Volume 16, April-June 2015

REGULETTERA Quarterly Newsletter

Inside this Issue

First Foray in AntitrustLegislation ..................... 2

EU Objects Abuse ofPower by Gazprom ........... 4

Alibaba Fined forPricingViolations ............. 6

Merck�s Sigma-AldrichAgreement ...................... 9

AirCarrierLiability:A Perspective ................ 13

�Too-Big-to-Fail�Banking Problem........... 16

Special Articles

Anti-monopoly Law in China isVery Much a Work in Progress� Tom Mitchell .........................3

Nothing to StandOn ..............5

Global Banks Punished forManipulation� John M. Connor ...................8

A Primer on the Greek Crisis� Anil Kashyap .....................18

Advocating Competitionin the Pharmaceutical Sector

There has been considerable debate about the goals of competition acrossthe globe. Competition is important because it brings efficiency and compels

industry to provide higher quality goods and services at lower prices. Competitionis the essence of any market and pharmaceutical sector is no exception. In thepharmaceutical industry,competition can motivatebrand companies to createnew and improvedmedicines and encouragegeneric companies to offerless expensive alternatives.

Compet i t ion- re la tedissues in pharmaceuticalindustry are highlycontentious world over andregularly discussed at globalplatforms on competition. It was good to see that this year, the IntergovernmentalGroup of Experts (IGE) meeting on Competition Policy organised by UNCTAD inGeneva in July dedicated a roundtable session on �The Role of Competition in thePharmaceutical Sector and its Benefits for Consumers�.

The deliberation highlighted that pharmaceutical sector makes a valuablecontribution in improving the public health by developing, producing, distributingand marketing the pharmaceutical products. A competitive market providesconsumers access to good quality medicines at comparatively lower prices.Competition also forces companies to invest more in research and developmentfor developing better quality and new drugs, which may contribute to improvementin the quality of life of consumers.

The UNCTAD meeting addressed the issue of competition in thepharmaceutical sector and its role to enhance consumer welfare and economicefficiency. The keynote speaker, Sven Gallasch, University of East Anglia, UKfocussed on difficulties that the complex regulatory structure of thepharmaceutical industry poses to competition policy enforcement. He highlightedthe need for coherence between intellectual property, patent policy and antitrustscrutiny, in order to successfully foster innovation in the sector for the well-being of the society at large.

The panellists brought to the participants� attention a number of issues dealingwith national strategies for regulating the pharmaceutical industry and relevantcases of enforcement of competition law in the sector. Issues such as pricereform and liberalisation, competitive entry of generic drug manufacture into themarket, pay-for-delay agreements, and universal access to healthcare werealso addressed.

A background paper prepared by UNCTAD for this session states that in orderto benefit from competition, consumers must be empowered to activate it, whichmay be achieved through consumer education, as well as facilitating consumeraccess to information and enhancing the capacity of consumers to assessinformation accurately to make an optimal decision. Competition, regulatory andconsumer policies should reinforce each other in achieving their common goals.

www.im

ages.bidnessetc.com

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MACRO ISSUES

Merger Reforms ProposedIsrael�s Antitrust Authority has

suggested amendments to its mergercontrol regime that would allowcompanies to voluntarily notifymergers that fall below the country�spre-merger notification thresholds iflawyers think they may be a target forantitrust scrutiny.The amendments would also raise

the country�s mandatory pre-mergernotification threshold. The draft wouldallow the authority to prohibit mergersthat do not meet the pre-notificationthresholds if they threaten competition.If the changes go ahead, companies

will be expected to judge for themselveswhether the merger is likely to raisecompetition concerns before decidingwhether to notify the authority.

(GCR, 23.04.15)

Bridging �Compliance Gap�The UK Competition and Markets

Authority (CMA) has recentlypublished the findings of research itcommissioned to examine UKbusinesses� understanding ofcompetition law.The aim of the research was to

gauge businesses� awareness ofcompetition law, their understanding ofanti-competitive behaviours and theresulting penalties, businesses�preferred sources of information aboutcompliance, and the awareness of theCMA and what it does.The report concluded that there is

a significant �compliance gap� as 85

percent of businesses think that theyshould comply with competition lawbecause it is the right thing to doethically � as opposed to being undera legal obligation to do so.

(NLR, 10.06.15)

Improving Competition LawThe Australian Competition and

ConsumerCommission (ACCC)and theJapan Fair Trade Commission (JFTC)signed a Co-operation Arrangement,designed to improve internationalcompetition law enforcement activities.The Arrangement builds upon the

Japan-Australia Economic PartnershipAgreement, which commenced onJanuary 15, 2015. The ACCC looksforward to working closely with Japanon a range of competition lawenforcement activities, particularlyglobal mergers and cartels.This agreement paves the way for

increased co-operation andinvestigative assistance between theagencies on competitionmatters whichaffect Australian or Japanese markets.

(www.jftc.go.jp, 30.04.15)

Disseminating Competition CultureSaudi Arabia�s Council of

Competition has published a range ofguidelines to encourage competitionacross the gulf state�s economy, takinginternational best practices intoconsideration.The Council said the information

would help raise awareness anddisseminate the culture of competition

among the business sector. Theguidelines are part of a recent trend toimprove Saudi Arabia�s competitionregime.The first book provides advice to

companies on how to comply withSaudi competition law and the secondon exchange of information betweencompetitors. The third targetsgovernment sectors and publicprocurement. (GCR, 16.06.15)

Fine-tuning Anti-trust RulesHungary�sNationalAssembly has

approved a series of amendments toits competition lawwhich once in force,will change how smaller companies aresanctioned for first time infringementsof antitrust rules.Under the amended law, small and

medium-sized enterprises (SMEs) thatbreach Hungary�s competition ruleswill now face a warning instead of afinancial penalty, so long as the offencedoes not infringe EU competition law,involve public procurement cartels oraffect vulnerable consumers.The warning will include an

obligation on the offending companyto introduce an internal complianceprogramme, with the aim of preventingfuture infringements. (GCR, 10.06.15)

Amendments to Competition LawThe Romanian Competition

Council (RCC) has recently publisheda proposal for amendments to theCompetition Law consultation on itswebsite. In addition to fine-tuningaspects related to areas such asprohibited agreements and practices,abuse of dominance, merger control,privilege and dawn-raids, the proposedamendments would alsointroduce several substantial changes.The amendment that the RCC now

intends to introduce states that anundertaking can no longer benefit fromthe reduction of the fine obtained incase it subsequently challenges the finein court.The RCC�s draft for amending the

Competition Law is subject to publicconsultation. It remains to be seenwhatthe reaction of the business communityand practitioners will be, as theamendments may affect key issues ofinterest for future or on-goinginvestigations. (Lexology, 09.06.15)

First Foray in Antitrust Legislation

The Philippine Congress has passed, and President Benigno Aquino III isexpected to sign into law, the Philippine Competition Act. The law, which

aims to safeguard fairand competitive marketconditions, marks thenation�s first foray intoantitrust legislation.

Under the new law,practices that allowentities to restrict marketcompetition through anti-competitive agreements and abuse of a dominant position will be prohibitedand parties will be required to obtain clearance for certain mergers andacquisitions. It additionally prescribes administrative and criminal penaltiesfor violations of these prohibitions. The Act also establishes the PhilippineCompetition Commission, which will implement and enforce the nationalcompetition policy. (www.dlapiper.com, 18.06.15)

www.dlapiper.com

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Anti-monopoly Law in China isVery Much a Work in Progress

TomMitchell*

In the annals of anti-monopoly case law, Chinese ricenoodle and tableware cartels do not rank up there withthe Standard Oil trust, the petroleum cartel that wasfamously prosecuted in 1911 under theUSShermanAntitrustAct.

But in time these two much lesser known cartels, targetedby Beijing regulators shortly after the implementation ofChina�s 2010Anti-Monopoly Law, may become famous intheir own right. They were among the first cases in anenforcement campaign that has since ensnared the likes ofMercedes-Benz and Qualcomm. It could also soon haveimplications for multinationals� ability to safeguardintellectual property in the world�s most coveted market.

In both instances, the National Development and ReformCommission imposed small penalties for price collusion onmore than a dozen rice noodlemakers and service providersthat wash, sterilise and wrap tableware in plastic forrestaurants.

The NDRC�s investigations into allegedly anti-competitive behaviour by domestic firms culminated

with anRmb200million fine forChina�s largest liquormaker,Wuliangye, two years ago. But it takes rather more moneyto get the attention of multinationals, and the NDRCachieved just that in 2013 with the first in a series ofinvestigations against foreignmanufacturers ofmilk powder,auto parts, premium cars and semiconductors.

Foreign firms accused of anti-competitive behaviour by theNDRC have generally been hit with much higher fines thantheir domestic counterparts. Qualcomm agreed to pay aRmb6.1bn penalty in February, while Mercedes and Audiwere finedRmb350mandRmb250m respectively.

In all three instances, the fact the penalties could havebeen much worse has blunted some of the criticism thattheNDRChas been deliberately targeting foreign companies� a charge the regulator has consistently denied.

Qualcomm�s penalty could have requiredmuchmore costlychanges to its business model. The San Diego company�sshares actually rose on the news. Mercedes and Audi,meanwhile, were penalised for infractions in just oneprovince each. In theory, they could have had to pay muchmore hadNDRC�s investigators ferreted out wrongdoing inall of China�s 32 provinces, autonomous regions and directlyadministeredmunicipalities.

* Beijing-based Reporter for the Financial Times. Abridged from an article that appeared in the Financial Times, on May 19, 2015

So what next now that the NDRC has so effectively got itsintended message across? Only one previously disclosedinvestigation has yet to be resolved � that involvingMicrosoft and the State Administration of Industry andCommerce, which also polices aspects of the 2010 Anti-Monopoly Law.

The rules, designed to �prohibit abuse of intellectualproperty rights to eliminate or restrict competition�, were

promulgated early in May 2015 and take effect on August01, 2015. Just as western regulators have occasionally forcedoperators of telecoms networks and electricity grids to sharetheir �essential facilities� with competitors, the SAIC couldcompel �dominant� companies to share intellectual propertywhen it constitutes �an essential facility of manufacturingand business operations�.

If it were to do so, the SAIC would be following the EU inapplying the essential facilities doctrine to intellectualproperty. But the EU has only forced companies to shareintellectual property in a very small number of exceptionalcircumstances, while the US has refused to do so.

In a rare public comment on the new rules, one SAICofficialhas said the regulator will be �cautious� in applying them.For multinationals wary of being forced to transfertechnology in China, the uncertainty is a worrying but usefulreminder that the country�s anti-monopoly law is verymucha work in progress. Very few if any of them took note of theimplications for their own industries of the NDRC�sprosecutions of the domestic rice noodle and tablewarecartels. It is a mistake that they should not make twice.

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ABUSEOFDOMINANCE

Safaricom to Acquire DominanceAirtelAfricaCEOChristiandeFaria

has criticised Kenya�s competition andtelecommunication regulators for notdeclaringmobile operator Safaricom adominant provider. This has made itdifficult for Airtel to compete andbecome profitable.Airtel is also demanding allocation

of 4G spectrum, arguing that Safaricomis already enjoying the first-to-marketadvantage having been allocated thebandwidth in 2014.Airtel Kenya CEOAdil ElYoussefi

said failure by regulators to declareSafaricom dominant has made it theonly profitablemobile firm inKenya. ElYoussefi said Airtel has not made ashilling in profit in the five years sinceAirtel took over the network, despiteinvesting millions of dollars in themarket.The two Kenyan regulators signed

anMoU that brought to an end a battleover who has powers to monitor theabuse of dominance in thetelecommunication sector.

(www.telecompaper.com, 16.06.15)

Auchan Breaches Trade RulesThe Hungarian Competition

Authority imposed a fine on retailerAuchan for abusing its significantmarket power under theTradeAct. Thismarks the highest fine ever imposed inthe sector by the CompetitionAuthority.The Competition Authority found

that Auchan had unilaterally imposeda fee on its non-food suppliers without

providing a service in return, simply toensure that their productswere includedor remained inAuchan�s stock.The charge came in the form of a

so-called �after-sale price discount� �previously labelled an �end-of-yearbonus� or �fix bonus� � which wasincluded in Auchan�s annual contractswith about three-quarters of its non-food suppliers. The Authorityconcluded that the discount, regardlessof its name, amounted to a unilaterallyimposed listing fee. (ILO, 11.06.15)

Nestlé to Answer AllegationsThe Competition Commission of

Pakistan sent the local unit of theworld�s biggest food company astatement of objections for allegedlyhiking Lactogen and Cerelac priceswithout justification.The regulator said that its

enforcement action is particularlysignificant as both are products usedfor infants and that �parents aresignificantly affected by pricefluctuations�.The move follows a commission

investigation of Nestle, which began inMarch. It suspects the Swiss companyabused its dominance in two relevantdomestic markets: Pakistan-producedinfant formula and follow-onmilk, andpackaged cereal-based baby products.

(GCR, 05.06.15)

Plugging Plug on Electricity PricesBulgaria�s Commission on

Protection of Competition has finedthree electricity distribution companiesfor allegedly exploiting their dominantmarket positions by charging excessive

prices to cable operators to use theirlow-voltage grid.CEZ Distribution Bulgaria, JSC

EnergyProNetworks andEVNBulgariaElectricity Distribution all imposeddiscriminatory and arbitrary prices oncable operators that used the lowvoltage network to transmit electricity,distorting competition and harmingconsumers.The enforcer brought separate

cases against the three foreign-owned,privately run electricity distributors,who each hold a regional monopolyover electricity grids in three ofBulgaria�s six geographical �planning�regions. The investigation beganfollowing a complaint fromBulgaria�sAssociation of Cable Operators.

(GCR, 05.06.15)

Amazon to Hamper InnovationTheEU�sAntitrust ChiefMargrethe

Vestager has warned Amazon againstusing its strong position to hurt itscompetitors, days after launching aninvestigation into the company�s e-books distribution practices.The probewill initially focus on the

largest markets for e-books in theEuropean Economic Area, namely e-books in English and German. Thecompany is currently the largestdistributor of e-books in Europe.Vestager said that Amazon should

not use its strong position to close thedoor behind it and prevent companieswith new ideas from contesting themarket. Thatwould hamper innovation,reduce investment and ultimatelyreduce choice for the final consumer.

(www.cbronline.com, 16.06.15)

EU Objects Abuse ofPower by Gazprom

The European Union (EU) Competition CommissionerMargrethe Vestager announced that the European

Commission has sent a statement of objections to Gazprom,alleging the Russian energy company abused its dominancein eastern Europe.

The Commission suspects Gazprom of partitioningnational gas markets in Eastern Europe � where it is dominantif not the monopolist � with the aim of preventing cross-border trade. This has the effect of inflating prices, theCommission explains.

The Russian government is the majority shareholder in Gazprom and the SO comes against the backdrop ofdeteriorating relations between the EU and Russia over the crisis in Ukraine and Crimea. (GCR, 22.04.15)

www.publics.bg

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�Give me a place to stand on, and Iwill move the Earth.� So

Archimedes explained the power oflevers in the physical world. The digitalrealm has levers of its own: �platforms�,the technological fulcrums uponwhichmany businesses can be built. Controlof an important platform is a source ofeconomic power. Microsoft used thepower of its Windows operating-system platform to shape the destinyof an entire industry � and to capturean outsized share of its profits. Someworry that Google�s dominance of theweb-search business lets it perform asimilar trick today.

Europe is taking no chances. OnApril15, 2015 theEuropeanCommission senta �statement of objections�, anindictment of sorts, toGoogle, accusingit of abusing its dominant position inthe internet-searchmarket and revivingan antitrust case that has dragged onfor five years. A day earlier GüntherOettinger, theEuropeanUnion�sDigitalCommissioner, gave a speech arguingthat it was necessary to �replacetoday�s web search engines, operatingsystems and social networks.�

InEurope, Google handles more than90 percet of web searches, making itthe place to be for many advertisers.Whether it has harmed consumers byusing its dominant platform to steerthem away from rival services andtowards its own, such as GoogleShopping, is at the heart of the case. Incontrast to the previous competitioncommissioner, Joaquín Almunia, thenew one, Margrethe Vestager, clearlythinks it has.

Instead of getting bogged down innegotiations with Google over howexactly it should redesign its search-results pages to give rival servicesmore prominence, Vestager wants thecase to set broad principles of fairnessthat Google would have to adhere to.For now she has narrowed the scope

of the case to the firm�s shopping service: if the outcome is that Google has toabide by certain principles over this matter, these could then be applied in others,such as whether Google makes it hard for advertisers to take their data to otherplatforms. She has also launched a separate formal investigation of Android,Google�s mobile operating system, amid allegations that it forces device-makersto give its smartphone apps preferential treatment.

In the search case the statement of objections may not become public for manymonths, and even then it will only appear in a redacted form.But an inadvertentlyleaked report fromAmerica�s FederalTradeCommission,which ultimately decidednot to sue Google, suggests the firm has a case to answer: it says that Googlepurposely demoted rival sites. But the statement is not a final decision.And if theEuropean Commission limits what Google can do, and especially if it imposes afine (it can levy up to 10 percent of annual revenues, or US$6.6bn), the case maygo to court and drag on for years.

The commission�s move against Google is not overtly political and protectionist.However, it is part of a broader trend. As Oettinger�s speech shows, Europe isbelatedly discovering its failure to develop many of the platforms underpinningthe online economy.Much of the world�s digital territory has in effect been cededtoAmerica without a fight.

The big danger, Oettinger warned, is that as the world relies ever more onplatforms operated by Google and otherAmerican firms, theymay be able to

repeat this trick in areas that have hitherto been Europe�s forte: fashion, energyand luxury vehicles, for instance.

That worry is understandable. But rather than trying to rein in American firms,European politicians should focus on fixing what is holding back the old world�smost promising platforms: the lack of a common digital market. Today only 15percent of consumers shop online across borders within the EU. To set up Europe-wide operations, an e-commerce firm has to jump through numerous bureaucratichoops, from tax rules to labour laws, in each country. If Europe wants to beAmerica�s equal in the creation of new technological platforms, it needs torecognise the importance of scale. America, with its large and open domesticmarket, has it. Europe does not.

Nothing to Stand On

� The news item appeared in The Economist on April 18, 2015

Europe is right to worry that it lacksbig digital platforms. But reining inGoogle is no solution

The

Econom

icTimes

6No.2, 2015

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MICRO ISSUES

Procter & Gamble in Dirty DealingsThe Greek Competition

Commission finedProcter&Gamble foroffering rebates to major retailers ofbaby diapers in exchange for a fixedamount of shelf space.The decision was made by a 3-2

majority of commissioners. XenophonPaparrigopoulos, at PotamitisVekris inAthens, who acted for Procter &Gamble, said that there is �extensive andstrong� dissent from the two no votes,which includes the Vice President ofthe Commission.Sources opined that the two

commissioners voted against the finesbecause the case concerned rebatesrelating to a portfolio of differentgoods, rather than one specificproduct. There is no set legal precedentfor the authority to rely on in thisrespect, the source adds.

(GCR, 29.04.15)

Hospital Bid Riggers PunishedNorway�s Competition Authority

(NCA) fined an alleged cartel for bidrigging and price fixing, after itsmembers abused an agreement with apublic hospital that gave thecompanies exclusive bidding rights onelectrical service contracts.Norwegian companies Arro,

Caverion and Pettersen declined to bid

against each other on nine separatetenders, ensuring they won contractsfrom Vestre Viken Hospital Trust incentral Norway. The hospital acceptedthe artificially inflated bids, believingthem to be competitive.ChristineMeyer, Director General,

NCA stated that secret collusion isdifficult to detect becausecommunication is often oral, and theparticipants are careful in hiding theirtracks. The companies started byexchanging emails, but quickly becamemore sophisticated, exchanging USBdata sticks in car parks. (GCR, 30.04.15)

Penalty on AutoManufacturersThe Competition Commission of

Pakistan (CCP) imposed a penalty onPakistan Automobile ManufacturersAuthorised Dealers Association(PAMADA) for indulging in collusiveprice-fixing in the relevant markets forautomobile body repair and paint jobs,and genuine automobile spare parts, aswell as restricting competition in themarket for trained and experiencedtechnical and sales staff in theautomobile sector.It was found that PAMADA had

taken decisions to fix the rates forautomobile body repairs and paint jobs,which were circulated by PAMADAtoall its members for implementation.In relation to the market for trained

and experienced sales and technical

staff, CCPobserved that PAMADAhasimposed a policy,whereby, itsmembersare to seek no-objection certificate fromprevious employer before hiring aformer employee of a fellowautomobiledealer. (CCP, 14.04.15)

Mercedes-Benz to Pay FinesGerman premium car maker

Mercedes-Benzwas finedUS$56.49mnfor price fixing, the highest antitrustfine slapped on automakers by Chinaso far. Mercedes-Benz reachedagreements with local dealers toenforce minimum prices for thecompany�s E Class and S Class sedansas well as some auto parts.Mercedes-Benz played a �leading

role� in the pricingmonopoly and gavewarnings or reduced support to dealersif they refused to cooperate inenforcing theminimumprices.Mercedes-Benz dealers in Nanjing,

Wuxi, and Suzhou, three cities inJiangsu,were also fined for price fixing,the provincial price bureau said.Mercedes-Benz said that it fully

respects and accepts the findings andpunishment decision, and will complyimmediately. At the same time, it hasdeveloped a series of targeted reformmeasures guided by the lawenforcement authorities. (FT, 24.04.15)

GSK and Sanofi SlammedIndia�s competition enforcer has

ordered pharmaceutical companiesGlaxoSmithKline and Sanofi to payUS$8.9mn fine for colluding to raise theprice of vaccine bids, despite strongobjections from the defendants thatthere were legitimate, independentbusiness reasons for boostingprices.India�s Competition Commission

imposed the fines, after finding thatGSK and Sanofi manipulated a 2011tender by India�s government toprovide meningitis vaccines to IndianMuslimsmaking theHajj pilgrimage toMecca.An Indian subsidiary of UK-

headquartered GSKmust pay 8.4mn,the lion�s share of the fine. Frenchpharmaceutical giant Sanofi�s Indianoperations will pay the outstanding418,000, according to an order.

(GCR, 08.06.15)

CARTELS

Alibaba Fined for Pricing Violations

Chinese e-commerce company,Alibaba, has been slappedwithUS$129,000fine by the price bureau in Zhejiang province for violations by third-party

sellers in promotions on its e-commerce websites.Pricing is handled by

third parties and not directlybyAlibaba, the group stated,but it would in any caseenforce price rules andregulations with sellers inorder to protect consumers.

The 27,000 vendors thatfeatured on Alibaba�sSingles� Day sites hope toboost sales and increasecustomers, but many have

complained that discounts and rivalry undercut the benefits.Alibaba does have difficulties from time to time regulating its e-commerce

empire, that now includes Taobo, Tmall, Juhuasuan and the original serviceat Alibaba.com. (BS, 18.04.15)

www.e-commercefacts.com

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Major Banks Hit with Record Fines

� Compiled from various sources (Newspapers and Internet)

What were the fines?Barclays has agreed a total of £1.53bn in fines with both

US and UK authorities including a record £284.4mn to theUK�s Financial ConductAuthority (FCA) the group pleadedguilty to a violation of anti-trust law in the US.Royal Bank of Scotland will pay £430mn to US

authorities. It comes on top of a £399mnpenalty inNovember2014, including £217mn by the FCA and £186mn by theUSCommodity Futures Trading Commission.UBS was also included in the US DoJ�s investigation.

The Swiss bankwas finedUS$545mn, whichwill be paid tothe DoJ and the Federal Reserve (Fed). UBS was able toavoid criminal charges for forex rigging because it receivedconditional immunity for reporting misconduct to DoJ andpromising full cooperation in the investigation.JPMorgan announced settlements with the USDoJ and

Fed relating to the Firm�s foreign exchange trading business.Under the DoJ resolution, JPMorgan will plead guilty to asingle antitrust violation and pay a fine ofUS$550mn.Underthe resolution with the Fed, the Firm will pay a fine ofUS$342mn and has agreed to the entry of a Consent Order.Citicorpwill payUS$925mn, the highest criminal fine, as

well as US$342mn to the US Fed. Its traders participated inthe conspiracy from as early as December 2007 until at leastJanuary 2013, according to the plea agreement. Traders atCiti were part of a group known as �The Cartel� or �TheMafia,� participating in almost daily conversations in anexclusive chat room and coordinating trades and otherwisefixing rates.Bank of America has been fined US$30mn by US

regulators, who accused the bank of violating consumerprotections for members of the military in collecting debts.The regulators say the bank violated the law protectingservice members by taking improper legal action againstmilitary customers for delinquent credit card accounts andoverdrafts. The improper practices allegedly occurred fromJanuary 2006 to the present.

Deutsche Bank, Germany�s largest lender, was finedUS$2.5bn by US and British authorities. It was ordered it tofire seven employees in the eighth global settlement ofalleged benchmark interest rate rigging. The penalty � thebiggest in a seven-year investigation � has shredded thebanking industry�s reputation.HSBC has been ordered to pay a record £28m and been

given a final warning by the Geneva authorities for�organisational deficiencies� which allowed moneylaundering to take place in the bank�s Swiss subsidiary. Thesettlement means the Swiss will not prosecute HSBC orpublish the findings of their investigation into allegedaggravated money laundering.Lloyds is reportedly due to be fined a record sum formis-

handling PPI complaints, as the bill for the scandal continuesto rise. The fine would be the latest blow to the bank, whichhas already paid billions to settle mis-selling claims, andcould open the door for thousands of historic cases beingreopened. The FCA is preparing to fine Lloyds, which alsoowns Halifax and Bank of Scotland.

Arepenaltiesenough topreventbanks�badbehaviour?Concerns were raised whether fines and settlements are

effective deterrents to fraudulent behaviour. Five banks willpay the US DoJ and the Fed fines, yet they could continueto do business as usual, thanks to settlement terms andwaivers against stiffer actions fromDoJ and SEC.The right to pursue a banking business is �a privilege�

that is supposed to be limited to honest bankers. The rulewith large banks is that the SEC always waives � it does notmatter how bad the violations are. This is a serial recidivism.The real problem is the culture inside banks. Although

banks are the least trusted institutions in theUS,most peoplewho work in banks are good and honest people. It seemsthat a minority of people within banks contribute to the poorculture.

Next page: �Global Banks Punished for Manipulation�by John M Connor

Five global banking giants, including British banks� Barclays and Royal Bank of Scotland, have beenslapped with record fines totalling US$5.7bn(£3.7bn, 5.1bn) for rigging foreign exchangemarkets. Barclays, RBS, Citigroup and JP Morganall submitted guilty pleas to the US Department ofJustice (DoJ). UBS was granted immunity in thecurrent probe for being the first to cooperate withantitrust investigators, although it did plead guiltyto charges related to interest-rate manipulation. Thebanks were accused of fixing benchmark foreignexchange rates by colluding in online chat rooms tomake transactions simultaneously minutes beforerates were set.

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In the past six months, seven global banks have beenpenalised US$10.3bn for price fixing, bid rigging, andjointly manipulating perhaps the largest financial market inthe world. And more penalties are on the way.

FX trading is an important source of revenues for globalbanks. Such revenues amounted to US$12 to US$22bnannually for the ten largest banks during 2008-2014.Becausefive or six large banks came to control more than half of allthe world�s FX trading, collusion became feasible.

In early 2013, the large Swiss bankUBSAG sought antitrustleniency fromUS,UK, and other competition authorities forits illegal FX schemes. In June 2013, theUK�s newFinancialConductAuthority opened a formal investigation, followedlater that year by Swiss, EU, German, and US governmentagencies. In most of those jurisdictions, criminal probes areopen. After internal investigations by leading banks, byFebruary 2014 some 21 of their FX traders and supervisorshad been fired. It seems very likely that large numbers of FXtraders and their supervisors will be criminally charged forfraud and antitrust violations.

These investigations moved very fast, given thecomplexities of international cooperation among the

prosecutors. OnNovember 12, 2014, government regulatorsin the US, UK, and Switzerland simultaneously announcedthe imposition of 11 civil penalties totalling US$4.33bn onsix banks: Citicorp, JPMorgan,Bank ofAmerica,UBS,RBS,andHBSC. The collusion endured from 2007 to 2013.

Global Banks Punished for ManipulationJohnM. Connor*

Five of the world�s biggest banks, JPMorganChase, Citi, Barclays, the Royal Bank of Scotland,and UBS, have agreed to pay US$5.6bn in finesfor manipulating the foreign exchange market.This comes at the end of a 19-monthinvestigation by the US DoJ

We now know that Barclays Bank refused to accept civilpenalties in 2014, a decision it must now regret. Behind thescenes, the same banks were negotiating furiously with theUS DoJ over whether to agree to plead guilty to the felonycrime of price-fixing conspiracy and accept huge fines, aswell as additional civil penalties fromothermarket regulators.

On May 20, 2015, the DoJ and four other governmentunits announced a second wave of harsher penalties

onmost of the same six banks. This time, penalties amountedto US$5.97bn. Five of the six banks will plead criminallyguilty, including Citicorp, whichmust pay a US$925mnUSfine, by far the largest in world antitrust history. For the firsttime, the Federal Reserve Bank of the US imposed six civilpenalties that totalled US$1.85bn for the banks� �unsafe andunsound practices� in FX trading.

The UK�s Financial Conduct Authority also imposed itslargest fine ever - on Barclays Bank. Indeed, Barclaysbecomes theworld record-holder in terms of total price-fixingpenalties. It now owesUS$2.38bn to US andUK regulators.

The perpetrators of the FX cartel face a certain future ofunrelenting demands for ever greater penalties. TheGermanfinancial regulator, the South African CompetitionCommission, and the EC have not yet completed theirinvestigations of FXmarket manipulation.

The EC has a history of imposing antitrust fines that arewell above US fines for the same cartel violations.

BecauseDoJ fineswereUS$2.8bnand totalUS fines exceededUS$9.7bn, the EU�s forthcoming finesmaywell fall into theUS$3.0 toUS$5.0bn range.

In addition, settlements of the banks with civil damagessuits filed in theUS typically exceed criminal fines by a largemargin. Settlements by private parties will very likely topUS$4.0bn.

In sum,monetary penalties for FXmarketmanipulation couldeasily surpass US$15 to US$20bn in a few years. Is thisshockingly large figure likely to deter future violations ofcompetition laws by big banks?

Sadly, the history of the banking and finance industries offersno solace. Big banks in many nations have cartelised atleast 65markets in the past 20 years, and the number of suchmarkets has accelerated in the past five years. So far, theUS$31bn in antitrust penalties has failed to quash cartelformation in the banking sector. Either the lure of excessiveprofits is too large, or the chances of being caught andseverely punished is too remote in banking.

* Expert Economist, OnPoint Analytics, Inc. Abridged from an article that appeared in The Financial Express, Dhaka onMay 24, 2015and The Hindu Business Line on June 24, 2015

9No.2, 2015

EGULETTERR

RESTRUCTURINGOrange Acquires JazztelThe EC has approved the

acquisition of Jazztel by Orange,subject to the full implementation of anumber of commitments by the latterto ensure effective competition on thefixed internet access services markets.The Commission had concerns that

the takeover could have led to higherprices for fixed internet access servicesfor Spanish consumers. The vastmajority of fixed internet contracts inSpain are bundled with a mobilecomponent so that a new entrant willneed access to a mobile network tocompete effectively.Orange has also committed to grant

to the purchaser of the FTTH networkwholesale access to its mobile networkincluding 4G services, unless thepurchaser already has access to amobile network.

(www.broadbandtvnews.com, 20.05.15)

Shell-BG Pact AgreedRoyal Dutch Shell and BG Group

announced that US regulators officiallyapproved their proposed US$70bnmerger. The energy companies said theFederal Trade Commission waived theantitrust waiting period, effectivelyclearing the only hurdle to the deal inthe US.The proposal still requires approval

from other nations in which BGoperates, including China, Brazil,Australia and the EU. Shell and BG inApril announced what would be thethird-largest oil and gas industrytransaction in history.The global collapse in oil prices

provided an opportunity for largercompanies like Shell to acquireadditional assets. The companies hopeto complete the merger by early 2016.

(www.chem.info, 16.06.15)

CVS Health to Hold OmnicareThe US-based CVS Health

Corporationagreed toacquireOmnicare,the leading provider of pharmacyservices to long term care facilities, fora total enterprise value of approximatelyUS$12.7bn, which includesapproximatelyUS$2.3bn in debt.With the acquisition of Omnicare,

CVSHealthwill significantly expand itsability to dispense prescriptions inassisted living and long term care

facilities, serving the senior patientpopulation.CVS Health will also expand its

presence in the rapidly growingspecialty pharmacy business.Omnicare�s complementary specialtypharmacyplatformandclinical expertisewill augment CVSHealth�s capabilitiesand enable CVS Health to continue toprovide innovative and cost-effectivesolutions to patients and payors.

(BS, 22.05.15)

Food Distributor Merger OffAmerger between food distributors

Sysco and US Foods has collapsed justdays after the Federal TradeCommission (FTC) won a preliminaryinjunction blocking the deal.Sysco�s US$3.5bn bid to buy US

Foods is off after US District CourtJudge Amit Mehta granted the FTC�srequest to put the brakes on the deal,citing concerns over how itwould affectthe restaurant business andconsumers.Sysco will be required to pay

US$300mn in so-called break-up feesto US Foods. It is not uncommon forcompanies to put such fees into theirtentative merger deals to ensure thereare incentives to finalise a transaction.

(www.usatoday.com, 29.06.15)

AT&T DirecTV Nears Regulatory OKAT&T and DirecTV are poised to

combine to become America�s largestpaid TV provider as reports indicateregulators will approve the US$48.5bnmerger, which aims to increase video

online services but would also inspiremore large deals and decrease optionsfor consumers.The DoJ is ready to announce that

the deal has cleared its review of anyantitrust concerns. The FederalCommunications Commission, whichscreens deals to determine if they arein the public interest of consumers, isalso preparing to approve the deal.To address public interest concerns

about the deal the combined firmwouldhave to agree to conditions that itwould observe the commission�s netneutrality rules, expand access to ruralbroadband, and agree to maintainaccess to diverse programming,

(www.usnews.com, 02.07.15)

GE-Electrolux Deal ChallengedThe US DoJ will seek to stop

Electrolux proposed acquisition of theappliances business ofGeneral Electric(GE Appliances). Electrolux contestsvigorously this effort by the DoJ tooppose the transaction. The review ofthe proposed acquisition will nowcontinue in a court procedure.Electrolux entered into an

agreement to acquire GEAppliances, awell-known manufacturer of kitchenand laundry products in the US, for acash consideration of US$3.3bn.Electrolux does not agree with the

DoJ�s assessment that the acquisitionwill harm competition. It has alreadyobtained regulatory approval in Brazil,Canada and Ecuador. The transactionis subject to filing requirements in afewmore countries in LatinAmerica.

(www.evertiq.com, 02.07.15)

Merck�s Sigma-Aldrich Agreement

The EC has given its approval for Merck�s planned acquisition of US-basedlife science company Sigma-Aldrich. The EU clearance, which is subject

to certain conditions, follows the recent antitrust approvals in Japan and bythe Chinese Ministry of Commerce. In addition, Merck has already securedantitrust clearance from the US,Taiwan, South Africa, Russia, Serbiaand Ukraine.

In September 2014, Merck hadsigned a definitive agreement toacquire Sigma-Aldrich for US$17bn,establishing the company as one ofthe leading players in the US$130bnglobal life science industry.

The acquisition is a key elementin Merck�s �Fit for 2018� transformation and growth programme aimed atstrengthening the company�s three growth platforms, healthcare. (BS, 16.06.15)

www.abidnessetc.com

10No.2, 2015

EGULETTERR

RESTRUCTURING

LinkedIn Seals Education AccordLinkedIn is to acquire the online

learning business Lynda.com for aboutUS$1.5bn, as the social networkexpands offerings for its audience ofprofessional users.Lynda.com, a California-based

company, has created hundreds ofthousands of video tutorials inmultiplelanguages, helping people to learn�software, technology, creative andbusiness skills to achieve personal andprofessional goals�. Users pay asubscription of up to US$375 a year togain access to online courses that havebeen created by more than 1,000authors.The companies believe strongly

that the growing skills gap is one ofthe biggest challenges to the future ofthe global economy. Lynda�s courseswill be integratedwith theLinkedIn site.

(FT, 09.04.15)

Western Union Buys MoneyGramWesternUnion Co. is in early-stage

talks to acquire smaller rivalMoneyGram International Inc., peoplewith knowledge of the matter said, asboth companies contend with stiffcompetition from upstart money-transfer companies.WesternUnion andMoneyGram�

the two dominant players in theremittance industry� are facing pricecompetition as companies includingWorldRemit, TransferWise and Wal-

Mart Stores Inc. give their customersnew options for moving cash.MoneyGram reported a loss of

US$72mn in the first quarter, comparedwith a profit of US$39mn in the year-earlier period. (Mint, 07.05.15)

Charter to Gain Bright HouseCharter Communications Inc.

agreed to buy cable operator BrightHouseNetworksLLC forUS$10.4bn incash and stock, the latest deal in arapidly consolidating pay-televisionindustry.Bright House is the sixth-largest

cable operator in the US and servesapproximately 2 million videocustomers in central Florida, as well asAlabama, Indiana, Michigan andCalifornia.Charter, currently the country�s

fourth-largest cable operator wouldbecome the second-largest cableoperator after the deal. Bright HouseNetworks provides Charter withimportant operating, financial and taxbenefits, as well as strategic flexibility.

(WSJ, 01.04.15)

BlaBlaCar Buys Corpooling RivalsBlaBlaCar is buying its strongest

competitor in Europe as the online ride-sharing company looks to consolidateits position on its home turf whilecontinuing to expand worldwide.The French company announced

deals to buy the German group

Carpooling.com, its main Europeanrival, as well as Hungary-basedAutoHop. The combined entity willmakeBlaBlaCar the leading ride-sharingservice in Europe, where it will controlmore than a 90 percent share of largemarkets such as Germany, Spain andItaly.It will also create one of theworld�s

biggest ride-sharing services with 20musers across 18 markets. BlaBlaCaroperates as an online marketplace,pairing motorists with passengersneeding a lift between cities. It is oneof the companies at the vanguard ofthe �sharing economy�, whichencourage individuals to offer servicesto others. (FT, 15.04.15)

Intel Agrees to Purchase AlteraIntel agreed to buy Altera for

US$16.7bn as the world�s biggestchipmaker seeks tomake up for slowingdemand from the PC industry byexpanding its line-up of higher-marginchips used in data centres.By combiningwithAltera, Intel will

be able to bundle its processing chipswith the smaller company�sprogrammable chips, which are used,among other things, to speed up Web-searches.The integration of Altera�s chips

with Intel�s will create a new class ofproducts giving customers a significantimprovement in performance, lowercosts and a lot more flexibility. Thetransaction is the third big one in thehighly fragmented chip industry in2015. (Reuters, 01.06.15)

Noble�s Rosetta Treaty ReopensNoble Energy, the US oil and gas

group, is to buy Rosetta Resources forabout US$3.7bn including debt, in thefirst acquisition of a significantUS shaleoil producer since the fall in crudeprices in the second half of 2014.The agreed deal is a sign of how

financially weaker shale oil producersunwilling or unable to finance enoughdrilling to keep their production fromfalling can be compelled to accept a bidas the best option for investors.The all-share deal gives Noble its

first shale positions in the Eagle Fordand the Permian Basin, both in Texasand two of the heartlands of the US oilboom. (FT, 12.05.15)

Vodacom-Neotel Gets Green Light

South Africa�s Competition Commission has recommended to theCompetition Tribunal that a merger worth 7 billion rand (US$575.95mn)

betweenmobile operatorVodacomand fixed line operatorNeotel be approved.The antitrust authority also wants Vodacom, who would control Neotel

after themerger anduseit to roll out high-speedfibre and next-generation mobileservices, to commit 10billion rand ininfrastructure spendingwithin the next fiveyears and guarantee areturn for Neotel�sblack empowermentshareholders.

Vodacom would also not be allowed to use Neotel�s spectrum to sellmobile services to any of its customers for a period of two years.

(Reuters, 30.06.15)

www.sabc.co.za

11No.2, 2015

EGULETTERR

RESTRUCTURING

Mergers among telecoms-equipmentmakers have a terrible

record. In 2006Alcatel, a troubledFrenchtelecoms conglomerate, was pressed tomerge with Lucent Technologies, adescendant of America�s telecomscolossus, AT&T. The messy resultburned cash for eight years and causedits share price to tumble by almost 75percent.

Nokia�s experience of togetherness washardly happier. In 2007 the Finnish firmformed a joint venture with Siemenswhich staggered on until Nokia boughtout its German partner in 2013. So newsthat Nokia and Alcatel-Lucent hadagreed to tie the knot, though notunexpected, caused eyeballs to roll.

It makes sense nonetheless. Nokia isback in profit and Alcatel-Lucent is onits way there, but each firm is too smallon its own to compete in the globaltelecoms-equipmentmarket. This is nowdominated by two firms � Ericsson ofSweden and Huawei of China.

Nokia�s and Alcatel-Lucent�scombined turnover last year was

26bn (US$34.5bn),more thanEricsson�sSKr228bn (US$33bn). But themerger is�primarily about scope, not scale,� saysRisto Siilasmaa, the Chairman ofNokia.The two firms are complementary.

Alcatel-Lucent is strong in internetrouters, for example, but its wirelessbusiness is small. Nokia�s wireless-networks business, by contrast, isalmost too dominant: it now accountsfor 88 percent of revenues because theFinnish firm sold its handset businessto Microsoft in 2014.Alcatel-Lucent isstronger inAmerica, thanks to its historicroots, while Nokia is somewhat moreEuro-centric. They could help each othermake a better fist of things in China.

Even so, there is much that could, and on past experience may well, gowrong. For a start, cross-border mergers frequently lead to culture clashes

� and both Alcatel and Nokia are already coping with some queasy culturalmixes from their earlier mergers. Michel Combes, the former�s chief executive,argues that both companies are thoroughly international, and Nokia now hasmore French heads of business lines than Alcatel-Lucent. However, 900m-worth of operational synergies must be found by the end of 2019. And BengtNordstromofNorthstream, a consulting firm,worries that it will take cost-cuttingto achieve these, and that this will make cohabitation trickier.

This is no merger of equals. Nokia is buying Alcatel in a straight exchange of0.55 �newNokia�shares for one inAlcatel-Lucent. Nokia�s shareholders will endup with 66 percent of the new company, and its chairman and chief executivewill assume the same positions in the combined group. Its brand will be Nokiaand its headquarters in Finland. Yet the French government, which on pastprotectionist form would have been expected to kick up rough, has given thedeal awarmwelcome.

That is partly because Nokia has promised not to cut any more jobs thanAlcatel-Lucent was already planning to, under the recovery plan it had

been carrying out before the merger was agreed. Indeed it has pledged to createa further 500 research jobs in France, and to finance digital and telecomsinnovation. It is also, no doubt, becauseAlcatel-Lucent has had its back to thewall for so long that it is hard to conceive of any better fate for it. Most of all itreflects the French government�s ardent belief that Europe needs more digitalchampions on a scale to take on the world, and win.

Still, it is strange that two weeks ago Emmanuel Macron, France�s economyminister, intervened to prevent Orange, its biggest telecoms firm, from sellingDailymotion, a video-hosting site, to a Hong Kong buyer, prompting a rivaloffer fromVivendi, a French firm, instead. If Dailymotion is a strategic nationalasset it is hard to seewhyAlcatel, a stalwart of France�s blue-chip CAC-40 indexuntil its recent decline, is not.

Engaged Tone

� The news item appeared in The Economist, on April 18, 2015

www.corpcounsel.com

The Nokia-Alcatel merger represents the triumph of hope over experience

www..bidnessetc.com

12No.2, 2015

EGULETTERR

INVESTMENT & DISINVESTMENT

Asia Drives Investment Surge by Emerging EconomiesShawn Donnan*

Foreign direct investment by emerging economies surgedalmost a third last year as companies sought

opportunities abroad to make up for slowing domesticgrowth, according to new UN figures.

The data highlight one of the big developing trends in theglobal economy?

Once a target for multinational companies eager to investand reap the benefits of their rapid growth, emergingeconomies are becoming rivals to the US and Europe as asource of investment.

The flow of funds from emerging economies hit a record$US484bn in 2014, an increase of 30 per cent on the yearbefore, according to figures compiled by the Geneva-basedUNConference onTrade and Development (UNCTAD).

That surge was driven almost entirely by Asian investors, with developingAsia accounting for $US440bn in

outbound investment in 2014 and overtakingNorthAmericaand Europe as the world�s biggest regional source of foreigndirect investment.

Behind that is a big shift in China in particular, said JamesZhan, the Head of Investment for UNCTAD.

China was second only to the US in the national leaguetables for foreign direct investment as Hong Kong and themainland accounted for $US266bn in outbound funds in2014.

That status is a reflection of a remarkable shift in China�splace in the world. A decade ago, mainland China saw

18 timesmore inbound than outbound investment, said Zhanbut in the year 2014, for the first time, outbound investmentovertook that coming into China.

* World Trade Editor, Financial Times. The article appeared in The Financial Times, on May 18, 2015

Zhan said the importance of China as a source of investmentwas only likely to grow. The advent of a China-led AsianInfrastructure Investment Bank and Beijing�s plans topromote a new Silk Road through central Asia to Europewould inevitably bring more investment by companies.

�Eventually the investment will by carved out by firms,� hesaid.

But slowing growth at home was also acting as an incentive for Chinese companies to look abroad, Zhan said

and the same was true for investors from other emergingeconomies such as Russia. Despite the ratcheting up ofsanctions and the crisis in Ukraine, Russian companiesinvested $US56bn offshore in 2014, the same as France.

Investments by multinational companies in developedeconomies such as the EU, US and Japan were flat last yearat $US792bn. While there had been �modest increases� ininvestment by Europeanand US companies,offshore bets byJapanese companies fell16 per cent in 2014,according to the UN.

The composition ofinvestments in 2014wasalso telling. More thanhalf of the investmentsmade in 2014 bycompanies fromdeveloping economieswere in equity andamounted to newprojects or acquisitions.

However, up to 80 percent of the FDI outflows from companies based in developed countries were in the form

of reinvested earnings and the result of record cash reservesheld by their foreign subsidiaries, according to the UNfigures.

There are signs that investors� confidence is increasing, Zhansaid.Asurvey byMcKinsey, the consultants, due nextmonthalongside UNCTAD�s global investment report, had foundrising sentiment among companies in even developedeconomies, he said.

Once a target for

multinational companies

eager to invest and reap

the benefits of their rapid

growth, emerging

economies are

becoming rivals to the

US and Europe as a

source of investment

www.media.economist.com

13No.2, 2015

EGULETTERR

CORPORATE ISSUESUS Tech Giants QuestionedBrussels has given notice that it will

be scrutinising some of the large UStech groups to see if their practices areeither anticompetitive or too intrusiveon people�s right to privacy.The draft plan for a �digital single

market� says that theEUwill probe suchareas as how search results are affectedby paid advertising and whethercompanies like Netflix, Whatsapp andSkype are providing unfair competitionto traditional media and telecomscompanies.The fact that the companies

concerned are allAmerican is leading anumber of politicians in the US tocriticise the EU�s action as another formof trade protectionism. They point outthat it may not be coincidence thatEurope currently boasts precious fewsuch companies that have helped todisrupt markets with better onlinesolutions to people�s needs.

(BR, 30.04.15)

Cutting Corporate TaxIndonesia is considering cutting its

corporate tax rate to as low as 17.5percent from 25 percent to attract moreinvestment from companies that areoperating in the region.The corporate tax cut being

considered will bring it closer to itsneighbour, Singapore, which offers 17percent. The proposed tax cut, whichwill apply to all companies, may hurttax collection in the short term, but �in

the not so long term. Investment isneeded to drive economic growth.During his presidential campaign in

2014, President Joko Widodo hadpledged to increase tax collection to 16percent of gross domestic product fromabout 12 percent partly by crackingdown on tax avoidance. (Mint, 11.05.15)

Measures to Combat CorruptionTwo-thirds of defence companies

show little or no evidence of havingprogrammes to combat corruption,according to an extensive study of theindustry.DassaultAviation, a key partner for

Britain in the development ofunmanned fighter aircraft, is among theworst in disclosing what it does toprevent corrupt practices, saidTransparency International in itssecond anti-corruption.The two-year study measures the

transparency and quality of anti-corruption programmes in 163 defencecompanies around the world.The report also highlights growing

concern over a lack of transparencysurrounding so-called offsets, the sidedeals demanded by governments as acondition for awarding defencecontracts. (FT, 27.04.15)

Tobacco Firms to Pay for DamagesBritish American Tobacco, Philip

Morris International and JapanTobaccoInternational have been hit by a rulingon two class action lawsuits on behalf

of a million Canadian smokers whoclaimed they were not aware of thehealth risks.The companies were ordered to pay

CAD$15.6bn.All three companies havesaid that they will appeal the damagesaward. Such actions are likely to addimpetus to the continuing growth of e-cigarettes as an alternative that hasmany fewer health impacts.However, at the same time as such

alternatives are a major source ofgrowth in developed markets, tobaccocompanies continue to invest heavilyin markets where health concerns havenot yet come to the fore. (BBC, 02.06.15)

KPMG over BNY Mellon AuditThe UK�s accountancy watchdog

has launched an investigation intoKPMG�s audit of theBank ofNewYorkMellon, two months after the world�slargest global custody bank was hitwith a recordUKfine formixing its ownfunds with those of clients.The Financial Reporting Council

will probe thewayKPMGaudited clientmoney arrangements at the Bank ofNewYorkMellon London Branch anda subsidiary, Bank ofNewYorkMellonInternational Limited.BNY Mellon admitted violating

client asset rules over a five-yearperiod, from2007 to 2011.As the bank�sauditor,KPMGexaminedwhetherBNYMellon�s custody arrangementscomplied with UK client asset rules.

(FT, 24.06.15)

Nestle Accused for Food Contamination

The Indian government has filed for damages against Nestléafter fears of lead in the Maggi Noodles brand led to a ban on

the product by the Food Safety and Standards Authority of India(FSSAI).

Nestlé has said that its noodles which, although not traditionalto India, have become popular as a staple food by many Indians,are safe to eat. The FSSAI disagreed after tests of 29 samples showed15 with more lead than legal limits. It described the product as�unsafe and hazardous for human consumption.�

The company voluntarily recalled the noodles from sale hoursbefore the ban was implemented, but is seeking to engage theFSSAI on how lead tests are conducted. Such argument abouttechnicalities has fallen far short of reassuring consumers, however,and sales of Nestlé�s Maggi brand has suffered as a result. So far, other Nestlé brands such as Nescafé have escapedassociation.

Whilst Nestlé has been targeted for this action, the authorities are undertaking checks against other instantnoodle brands. (BR, 08.06.15)

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14No.2, 2015

EGULETTERR

SECTORAL REGULATION

Rail Competition GainsMomentumWhen a train used to reach a

European border, the driverwouldhaveto get off, walk to the rear carriage andchange the tail lights to meet therequirements of the country he wasentering.That practice has all but ended, a

casualty of the drive by the EuropeanUnion over the past two decades tocreate a single EU railway that not onlymakes it easier to cross borders but alsoseeks to ensure competition on linesby ending the monopolies of state-controlled train operators.This could provide big growth

opportunities for operators such asStagecoach, Go-Ahead and NationalExpress of the UK, and Keolis ofFrance. The EU passenger rail marketgenerates £200bn in annual revenue,according to Arriva, a subsidiary ofDeutsche Bahn, and the financial crisisincreasedmomentum in some countriesto open up their railways to privateoperators to secure savings in publicspending. (FT, 18.05.15)

Antitrust Guidelines for Auto SectorChina recently started drafting a set

of antitrust guidelines for the autosector, the first such rules devised fora specific industry. The antitrustauthority under China�s NationalDevelopment andReformCommission(NDRC) invited industry groups, suchas theChinaAssociation ofAutomobileManufacturers and the ChinaAutomobile DealersAssociation to themeeting.The NDRC�s decision to adopt

guidelines rather than other forms ofregulations would carry greaterauthority. The introduction of

The �natural gas market law�approved by amajority of almost two-thirds, aims to boost competition andtransparency in one of the mosttroubled sectors of Ukraine�srecession-battered and war-torneconomy.Described by one lawmaker as a

�moment of truth� demonstratingparliament�s determination to break thelongstanding hold of oligarchs overUkraine�s politics and economy, thenew law brings Ukraine�s gas marketinto line with the EU�s Third EnergyPackage, which aims to boostcompetition in the energy sector.

(FT, 10.04.15)

Plans for Digital Single MarketPlans to reverse the fragmentation

of internet shopping and other onlineservices have been unveiled by theEUexecutive, which called for a digitalsingle market in Europe coveringeverything from e-commerce tobroadband spectrum, courier andparcel delivery rates, and uniformtelecoms and copyright rules.Setting out an ambitious digital

strategy that will run into fierceresistance in some of the 28 EUcountries, the European CommissionVice-President, Andrus Ansip, saidEurope would be left behind if it didnot create a level playing field forinternet shoppers and firms.Expected to take years to even

partially realise, the proposals wouldalso boost digital services across theEU, which lags far behind the US.Currently, not a single market leaderamong internet providers in the EU isEuropean. (TG, 06.05.15)

guidelines takes less time and theNDRCwill hold the power to interpretthe rules.The introduction of guidelines on

fair competition practices, on the otherhand, is expected to help sort out theauto sector, which has developed basedon questionable practices, said ShenJinjun, head of the China AutomobileDealers Association.

(www.wantchinatimes.com, 02.07.15)

Broadband Policy ImplementedIn addition to its spectrum release

for the fourth-generation (4G) Long-Term Evolution (LTE) schedule inupcoming years, the NationalCommunicationsCommission (NCC)ofTaiwan has announced a parallel moveto improve broadband access availableto general users for fixed-line networks.Between 2015 and 2017, the NCC

plans to release by auction up to a totalof 360 megahertz (MHz) in the2,600MHz, 1,900MHz, 2,100MHz and850MHz frequency bands for mobilebroadband licenses. Existing 4G LTEoperators will soon face anotherspectrum competition in the thirdquarter of 2015.Meanwhile, the NCC has taken an

aggressive approach encouragingleading4GLTEoperatorswhich are alsoincumbents in the second-generation(2G) mobile phone market to transfer1,800MHz of licensed use from 2G to4G. (ILO, 15.04.15)

Gas Sector Opened to InvestorsUkraine�s Parliament approved a

law that intended to break monopoliesand lure badly needed investment intothe country�s lucrative but opaquenatural gas sector.

Air Carrier Liability: A Perspective

The Nigerian aviation industry has evolved from a means oftransportation into a vehicle of commerce with great benefits

to economic growth. In view of this pivotal role, ensuringaviation safety is paramount.

The need to provide adequate compensation for air travellersin the event of damage to their person or luggage � while alsopreventing excessive or spurious claims against aviationoperators�has led to thedevelopment of an international regime regulatingthe quantum of liability borne by air carriers in the event of

accidents and the consequent harm to passengers and their luggage.The regulations provided by the Civil Aviation Act aim to ensure that local aviation practice is in line with

international best practices. (ILO, 20.05.15)

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15No.2, 2015

EGULETTERR

SECTOR REGULATION

Mergers and acquisitions may involve vast sums ofmoney but they are as prone to fashion as anything

else. Indeed, when it comes to deals, it is often striking howwilling corporate bosses are to follow trends rather thanstep back and risk standing out from the herd.

The pharmaceuticals world is in the grip of two dealmakingcrazes. One involvesmanufacturers of generic and branded,but off-patent, remedies seeking efficiencies through cost-crunching deals with similar businesses.

The other is for big, research-led pharma groups to buysmaller innovative rivals.The idea is to restockpipelines with excitingnew biologicalcompounds that treatconditions such as cancer.Bidders hope that if theyget the right product andbring it smartly to market,they canmake a mint.

As one of the world�sbiggest, research-led

drug companies, GlaxoSmithKlinemight be expected to bein the thick of the action. Like other representatives of�Big Pharma�, it has struggled to justify its vast market capwith a big enough pipeline of drug discoveries. From beingthe world�s biggest drug company at the time of its mergerin 2000, it has dipped to number seven.

Its boss, Sir Andrew Witty, is, moreover, under pressure.Since he became chief executive in 2008, GSK�s total returnto shareholders is less than half that of the Standard &Poor�s 500 index. Some investors would quite like to seehim go. But underAndrew�s leadership, GSK is pursuing adifferent path. Instead of supplementing in-house researchwith bought-in ideas, he has been cutting projects andwithdrawn from one of the hottest new areas of drugdiscovery: anti-cancer therapies.

This is not because he thinks the drugs won�t work.Rather it is the economics of healthcare that GSK finds

challenging. The industry depends for much ofits revenues on markets in Europe and North America,selling to national health systems and private healthcarepayers.

These are markets with stagnating populations andincreasingly stretched health budgets. Many of theindustry�s profits come from selling at premium prices to asmall number of US consumers.Were this premium to erode,or the cost inflation that supports it to stagnate, theeconomics of drug discovery could unravel. Many of thedeals being concluded at multibillion premiumswouldmakelittle sense.

Instead SirAndrew is touting an alternative: this is to growGSK�s non-drug side, which includes vaccines andconsumer healthcare.

It was this desire, forinstance, that led the groupto swap its oncology drugbusiness last year for thevaccine operations ofNovartis, the Swiss druggiant. Sir Andrew�s bet isthat selling vaccines andconsumer products intoglobal healthcare marketswill offer faster and less riskygrowth than the crowded

and expensive market to sell costly drugs.

It is too soon to tell whether Sir Andrew is right about drugprices.While European buyers have been squeezing pharmacompanies, and President Barack Obama�s reforms havebrought a new cost consciousness to the US system, theAmerican premium has yet to crack.

There are, however, other things to like about his plan.FocusingGSK�s drug discovery efforts may help to deal

with one of the main disappointments of Big Pharma: thatlarger research departments tend to be less productive, notmore. Concentrating on vaccines doesn�t look such a badidea either: discovery costs are lower than drugs and thevaccine market is growing faster.

JohnMaynard Keynes once observed that in many walks oflife, it is �better for reputation to fail conventionally than tosucceed unconventionally�. Most bosses follow this dictumand it is rare for one to flout it � especially when others areavidly implementing the fashion of the day.Hopefully,GSK�sinvestors will be patient and give SirAndrew�s idiosyncraticstrategy time to play out.

GlaxoSmithKline Chief SeeksImmunity from Sector�s Herd Mentality

Jonathan Ford*

Sir Andrew Witty has withdrawn from anti-cancer therapies to grow non-drugs side

* Chief Leader Writer, Financial Times. Abridged from an article that appeared in The Financial Times, on May 11, 2015

Financial

Times

16No.2, 2015

EGULETTERR

FINANCIAL SECTOR REGULATIONCredit Risk in Banking SectorRisk in the US banking sector is

increasing because lenders are easingunderwriting standards for some auto,business, and commercial real-estateloans, the Office of the Comptroller ofthe Currency (OCC) said in its semi-annual report on emerging risks.The report, which focused on

lending data and regulators�observations from the second half of2014, said competition pushed banksto make more exceptions to theirlending and underwriting policies.�Bankers need to be cognizant of

the long-term implications of some ofthe risks they are taking,� said DarrinBenhart, theOCC�sDeputyComptrollerfor supervision risk management.Benhart said the comptroller�s office

does not see systemic risk from anyone of the lending categories, but if theeconomy slows down �any one of themwould be a contributor to a potentialbroader systemic issue.�In commercial real estate, banks are

facing competition not only from otherbanks but also from life insurers,private-equity firms, and others, theOCC said.As a result, banks are easing

underwriting standards, including byloans with options including interest-only payments for borrowers.

The OCC is monitoring otheremerging risks, such as potential lossesbanks could face from the oil and gasindustry, which is paring production inresponse to falling prices. (WSJ, 30.06.15)

Kenya 3rd Financial Sector in SSAKenya now has the third-largest

financial sector in sub-SaharanAfrica,the World Bank has said. The globalfinancier, however, says there is needfor further structural reforms to enablethe country achieve its truedevelopment potential.The bank�s country partnership

strategy for Kenya and thegovernment�s Vision 2030 identifyaccess to finance as critical toenhancing the prospects for growth,regional competitiveness and sharedprosperity.Consequently, theWorldBankGroup

boardof executive directors approved anInternational Development Associationcredit of US$37mn for the country�sfinancial sector support project tostrengthen the legal, regulatory andinstitutional environment.The initiative is aimed at helping

Kenya improve financial stability andincrease affordable and long-termfinancing.TheWorldBankwill continueto support efforts to increase financialaccess to improve the environment for

�Too-Big-to-Fail� Banking Problem

Regulators are worried that patchyapplication inEurope andbeyond

of new rules to solve the problem ofbanks that are �too big to fail� couldmake it harder to avoid a repeat ofthe mayhem that followed thecollapseof LehmanBrothers.

They point to likelyinconsistencies in howbanks will be treated underthe rules that are beingwritten, not only betweenEuropean authorities in andoutside the euro zone butalso in jurisdictions furtherafield such as the US.

Even if these problemscan be overcome, regulators also fearclearing houses that will increasinglyhandle deals in the US$630tnfinancial derivatives and swapsmarket

�resolution� mechanisms are beingintroduced for the restructuringor orderly winding down of acollapsing bank so that vital parts ofits business, such as customeraccounts and payments, could

continue operating.Banks are also being

forced to sell �bail-in�bonds to investors.Holders of the bondsagree to bear losses if thebank�s core capital fallsto a dangerously lowlevel during a crisis.Investors mightalternatively have their

bonds converted into shares in thebank, but the public should not becalled on to fund a rescue, as in thepast. (FE, 18.05.15)

private investment, which plays acritical role in Kenya�s development.(www.kenyathegoodnews.com, 04.05.15)

Code to End �Shocking� FeesRegulators in the United Arab

Emirates have published a new codeof conduct aimed at improvingstandards among financial servicesproviders. This comes amidwidespreadconcerns that expatriate investors inDubai and the UAE are being rippedoff by financial advisers.The new code published by the

Emirates Securities and CommoditiesAuthority calls on financial servicesproviders to uphold the highestprofessional and moral standards andto protect the interests of their clientsat all times.Many have been highly critical of

the fees payable on internationalbonds by investors in the UAE. Thesecan include initial charges of up to 8percent, annual �establishment�charges of 1.5 percent for the first fiveto 10 years, and opaque annual�investment� charges of up to 3 percent.Sam Instone, Chief Executive of

AES International, a wealth managerbased in the UAE, welcomed the code,which is based in part on the UKregulator�s Treating Customers Fairlyinitiative first published in 2006.

(FT, 26.04.15)

could become a new generation oftoo-big-to-fail institutions.

Policymakers around theworld arenow forcing banks to build up safetycushions that are big enough that theycould ride out a future crisis, or could

be allowed to fail without fear ofsetting off a systemic meltdown.

The policymakers are putting theirfaith in two measures. New

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FINANCIAL SECTOR REGULATION

Technology Will Free Customers from Broken BanksPhilip Augar*

* Non-Executive Director at TSB, a British Bank. Abridged from an article that appeared in The Financial Times, on March 31, 2015

The trouble with writing rules is that they can quickly beovertaken by technological change. In 1907, TheHague

Peace Conference solemnly prohibited the discharge ofmissiles from balloons; the first flight of amilitary aeroplanetook place a year later. In its attempt to oversee the moremundane battlefield of Britain�s banking market, thecountry�s antitrust regulator needs to avoid a similarmistake.

The Competition andMarketsAuthority (CMA) is the latestin a long line of competition and parliamentary inquiriesinto banking, beginningwith SirDonaldCruickshank�s reportfor the Treasury in 2000 and repeated at regular intervals.These reports make sorry reading. The problems they revealare persistent but the cure has been elusive.

They gather dust on the shelves for two reasons. First,government support for reform has faded in the face oflobbying from thosewith themost to lose. Second, proposedremedies have focused on the symptoms of a failing bankingmarket not the cause.

The symptoms are embedded and largely unchangingmarket shares, a uniformproduct offering based on bank

accounts that are provided free of charge so long as theholder remains in credit, and widespread customerdissatisfaction. Remedies such as capping market shares,introducing price controls and seeding challenger banks donot tackle the cause of the problem,which is that a formidablebarrier to entry prevents a competitive retail bankingmarketfrom taking root.

Actually, there are two barriers. One is the branch network,80 per cent of which is controlled by a handful of big banks.Historically, banks depended on branches to attract andretain customers � even now, new banks need branchesto compete with established players. But the switch tomobile and online banking has the potential to change thatas specialist digital banks such as Atom and paymentscompanies such as PayPal threaten to bypass the branch.

Online banking in the form currently offered by themajorbanks ismainly away for customers to pay bills, receive

funds and transfer money between accounts. But onlinelending is growing fast. At the moment, it mostly involvesrelatively small scale unsecured lending on credit cards andcurrent accounts. But it will not be long before internet-based players start competing on big-ticket items such asmortgages. Customers with good credit will increasinglyborrow online, and challenger banks will find the branchnetwork a much less formidable barrier to entry.

A �national grid� would end the big banks�control of infrastructure

The payments system is the means by which money ismoved around the banking system, and in the UK is ownedand controlled by the banks. Outsiders find its mechanismsexpensive and cumbersome. The regulator has vowed to�open up the payments industry, making it easier for a widerrange of parties to access payments systems�.

This apparently arcane change has the potential to openup banking. If it could be further allied to a �national

banking grid� then the conditions would exist for a morefluid and innovative bankingmarket. This grid could includefront-end technology, the payments system and accountswitching. It could centralise functions such as registersdealing with fraud and money laundering. It wouldadminister standard industry-wide terms and conditions,ending the confusion that currently arises from lengthy andincomprehensible missives from our banks.

The CMA is due to publish its provisional findings andpossible remedies for any failure of competition in retailbanking in September before issuing its final report inApril2016.

If the CMA does its job, the next government will have amajor opportunity to mend Britain�s brokenbanking market once and for all. This could be the bankingreport to end all banking reports. But if the government orthe CMA flinches, the UK will continue to worry aboutbombs from balloons long after the rest of the world hasmoved on.

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EGULETTERR

OPINION

* Professor, University of Chicago, Booth School of Business. Extracted from a research paper posted on to the website of Universityof Chicago on June 29, 2015

A Primer on the Greek CrisisAnil Kashyap*

Bythe spring of 2010 the excessivedebt problem became unbearable

and there was open speculation thatGreecewould default. The new lendingcame from two sources in 2010, a fundthat was raised from Europeangovernments and the InternationalMonetary Fund (IMF).

TheEuropeanCentral Bank (ECB) alsoprovided support to Greece in twoways. First, it allowed banks in Greeceto borrow from it by posting bondsguaranteed by Greece as the collateral.Second, it bought some Greekgovernment bonds in the open market.

In the time since Draghi�s statementthree important things happened inGreece. First, Greece made furthersubstantial progress on closing itsdeficits. Second, the economycontracted for two more years as thereforms failed to deliver higher growth.The thirdmajor development, however,was that the public lost confidence inthe incumbent government and itslenders.

The Tsipras government wantedthree types of changes. First, it

wanted to restore some of thespending cuts that had been enacted.Second, it wanted to reverse some ofthe revenue hikes that the past

�yes�, then perhaps the existinggovernment will be able to reopen thebanks and conclude a deal. But, if thepublic sides with Tsipras government,then therewill be a very sharp recessionover the next few months.

If IMF�s loan is not repaid, then it willcontinue to pursue its claim againstGreece. Greece will not be able toborrow internationally until it makespeace with the IMF. So the IMF willeventually be repaid. This could takeyears.

The loansmade to Greece are extendedby theGreek central bank, which in turnborrows from the ECB. So the ECBwillhave a large claim against the Greekcentral bank that is likely to turn into asignificant loss.

The ECB can definitely continueeven if Greece defaults. The ECB

has provisions set aside to cover somelosses. It also is making lots of profitson the bonds it owns.

Greece should have defaulted in 2010.Its debt burden then was unsustainableand nothing since then has changedthis. Once the bad rescue of 2010 wasundertaken, it was inevitable that someform of debt relief was going to benecessary.

Greece from the mid-1990s until 2014 wasconstantly spending more than it was collectingin tax revenues. Because of these deficits, thecountry borrowed to cover the shortfalls and itsdebt burden was steadily rising. From that pointonward, the world began to wonder if Greecereally could pay the debt that it had issued orneeded to default. Its borrowing costs rosesharply and the country began looking for waysto reduce its required debt payments and end itsborrowing addiction.

governments had instituted. Finally, itwanted outright forgiveness of someof the debt that had accumulated.

There are two sources of objectionsthat the creditors have with Tsipras�requests. First, countries such as Italy,Portugal, Spain, and Ireland, had toundertake similar types of adjustmentas in Greece. Second, even if there wassome way that Greece could be helpedwithout setting a precedent, theofficials do not trust the Greeks tocarry through with any plans.

The ECB decided it could no longerkeep accepting additional collateralfrom the Greek banks that wasguaranteed by the Greek government.Greece has closed the banks so thatdepositors cannot take out all of theirmoney.

Greecemust either find a new lender,which seems very unlikely, or

survivewith very little credit for awhile.If there is a no vote, Greece will likelystop payments on all debt. Being cutoff from credit markets, it will now beforced to match its spending to therevenue it is receiving.

What is likely to happen next inGreece?The outcome of the referendum nowbecomes critical. If the public votes

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EGULETTERR

* Reporter, The New York Times. Abridged from an article that appeared in The Hindu Business Line, on April 26, 2015

Too Little Competition onthe Screen Hurts Customers

Hilary Stout*

In the vast realm of unhappycable customers, TimeWarner

Cable subscribers stand out asan especially miserable bunch.The company, which has nearmonopolies in some of thecountry�s largest markets,including parts of NewYorkCity,scores dead last on consumersatisfaction surveys, not only forcable but for all industries.

Now, with Time Warner Cableback in play after Comcastabandoned its US$45bn takeover,many of the company�smore than15 million subscribers are resigned to frustration, stuck fornow with the company they love to hate and wondering ifany future deal could be any better.

It is an apprehensive time for cable customers in general.Despite regulators� objections to the huge Comcast deal,analysts say they expect continued consolidation in anindustry where single carriers already dominate mostregions. No sooner had the door shut on the Comcast dealthan reports emerged that Charter Communications, theregional cable operator backed by the billionaire John C.Malone, was exploring a new bid for TimeWarner Cable, itssecond in less than two years.

Somepredict consumerswill lose nomatterwho buyswhom.�If you�re selling consumers something they can�t livewithout, and you�re subject to neither oversight norcompetition, consumers aren�t going to be happy,� saidSusan P. Crawford, co-director of the Berkman Centre forInternet and Society at Harvard.

The plight of TimeWarner Cable customers showcases thefrustration. It is why despite the overpowering oppositionto the Comcast deal from consumer and corporate groups,lawmakers and regulators, there were also disappointedsighs from people like Candice Kilpatrick of Brooklyn afterthe proposed merger collapsed.

Kilpatrick said her neighbourhood had no cable andbroadband service provider other than Time Warner

Cable and that its service was �so terrible� that shedowngraded her package to just Internet, which she neededfor her job and which she still found slow and expensive.

Comcast is no model of customerservice either, scoring just aboveTime Warner Cable on thosecustomer service surveys, butKilpatrick said she had hoped thecombined company wouldsomehow provide more �juice.�

Someof the frustrationwith big,expensive cable television

packages has helped to fuel thetrend of cord-cutting andincreasing competition fromdifferent services,with newcomerslikeApple TV, Hulu andAmazon,and single-channel offerings like

HBOGo. Still, users need strongWi-Fi and Internet access,pressuringTimeWarnerCable,Verizon and others to improvethe delivery of streaming services.

Analysts say that the ill-fated Comcast deal could lay thegroundwork for significant improvements in customer serviceand satisfaction at TimeWarner Cable.

The company spent the last year preparing its network tobe turned over to Comcast in the best shape possible.

Today, said Richard Greenfield, a media and technologyanalyst at BTIG: �Broadband speeds are higher. Customerservice has improved. I think they�ve gone out of their wayto invest in their consumer experience to position for if thedeal didn�t happen they could simply move forward.�

In an interview, Robert D. Marcus, the Chief Executive ofTimeWarner Cable, listed improvements to customer servicehe said the company began in 2014. They include introducingTWCMaxx to roughly 10markets, includingNewYork andLos Angeles, which he called a �tremendous improvementof customer service across the board.�

Mr. Marcus said that the company was focussed onincreasing broadband speeds to industry-leading

levels, and that TimeWarner Cable�s standard tier of servicewas faster than Comcast�s standard tier. Whether Charterwill have more success than Comcast in acquiring TimeWarner Cable is not at all clear.

But if the companies do combine, AmyYong, an analyst atMacquarie Capital, said Charter held promise for TimeWarnerCable subscribers, citing areaswhere she saidCharterdid better � interface, search and discover, speed.

SPECIAL REPORT

The US cable sector is dominatedby single carriers in most regions

TheHindu

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

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Publications

Synthesis Report

Making Competition Reforms Work for PeopleEvidence from Select Developing Countries & Sectors

This Synthesis Report is published under the CREW project. The Report presents thecross-country experience from the staple food and bus transport sectors respectively,

together with associated emerging lessons. It illustrates an emerging pathway, which isthe medium through which competition reforms could lead to consumer and producerwelfare. It also presents some illustrations to highlight how competition and regulatoryreforms in the sectors have had implications on women�s social and economicempowerment and concludes.

The report was released on the sidelines of the 7th Review Conference of the UN Seton Competition Policy at UNCTAD in Geneva on July 08, 2015.

http://www.cuts-ccier.org/CREW/pdf/Making_Competition_Reforms_Work_for_People-Evidence_from_Select_Developing_Countries_and_Sectors.pdf

Policy Watch

The April-June 2015 issue of PolicyWatch encompasses cover story entitled �There is aGap between Policy and Practice� which states that the Government of India must

undertake an in-depth evaluation of its policy proposals, estimate the required technicaland financial resources, people, structures, and processes for converting its ideas intopractice.

The newsletter also covers an exclusive interview of Rakesh Garg, Telecom Secretary(India) who opines that over-the-top companies have been around as long as mobile phonesand telecom companies will earn from increased data usage. It also encapsulates a SpecialArticle �Still Too Many left without Cover� mentioning the fact that with the Indian PrimeMinister�s Jan Dhan Yojna having its massive outreach of 15.3 crore households, eachblessed with a bank account to the record time of eight months, has evoked euphoria.

Besides, the newsletter carries regular sections on Infrastructure, Trade and Economics,Governance and Reforms, Corporate Governance, Report Desk, Competition Insight etc.

http://www.cuts-ccier.org/pdf/pw_Apr-June2015.pdf