to see whatinformation about them are beingcollected and also have them deleted ifthey wish so (also see page no. 17).

(BL, 25.05.18)

Comments on 5G Spectrum InvitedThe National Communications

Commission (NCC) of Taiwan hasinitiated a public consultation on 5Gspectrum planning and auctionpreparation. Industry stakeholders andinterested parties are invited to givecomments. NCC Chair Nicole Chanstated that the commission will besubmitting its final analysis of thepublic consultation to the Executive

Yuan in July 2018.Thepremierwill thenissue a further decision on 5G spectrum.Further to its 2017 Taiwan

Communications Market Report ofApril 2018, the NCC�s request forcomment indicated that the 3rdGeneration Partnership Project wouldfinalise Release 16 by 2020 and that 5Gproducts may be mature enough tomeet market needs in the third quarterof 2019.It also referred to the progress

being made in Germany, South Korea,Japan, China, Australia and the UStowards planning for 5G spectrum.

(ILO, 20.06.18)

Transport Code ApprovedThe Transport Code is one of the

government�s key initiatives inFinland.The code�s main purpose is to create agrowth environment for businessdigitalisation and promote transportbusiness by deregulation.The codewill reform the regulation

of all transport modes, so that theregulation itself will not become anobstacle to digitalisation, automationand new innovations.The preparation of the first stage

started inNovember 2015. InSeptember2016 the government submitted the billto Parliament and preparation for thesecond stage began.

The first stage of the codewill enterinto force on July 01, 2018. However,the provisions relating to intelligenttransport systems based on Directive2010/40/EU entered into force onOctober 01, 2017, and the provisionson opening essential data have appliedsince January 01, 2018. (ILO, 09.05.18)

New Bill for Clinical ResearchThe importance of clinical research

for developing new treatments anddiscovering cures for diseases isindisputable. However, the degree towhich patients benefit fromparticipating in clinical trials andwhether they should have post-trialaccess to experimental treatments arehighly disputed, especially in Brazil,where free universal healthcare is aconstitutional right.The House of Representatives is

discussing clinical research and post-trial access as part of a new legislativebill. Under the existing bill, sponsorsmust provide their patients withproducts that benefit their health at nocost and for an unlimited period.As Congress is likely to propose

and make amendments, senatorsshould re-examine the bill before votingon it. Further, it must be sanctioned bythe president (with or without vetoes).

(ILO, 23.05.18)

Net Neutrality Officially Ends

The US Federal Communications Commission (FCC) announced that itsreversal of the 2015 Open Internet Order, known as net neutrality, will

officially take effect on June 11, 2018.The decision to

end net neutralitywasmadeby theFCCin late 2017 by a 3-2vote headed up byFCC Chairman AjitPai. Undernet neutrality,broadband internet isrequired to beregulated as a utility,preventing ISPs fromthrottling, slowing,or speeding up certain websites or services based on paid partnerships withcompanies.

When the new rules go into effect on June 11, providers will be legallyable to adjust the speed of content to benefit companies from which theystand to profit. (CPI, 11.06.18)

14No.2, 2018

EGULETTERR

SECTORAL REGULATION

It is a remarkable fact, but few businesses ever seem tofail because of excessive leverage, misconceivedstrategies, or inability to meet the needs of their customers.They struggle because banks unreasonably refuse furthercredit, or because of unseasonable weather, or someunexpected adverse effect, such as a terrorist attack. Mostoften, however, their difficulties are the result of someinsufficiently supportive government policy. The corporateexecutive who says �we got it wrong� is as rare as thepolitician whomakes a similar admission.

Pressure on the retail sector has been intensifying for adecade. In the years of the credit boom finance was cheaplyand readily available to fund new property development. Itwas also readily and cheaply available for leveraged privateequity purchase of retail chains. But since 2008 consumerexpenditure has stalled. Shopping has become a diminishingfraction of household spending, and online sales havegrown.

So the weakest retailers have been struggling� the dowdydepartment stores; the groups with financing structurestoo precarious to survive any setback.And surely it shouldnot be a surprise that the market for imported tat andwholesalers� overstocks at £1 per item has its limits. Eventhe stronger chains have had to review their less profitablestores.

All that is an appropriate market response to evidentovercapacity. Therewill be fewer retailers, fewer shops

and less popular high streets and shopping malls willstruggle until some sort of equilibrium is restored. Sowheredo business rates come into it all?

Business rates are levied on a notional rental value ofcommercial property, and the rate of tax (the multiplier) is

UK�s Retailers are too Quick to Blame BusinessJohn Kay*

increased annually in linewith the retail prices index. Theseassessed rental values are subject to revision every fiveyears. The effect of revaluations is to leave the total ratesbill unchanged but to redistribute it in line with changes inrelative rental values. The latest revision, which had beenpostponed for two years to avoid an unwanted clash witha general election, came into effect inApril 2017. Some payless, but those who pay more make more noise.

The critics of business rates have the wrong end of thestick. First, and fundamentally, they have failed to

recognise that the core problem is one of overcapacity inretailing. Shopkeepers are victims of their own historichubris, not government greed. Second, those critics havenot thought through who would be the main beneficiariesof the relief they seek. The gains would not go to strugglingdiscounters and outmoded department stores. The winnerswould be the holders of the most valuable land in England.Think of the big landowners of central London and yourthoughts should turn to the Queen, the Duke ofWestminster and Land Securities.

So what should be done about business rates? Thegovernment is in the early stages of a programme to restorecontrol of business rates to local authorities. While thisseems welcome, it carries the danger that irresponsiblecouncils will see local businessas a cash cow to offsetinadequate Central Governmentfunding. The government hasalso proposed to revalue atthree rather than five-yearintervals. This would probablyreduce the volume, even as itincreased the frequency, ofcries of pain.

Recent years have seen two reports on the future ofhigh streets. One, by retail consultant Mary Portas,

suggested a range of policies to sustain the status quo.Another, more perceptive, fromBill Grimsey, former headof Wickes, Iceland and Focus DIY, took a broaderperspective. We want vibrant centres in our cities andtowns. But not streets lined with identical collections ofoutlets of the same chain retailers. Think of high streets ascommunity hubs rather than shopping malls.

* Contributing Editor, Financial Times. Abridged from an article appeared in the Financial Times, on July 06, 2018

Shopkeepersrailing againstthe levy shouldlook a bit closerto home

TheFinancialTimes

15No.2, 2018

EGULETTERR

FINANCIAL SECTOR REGULATIONRemuneration Policies in BankingThe Bank of Italy recently

commenced a public consultation onthe proposed amendments toRegulation 285/2013 on remunerationpolicies in the banking sector.The main aim is to align the

regulation with the European BankingAuthority Guidelines of December2015(1) and ensure compliance withArticles74(3)and75(2)of theEUCapitalRequirements Directive (2013/36/EC).The consultation ended on May 14,2018.The proposed amendments to

Regulation 285/2013 apply to bothbanks and investment firms, in linewiththe joint regulation issued by the Bankof Italy and the Italian Companies andExchange Commission. (ILO, 20.04.18)

Financial Technology InstitutionsLawThe US Congress passed the bill

on the Financial TechnologyInstitutions Law in Mexico, with 265votes in favour, nine abstentions and61 votes against.The Senate had unanimously

approved the bill with 102 votes infavour, and sent it to Congress foranalysis. Congress made noamendments to the bill.On March 08, 2018 the President

signed and enacted the bill. The lawwas published the next day in its finalform in the Federal Official Gazette.The law seeks to build a regulatoryframework that will encourage thedevelopment of innovative financialservices; increase the level ofcompetition and financial inclusion;and placeMexico at the forefront of theindustry. (ILO, 06.04.18)

Regulating Private LendingThe China Banking Regulatory

Commission (CBRC) issued theCircularon Matters concerning RegulatingPrivate Lending and MaintainingEconomic and Financial Order (10/2018), which came into effect on thesame date. Officials of the relevantgovernment agencies also held a pressconference to answer reporters�questions on the circular.The circular was formulated in

accordance with the BankingRegulationLaw; theLawonCommercial

Banks; the Criminal Law; and theMeasures for the Clampdown of IllegalFinancial Institutions and IllegalFinancial Operations.The circular establishes the basis

for clarifying credit rules andprohibiting illegal private lending.

(ILO, 08.06.18)

Reviewing Banking OligopolyThe Australian competition

regulator said it plans to review thepowers of the country�s four largestbanks, amid concerns that lending capshave cut competition and high barriersto entry have stifled rivals.The move is the latest sign

Australia�s �Big Four� banks, which

control about 80 percent of the homelending market, face greater scrutinyand regulation to correct abuses ofpower following years of scandals andcorporate wrongdoing.The scope of reviewswas still being

decided, but they would likely focuson the power of the four largest banks,barriers to entry in the industry, andconstraints on consumers switchingbetween banks, theACCC said.The reviews come on top of an

ongoing judicial inquiry intoAustralia�s financial sector which hasalready revealed the banks abused theirpower and routinely breached lawswhen issuing home loans, credit cardsand other consumer loans.

(Reuters, 11.04.18)

US Banks: �Too Big to Fail� just ShrankPreeti Varathan*

Republicans have been gunning to dismantle the 2010 Dodd-Frank Actfrom the moment it came into existence. US President Donald Trump

promised to do �a big number� (paywall) on it, calling the Wall Streetreform act a �disaster.�

The Dodd-Frank WallStreet Reform andConsumer Protection Actwas a colossally large,2,300-pager piece offinancial reform. The Actcreated a number of newgovernment agencies, likethe Financial StabilityOversight Council and theConsumer FinancialProtection Bureau, entities Trump has vociferously critiqued as decimatingfinancial institutions. The Act also curtailed speculative trading, effectivelyseparating the investment and commercial sides of banks. And it eased thefinancial and legal lives of whistleblowers.

Many of those unprecedented, tough standards will remain intact. Whatthe new bill takes a hammer to is which banks, if any, are thought of assystematically important financial institutions-Dodd-Frank lingo for toobig to fail. In the newest version of the bill, only banks with US$250bn ormore in assets fall under that jurisdiction. That�s fewer than 10 banks(paywall) in the US.

The new bill, if signed by the President, is a boon for smaller banks.Whether the latest version of Dodd-Frank maintains its muscle, though, isultimately up to the Federal Reserve, which gets large discretion indetermining the size and scope of regulation for medium and small banks.In his senate confirmation hearing, Fed chair Jerome Powell let on justwhat he thought of the current necessity of Dodd-Frank legislation.

* Atlantic Editor Fellow at Quartz.The article appeared in the Reuters, on May 23, 2018

16No.2, 2018

EGULETTERR

FINANCIAL SECTOR REGULATION

* Managing Director, Scope Ratings�Financial Institutions Group. Abridged from an article appeared in the Financial Times onJune 05, 2018

The finance industry has been waiting for large cross-border bank mergers since the EU voted for banking

union five years ago. Unlike the wild-eyed years beforethe global financial crisis, such deals, themarket believes,will be conducted with efficiency and transparency,governed by tougher regulations and, in the eurozone,closely supervised by the European Central Bank.

Hints of that consolidation may at last be emerging. TheFinancial Times reported that UniCredit�s chief executivehad been seeking a merger with Société Générale. Andlast month it emerged that Barclays had been talkingprivately about a possible merger with rival internationalbanks, including Standard Chartered, in response topressure from an activist investor.

But in truth there is still little excitement around large-bankmergers and acquisitions. Thememory of the abysmalpre-crisis mega-deals lingers, among them the 2007acquisition of ABNAmro by a Royal Bank of Scotland-led consortium that ended up costingUK taxpayers £45bnand Dutch taxpayers nearly 22bn. Or the foolishlyacquisitive strategy of public-finance group Dexia thatended in a multi-billion-euro government bailout.

With the possible exception ofUniCredit�s Jean-PierreMustier,most bank executives seem to lack appetite

for transformationalmergers. That is partly because, sincethe financial crisis, the �hunter� bank leader who chasedacquisitions and risky diversification has gradually beenreplaced at most European lenders by the �farmer� chiefexecutive, tilling and pruning the local backyard.

Ironically, it is the ECB and other public-sector bodiessuch as the IMF that have changed their tune and arenow urging consolidation. Banking authorities have nothistorically been keen proponents of M&A among largebanks. But now they hope to address over-capacity inthe system and resuscitate the ailing eurozone.

Technology Suppresses Banks� Appetite for Mega-DealsSam Theodore*

Some industry participants suspect that the ECB�s cross-border supervisor would welcome having more cross-bordergroups to supervise to strengthen its umbrella role. That wouldmake it easier to challenge national politicians, who are moreinterested in solutions for their own countries. 2017�s Italianbank bailouts were a case in point.

If deals do emerge, a large dose of market concern iswarranted. Consolidation is necessary for smaller andundiversified retail banks which, facedwith years of ultra-lowinterest rates and subdued volume growth, can barely eke outa profit. This has already occurred with Spain�s regionalsavings banks, or cajas, but is still a work-in-progress amongsecond-tier banks in Italy and the many co-operative andsavings banks in Germany.

Despite the ECB�s siren calls and the recent back-channeldiscussions, it remains unlikely that we will see large M&Atransactions any time soon. If deals do emerge, a large dose ofmarket concern is warranted.A few caveats come to mind.

First, banksmust becomemore efficient to fend off competition.But the challenge is coming fromnewdigital apps and businessmodels. Rather than combining with an old-fashioneddistributor (in other words, another bank), today�s wiselymanaged lender is investing in buying fintech companies orbuilding its own digital capacity.As customers switch in drovesto smartphone banking, that wiselymanaged bank thinks twicebefore taking onmore brick-and-mortar branches.

Second, financial products have become increasinglycommoditised. Demand for customised products has

diminished since the financial crisis andmany services can bemore easily replicated through technology. EU paymentservices rules mean that our wiselymanaged bankwill be ableto provide services to a broader range of customers on otherbanks� open platforms.

Third, banks remain concerned about the regulatory andpoliticaltreatment of cross-border mergers. Who can blame them?There are legitimate uncertainties about the structures set upto deal with failing banks and the ability of lenders to transfercapital and liquidity across jurisdictions. The banking unionis still viewedwith suspicion bymany European governments,even those of a non-populist persuasion. If the fear factorreturns, politicians will circle the homewagons first.

Fourth, mergers do not necessarily reduce excess capacity. InFrance, a highly consolidated market, most banks exhibit apoor level of cost efficiency compared with other countries.So, for now, the �farmer� chief executive may still hold theupper hand.

Wisely managed lendersseek efficiency throughfintech or digital capacity

TheFinancial

Times

17No.2, 2018

EGULETTERR

SPECIAL ARTICLE

* This article appeared in the Leaders section of the print edition under the headline �Copy that� of the Economist on April 25, 2018

US looks to the bureaucrats ofBrussels for guidance.

Commercial freedomappealsmore thandirigisme. But when it comes to dataprivacy, the case for copying the bestbits of the European Union�s approachis compelling.

The General Data ProtectionRegulation (GDPR) is due to come intoforce next month. It is rules-heavy andhas its flaws, but its premise thatconsumers should be in charge of theirpersonal data is the right one. The lawlets users gain access to, and to correct,information that firms hold on them. Itgives consumers the right to transfertheir data to another organisation. Itrequires companies to define how theykeep data secure.And it lets regulatorslevy big fines if firms break the rules.

US has enacted privacy rules in areassuch as health care. But it has neverpassed an overarching data-protectionlaw. The latest attempt, the ConsumerPrivacy Bill of Rights, introduced in2012 by theObama administration, dieda slow death in Congress. The GDPRshould inspire another try.

The failings of America�s self-regulatory approach are becomingclearer by the week. Large parts of theonline economy are fuelled by data thatconsumers spray around withoutthought. Companies� arcane privacypolicies obfuscate what they do withtheir users� information, which oftenamounts to pretty much anything theyplease. Facebook is embroiled in crisisafter news that data on 87million usershad been passed to a political-campaign firm. Identity-theft iswidespread; the annual cost toAmerican consumers exceedsUS$16bn, according to some estimates.

These scandals are changing thecalculus about the benefits of self-

US Should Borrow from Europe�s Data-Privacy LawThe GDPR�s premise, that consumers should be in charge

of their own personal data, is the right one

countries are adopting GDPR-stylelaws.Asimilar regime on both sides ofthe Atlantic would help keep dataflowing across borders. Thealternative, of a regulatory patchwork,would make it harder for the West toamass a shared stock of AI trainingdata to rival China�s.

Putting the personal into dataAmerica need not adopt the GDPRwholesale. The legislation is far fromperfect. At nearly 100 articles long, itis too complex and tries to achieve toomany things. The compliance costs forsmaller firms, in particular, lookburdensome. In addition, parts of theGDPR are out of step with America�sconstitutional guarantee of freespeech: a �right to be forgotten� of thekind that the new law enshrines willnot fly.

But these are arguments for using theGDPR as a template, not for ignoringthe issue of data protection. IfAmericacontinues on today�s path, it will failto protect the privacy of its citizensand long-term health of its firms.America�s data economy has thrivedso far with hardly any rules. That erais over.

regulation. Opponents of privacylegislation have long argued that theimposition of rules would keeptechnology companies frominnovating. Yet as trust leaches out ofthe system, innovation is likely tosuffer. If consumers fret about whatsmartphone apps may do with theirdata, fewer new offerings will take off� especially in artificial intelligence.

The need to minimise legalfragmentation only adds to the caseforAmerica to adopt bits of the GDPR.One reason behind the new rules inthe EU was to harmonise data-protection laws so that firms can dobusiness across Europe more easily.America is moving in the oppositedirection. States that have detected aneed for greater privacy are draftingtheir own laws. California, for instance,has pending legislation that wouldestablish a data-protection authorityto regulate how the state�s big techfirms use Californians� personal data.

Internationally, too, America isincreasingly an outlier.AnyAmericanfirm that serves European customerswill soon have no choice but to complywith the GDPR; some firms plan toemploy the rules worldwide. Other

The

Econom

icTimes

18No.2, 2018

EGULETTERR

SPECIAL ARTICLE

From War Room to Boardroom.Military Firms Flourish in Sisi�s Egypt

Reuters Staff

Abridged from an article appeared in Reuters, on May 16, 2018

These days he issues orders from an office thatoverlooks the Nile, as chairman of the Maadi Co. for

Engineering Industries, owned by theMinistry of MilitaryProduction.

Maadi was founded in 1954 to manufacture grenadelaunchers, pistols and machine guns. In recent years thefirm, which employs 1,400 people, has begun turning outgreenhouses, medical devices, power equipment and gyms.It has plans for four new factories.

�There are somany projects we are working on,� saidAbdelMeguid, a 61-year-old engineer, listing orders including a495 million Egyptian pound (US$28mn) project for theMinistry of Electricity and an Algerian agricultural wasterecycling contract worth US$400,000.

Maadi is one of dozens of military-owned companies thathave flourished sinceAbdel Fattah al-Sisi, a former armedforces chief, became president in 2014, a year after leadingthe military in ousting Islamist President MohamedMursi.

Themilitary owns 51 percent of a firm that is developinga newUS$45bn capital city 75 kmeast ofCairo.Another

military-owned company is building Egypt�s biggest cementplant. Other business interests range from fish farms toholiday resorts.

In interviews conducted over the course of a year, thechairmen of nine military-owned firms described how theirbusinesses are expanding and discussed their plans forfuture growth. Figures from the Ministry of MilitaryProduction - one of three main bodies that oversee militaryfirms - show that revenues at its firms are rising sharply.The Ministry�s figures and the chairmen�s accounts give

rare insight into the way themilitary is growing in economicinfluence.

Some Egyptian businessmen and foreign investors say theyare unsettled by the military�s push into civilian activitiesand complain about tax and other advantages granted tomilitary-owned firms. The International Monetary Fundwarned in September 2017 that private sector developmentand job creation �might be hindered by involvement ofentities under the Ministry of Defence.�

Egypt�s government counters that private companies areoperating on an even playing field and that the military

is filling gaps in the market, as it did during a shortage ofinfant formula in 2016. Then themilitary helped by importingsupplies and has since announced plans to build a formulaplant. Sisi says the military can deliver large, complicatedprojects faster than the private sector.

In 2016, the military and other security institutions weregiven exemptions in a new value-added tax (VAT) lawenacted as part of IMF-inspired reforms. The law statesthat the military does not have to pay VAT on goods,equipment, machinery, services and raw materials neededfor the purposes of armament, defence and national security.

The Ministry of Defence has the right to decide whichgoods and services qualify. Civilian businessmen

complain that this can leave the system open to abuse.Receipts for a cup of coffee at private sector hotels, forexample, add 14 percentVAT. Receipts at military hotels donot. Employees at the military-owned Al-Masah Hotel inCairo told Reuters that no VAT was charged when rentingvenues for weddings and conferences.

An employee puts a �Made in

Egypt� sticker on a boxed

refrigerator at Helwan Company

for Metallic Appliances (Factory

360) on the outskirts of Cairo,

Egypt February 20, 2017.

Reuters

19No.2, 2018

EGULETTERR

Facebook Should Be a NonprofitKara Alaimo*

OPINION

Facebook users have no way to optout of advertising because the

company�s business model would notallow it, the company�s chiefoperating officer, Sheryl Sandberg,said in a �Today Show� interview. Ifusers could request that their data notbe used for advertising purposes, thenFacebook would have to be �a paidproduct,� Sandberg said. But beyondthe alternatives Sandberg laid out �Facebook users can either be targetedwith ads, or pay Facebook to avoidthem � there is a third option:Facebook could become a nonprofitorganisation.

If the idea of internet companieseschewing opportunities to makemoney with advertising sounds crazy,consider this: Some of the firstproponents of the idea were thefounders of Facebook and Google. Inhis book �The Know-It-Alls: The Riseof Silicon Valley as a PoliticalPowerhouse andSocialWreckingBall,�journalist Noam Cohen reports thatFacebook chief executive MarkZuckerberg originally did not want adsto show up in a person�s news feedunless a friend had liked a particularproduct. He changed course, Cohensays, under pressure to deliver profitsto investors.

Similarly, in a 1998 paper Google�sfounders, Sergey Brin and LarryPage, warned about the dangers of ad-supported search engines, predictingthat they would be �inherently biasedtowards the advertisers and away fromthe needs of the consumers.� Forexample, they wrote, a search enginethat sold ads to a cell-phone companymight feel pressure to suppressnegative search results about cellphones.

* Assistant Professor, Public Relations at Hofstra University and Author of �Pitch, Tweet, or Engage on the Street: How to PracticeGlobal Public Relations and Strategic Communication.�The article appeared in The Hindu Business Line, on April 13, 2018

But internet users need to see information like this in order to make informeddecisions as consumers. Commercial considerations alone should not

determine what shows up on our Facebook news feeds or Google searches. Wealso need accurate and balanced reporting in order to perform our civic duties�not the fake news which has circulated on Facebook of late and pieces fromsources we already agree with, which the author and activist Eli Pariser saysleave us in �filter bubbles�and have contributed toAmerica�s heightened politicalpolarisation.

43 percent ofAmericans often get news online and 67 percent ofAmericans turnto social media for news, according to a 2017 Pew Research Center survey. Theraisons d�etre of social media platforms should be to share vital information,provide a forum for public discussion, and help connect the world� not just tosell ads to politicians and corporations.

It wouldn�t be unheard of for an internet heavyweight to reinvent itself as anonprofit: One example is Wikipedia. The internet encyclopedia, which wasoriginally funded by a dot-com company, is now run by a nonprofit organization.Ann Ravel, a lecturer at the University of California, Berkeley Law School, saida company like Facebook could convert to nonprofit status by buying outshareholders and complying with the IRS requirements for 501(c)(3)organisations.

Facebook is often the first to claim that it is driven by a social mission. In aninterview with Fast Company last year, Zuckerberg said, �I think the coreoperation of what you do should be aimed at making the change that you want�What we are doing in making the world more open and connected, and nowhopefully building some of the social infrastructure for a global community� Iview that as the mission of Facebook.� There�s a name for an organisation witha pro-social mission. It is called a nonprofit.

Mark Zuckerbergsays his companyhas a socialmission. Here�s oneway to prove it.

Published by CUTS Centre for Competition, Investment & Economic Regulation (CUTS CCIER)D-217, Bhaskar Marg, Bani Park, Jaipur 302016, India

Ph: +91.141.2282821, Fax: +91.141.2282485, Email: c-cier@cuts.org, Website: www.cuts-ccier.orgAlso at Delhi, Kolkata and Chittorgarh (India); Lusaka (Zambia); Nairobi (Kenya); Accra (Ghana); Hanoi (Vietnam); Geneva (Switzerland); and Washington DC (USA)

BL: The Hindu Business Line; BS: Business Standard; CNBC: Consumer News and Business Channel; CPI: Competition Policy International;ET: Economic Times; FT: The Financial Times; IANS: Indo Asian News Service; IE: Indian Express; ILO: International Law Office; JP: Jakarta Post;NBC: National Broadcasting Company; NYT: New York Times; TG: The Guardian; ToI: Times of India; WSJ: Wall Street Journal

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Complete reproduction without alteration of the content, partial or as a whole, is permitted for non-commercial,personal and academic purposes without a prior permission provided such reproduction includes full citationof the article, an acknowledgement of the copyright and link to the article on the website.

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know how far this effort is paying off in terms of utility tothe readers. Please take a few seconds and suggest waysfor improvement on:� Content� Number of pages devoted to news stories� Usefulness as an information base� Readability (colour, illustrations & layout)W

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Publication

Festschrift

Putting Consumers First

This volume is an anthology of analytical essays edited by Dr Sanjaya Baru with AbhishekKumar, and penned by experts from around the world on trade, regulation, governance

and other issues relevant to economic policy. The volume has been compiled in honour ofPradeep S Mehta, founder Secretary General of CUTS International on the occasion of his 70th

birth anniversary to commemorate his lifetime contribution to consumer welfare in India andglobally.

Book your copy at: https://www.amazon.in/Putting-Consumers-First-Dignitaries-around/dp/8182572592

PolicyWatch

The April-June, 2018 issue of this quarterly newsletter carries a cover story entitled, �TheRole of Competition Policy for Development�, which mentions that competition policy

can not only guide competition authorities in identifying and disincentivising anti-competitivepractices, but can also correct distortions to competition induced by other policies.

It also encompasses a trade feature by Gireesh Chandra Prasad entitled, �FromDemonetisation to GST to Cashless Payments, Economy gets more Formal�, which states thatthough demonetisation and GST led to short-term pain in economic activity, positive changesin key metrics of the Indian economy are visible over a period of time.

A special article by Kaushik Basu dubbed, �The Ethics of Reducing Inequality in Society�recommends that to face the challenge of economic insecurity there should be a balancebetween ensuring equality and poverty eradication.

This newsletter can be accessed at: http://www.cuts-ccier.org/pw-index.htm

Economic Regulations, Competition, and Consumer Protection in Ancient IndiaBy Pradeep S Mehta

It is learned that the Ancient India was a �mixed economy� adhering to the socio-economic philosophy of a�welfare state�. In general, the state was both regulator and competitor, including state enjoying monopoly over

certain sectors, such as mines and mineral. This article introduces the audience to the ancient Indian ethos, wheredharma (duty) was the backbone of the civilisation that made the society righteous and duty-centred. The articlegives an overview of ancient India�s economic activities along with a short account of sectoral regulations. Besides,the article presents a competition analysis of the then regulations. It analysed the state monopolies, state as regulatorand competitor, the prevalence of the guild system, differential regulatory treatments, price control, treatment ofcartels and consumer protection.

This article can be accessed at: http://cuts-ccier.org/pdf/Article-Economic_Regulations_Competition_and_Consumer_Protection_in_Ancient_India-AntitrustBulletin.pdf