CLOs

Renewable energy investors who lost subsidies promised by Spain are heading to a London court to try to claw back US$125 million from the government, reports the Associated Press (29 March, O'Mahony), a decadelong dispute with ramifications for clean energy financing across the European Union. The outcome will be closely watched by investors after the US passed a new law offering incentives for homegrown green technology. The European Commission has proposed its own rules on allowing state aid and incentives for green investment, but those changes would not affect court cases already underway. The lawsuit in London’s Commercial Court this week involves investors from the Netherlands and Luxembourg who poured millions into a solar plant in southern Spain in 2011. The Spanish government offered subsidies to encourage growth in renewable energy production, then slashed the payments without notice as it cut costs after the 2008 financial crisis. Spain has been sued internationally more than 50 times over the retroactive changes. It has not paid out despite losing more than 20 cases so far. The EU backs Spain’s position. Spain now ranks alongside Venezuela and Russia as countries with the most unpaid debts over commercial treaty violations, according to a recent ranking compiled by Nikos Lavranos, a Netherlands-based expert in investment arbitration and EU law. Most of the cases allege that Spain broke agreements it agreed to honor under the international Energy Charter Treaty, a legally binding agreement between 50 countries to protect companies from unfair government interference in the energy sector.

From "Spain Clean Energy Case Shakes Confidence in EU Investment"
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An unexpected tax change in Canada's federal budget could have a “relatively material” earnings impact on Canadian insurers and banks, reports the Financial Post (29 March, Shecter). The budget, unveiled by Finance Minister Chrystia Freeland on Tuesday, proposes to change the tax treatment of dividends received on Canadian shares held by the financial institutions. The proposed amendment to the Income Tax Act would mean dividends received on Canadian shares held by financial institutions after 2023 would be treated as business income. The government noted that the dividends that would be subject to the new tax treatment are currently “effectively exempt from tax” and that the financial institutions rely on that status to lower their tax burden.

From "Canadian Budget's Unexpected Dividend Tax Change Would Be Fresh Hit to Insurers and Banks"
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Adidas reversed an attempt to block a Black Lives Matter logo from being trademarked, reports the Washington Post (29 March, Hassan), two days after asking US authorities to reject the design. “Adidas will withdraw its opposition to the Black Lives Matter Global Network Foundation’s trademark application as soon as possible,” an emailed statement from the German company said Wednesday, though the sporting giant did not provide a reason for its decision. In 2020, the Black Lives Matter Global Network Foundation, which has described itself as a fundraising and grant-making entity of the Black Lives Matter movement, applied to trademark two designs for campaigning and fundraising purposes. One application was for a design the group has been using as its logo on its website, featuring the words “Black Lives Matter” above three yellow stripes. The second application was to trademark the three yellow stripe design, so it could be used for fundraising purposes on merchandise. Adidas had filed a notice of opposition against the second application on Monday, arguing that the foundation’s three-stripe design was “confusingly similar” to Adidas’s own “Three-Stripe Mark” and was likely to cause “confusion, deception, or mistake as to the affiliation” of the organization with Adidas. It is quite unusual for a trademark case to be withdrawn so quickly, Phillip Johnson, a professor of commercial law at Cardiff University, said. “Most likely the decision to withdraw the case was for reputational management reasons rather than the merit of the case.”

From "Adidas Gives Up Attempt to Block Black Lives Matter Trademark"
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Germany is to establish a new anti-money laundering authority, called the Federal Authority for Fighting Financial Crime, or BBF in German, reports the Financial Times (29 March, Chazan). It will be guided by the principle of “follow the money," said a senior official. The move follows a critical report issued last August by the Financial Action Task Force, a Paris-based intergovernmental agency that sets standards for limiting money laundering and the financing of terrorism. It said Germany needed to “do more to proactively and systematically investigate and prosecute money-laundering activity, in line with its risk profile." The creation of the agency also follows the fall of payments giant Wirecard, whose collapse in 2019 turned into the biggest accounting scandal in Germany’s postwar history. Laws passed in the wake of Wirecard’s collapse granted the financial watchdog BaFin extensive powers to probe the accounts of Germany’s most important listed companies and tightened rules for auditors. Germany’s existing anti-money-laundering agency, the Financial Intelligence Unit (FIU), will be integrated into the BBF, which will also be responsible for enforcing international sanctions. Money laundering has long been seen as a serious problem in Germany, where cash is used in many transactions that in other countries would occur digitally.

From "Germany to "Follow the Money" with New Financial Crime Agency"
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Australia's largest health insurer, Medibank Private Ltd, was hit with a second class action lawsuit related to its disclosures on its cyber security systems leading up to a data breach last year, reports Reuters (29 March, Iyer). Last October, Medibank disclosed that a hacker had gained data of 9.7 million current and former customers and released the data on the dark web. The company breached its disclosure obligations by not revealing information regarding the alleged deficiencies in its cyber security systems, US-based law firm Quinn Emanuel Urquhart & Sullivan alleged in its class action lawsuit. A similar lawsuit was filed in early February by law firm Baker & McKenzie, which alleged a breach of contract and contraventions of Australian consumer law.

From "Australia's Medibank Gets Second Class Action Lawsuit over Data Breach"
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An India appeals court upheld a fine of about US$160 million imposed on Google by the country’s antitrust regulator, reports Bloomberg (29 March, Mahajan, Phartiyal). The court, however, allowed some concessions to corrective measures the regulator had sought. For example, the company can prevent users from un-installing its apps that are pre-loaded on new Android devices. Google will also be free to block third-party app stores from its Play Store and can keep restricting the distribution of third-party apps through other channels, also known as sideloading. The concessions help Google prevent a complete shakeup of how it operates its Android business in India. Google has previously said the measures sought by the antitrust regulator would cripple efforts to get more people online, hinder user privacy and make Android, which accounts for more than 90 percent of India’s smartphone market, less affordable. The antitrust watchdog, meanwhile, has argued Google wields too much power over the mobile market and has asserted that the company has adopted a different approach in other jurisdictions.

From "Google’s India Antitrust Fine Stays, with Some Concessions"
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New Zealand’s Financial Markets Authority (FMA) has issued a formal warning to Vanguard Group Inc.’s Australian business for missing a deadline to disclose greenwashing fines by two months, reports Bloomberg (29 March, Bainbridge). Vanguard was fined in Australia late last year for incorrectly stating that three of its funds excluded exposure to firms involved in tobacco sales. As the same products were also offered to New Zealand investors, the firm was required to formally notify the FMA within five working days, according to a statement from the regulator Wednesday. It instead took Vanguard 55 business days to file the correct documents and after an intervention by the FMA, the regulator said, adding that Vanguard failed to meet its regulatory obligations or have adequate processes in place. Regulators around the globe are clamping down on claims tied to investments sold under environmental, social, and governance criteria. The Australian Securities and Investment Commission has so far issued a total of A$140,000 (US$94,000) in fines related to greenwashing, including the Vanguard infringement, and recently launched its first such court action against pension fund Mercer Superannuation.

From "Vanguard Warned over Greenwashing Disclosures in New Zealand"
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The Wall Street Journal (30 March, Ng) reports that UBS Group's former head, Sergio Ermotti, is returning as CEO, effective 5 April. The hiring comes soon after the Swiss banking giant's takeover of Credit Suisse Group AG. Ermotti previously ran UBS for nine years. He will succeed current Chief Executive Ralph Hamers, who has agreed to remain as an adviser for an undetermined transition period. Hamers has been at the helm since November 2020. A UBS statement reads that he "has agreed to step down to serve the interests of the new combination, the Swiss financial sector, and the country."

From "UBS Brings Back Former CEO Sergio Ermotti After Credit Suisse Deal"
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Ericsson shareholders voted against discharging the CEO and most of the board members of liability for the tech company's actions during 2022 at the group's annual general meeting on Wednesday, reports Reuters (29 March, Ahlander). Under Swedish law, if board members are not discharged of their liabilities for the previous year by shareholders owning at least 10 percent of the stock they can be sued by the company and its investors. At issue is the company's perceived mishandling of alleged bribery cases. Ericsson was fined US$207 million earlier this year by the US authorities for not properly disclosing that a 2019 investigation had found the company may have paid bribes to militant organizations in Iraq. Ericsson's board was denied discharge of liability last year too, in a rare rebuke for corporate leadership in Sweden.

From "Ericsson's Board Rebuked by Shareholders at AGM for Second Year in a Row"
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The UK Competition and Markets Authority (CMA) said Wednesday that it will now refer Broadcom Inc.'s planned US$61 billion acquisition of VMware Inc for a further review after being notified that Broadcom will not be offering any undertakings to satisfy its concerns over the deal, reports MarketWatch (29 March, Walker). The regulator, which started its initial review into the deal in January, said the deal could lead to a substantial lessening of competition within the UK and invited the companies to offer undertakings to address its concerns. They were given a deadline of 29 March to offer undertakings. The CMA said Wednesday that the acquirer informed it on 22 March that it wouldn't be offering any undertakings. On 20 December, the European Union's antitrust watchdog said it would open an investigation into the deal as it believed it would allow Broadcom to restrict competition in the market for certain hardware components. The US Federal Trade Commission has also been seeking information about the deal from the companies, citing a previous regulatory filing.

From "Broadcom's Planned US$61 Billion Acquisition of VMware to Get Further Probe by UK Regulator"
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The US state of Arkansas has sued TikTok, its parent ByteDance, and Facebook parent Meta over claims the companies’ products are harmful to users, reports CNN (29 March, Fung). All three lawsuits claim the companies have violated the state’s Deceptive Trade Practices Act and seek millions of dollars, if not billions, in potential fines. The suits were filed in Arkansas state court. The suit against Meta particularly zeroes in on the company’s impact to young users’ mental health, alleging that Meta’s implementation of like buttons, photo tagging, an unending news feed, and other features are addictive and “intended to manipulate users’ brains by triggering the release of dopamine.” The remaining two suits, both naming ByteDance and TikTok as defendants, target TikTok’s alleged shortcomings in content moderation and also reiterate claims about TikTok’s alleged threat to US national security.

From "Arkansas Sues TikTok, ByteDance, and Meta over Mental Health Claims"
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The new board handpicked by Florida Governor Ron DeSantis to oversee Disney’s special taxing district said Wednesday it is considering legal action over an agreement reached between the entertainment giant and the outgoing board in the days before the state’s hostile takeover last month, reports CNN (29 March, Contorno). Under the agreement, quietly approved as Florida lawmakers met in special session to hand DeSantis control of the Reedy Creek Improvement District, Disney would maintain control over much of its vast footprint in Central Florida for 30 years and, in some cases, the board can’t take significant action without first getting approval from the company. The board on Wednesday retained “multiple financial and legal firms to conduct audits and investigate Disney’s past behavior,” DeSantis spokesperson Taryn Fenske said. The spat between Disney and the governor stems from the company’s opposition to a Florida law that prohibits the instruction of sexual orientation and gender identity through third grade and only in an “age appropriate” manner in older grades. In March of last year, as criticism against the legislation spread nationwide, Disney released a statement vowing to help get the law repealed or struck down by the courts. DeSantis and Florida Republican lawmakers retaliated by eliminating the Reedy Creek Improvement District, the special taxing authority that effectively gave Disney control of the land in and around its Orlando-area theme parks. But Republicans in control of the state legislature changed course this year and voted instead to fire the board overseeing the district and gave DeSantis power to name all five replacements. DeSantis stacked the board with political allies. The controversy is central to DeSantis’ political narrative of a leader who is unafraid to battle corporate giants, even one as iconic as Disney, as he prepares for a possible US presidential bid.

From "Disney Quietly Took Power from DeSantis’ New Board Before State Takeover"
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A Japanese construction company targeted for takeover by the family office linked to Nintendo Co's founder has asked the government to investigate alleged breaches of foreign ownership rules, reports Reuters (28 March, Yamazaki, Katsumura, Shimizu). Toyo Construction Co, the marine construction company now 27 percent owned by Yamauchi-No.10 Family Office (YFO), made the request to the government this month. The move by Toyo, which maintains port facilities and constructs seawalls and other key parts of infrastructure, shows how rules over national security can increasingly play a role in takeover battles. YFO, which manages nearly US$1.5 billion of assets for members of Nintendo's founding Yamauchi family, last year effectively blocked a takeover attempt for Toyo from an industry rival, saying it would offer a higher price. YFO has amassed most of its stake through three related investment companies registered in the Cayman Islands, each of them with less than 10 percent. Toyo said its businesses are in strategically important "core sectors," meaning that investors are required to report to the government before acquiring a stake of 10 percent or more. Because the three Cayman Islands-registered vehicles are related, Toyo believes YFO violated the rules by not notifying the government beforehand, the company said. Violation of such requirements could result in fines, imprisonment, and other penalties, including the return of all or partial stakes acquired through such investment, according to the government.

From "Takeover Target of Nintendo Founder Family Office Asks for Japan Government Probe"
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A judge dismissed a proposed class action lawsuit accusing L'Oreal SA of tricking US shoppers into overpaying for its beauty products by making them believe the products came from France, reports Reuters (28 March, Stempel). In a decision on Monday, US District Judge Analisa Torres in Manhattan said L'Oreal's referring to "Paris" and using French words on packaging would not deceive reasonable consumers about where its products came from. The plaintiff claimed she had not noticed the fine print before learning that the products she bought were manufactured in L'Oreal's factory in North Little Rock, Arkansas, or elsewhere in the United States and Canada. Torres said the case was similar to dismissed lawsuits over references to "Hawaiian" and "Jamaican" on product packaging. Companies are periodically sued over their products' origins in US courts. In 2015, Anheuser-Busch offered refunds to settle a Florida lawsuit claiming it misled consumers into thinking its Beck's beer was brewed in Germany, not St. Louis, Missouri.

From "L'Oreal Defeats US Woman's Lawsuit over "Paris" Product Labels"
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Applied Industrial Technologies announced that Jon S. Ploetz has joined the company as vice president, general counsel, and secretary, according to a release published by Business Wire (28 March). He succeeds Fred D. Bauer who elected to retire effective 31 January, after 30 years of service to the company. Ploetz joins Applied from Harsco Corporation, a provider of environmental solutions for industrial and specialty waste streams, where he served as assistant general counsel. His professional career also includes five years as assistant general counsel at Arch Coal, Inc.

From "Applied Industrial Technologies Names New General Counsel and Secretary"
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Vale S.A. has agreed to pay the US Securities and Exchanges Commission US$55.9 million to settle charges related to the company's allegedly false and misleading disclosures about the safety of its dams prior to a collapse in Brazil, reports MarketWatch (28 March, Ojea). The charges were brought against the Brazilian mining company and iron ore producer last April after a dam collapse killed 270 people on 25 January 2019. The settlement requires Vale to pay a civil penalty of US$25 million and a disgorgement and pre-judgment interest of US$30.9 million.

From "Vale to Pay US$55.9 Million to Settle SEC Charges over 2019 Dam Collapse"
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Google on Monday asked a US judge to dismiss the federal government’s case against its dominance in the digital advertising market, reports Bloomberg (28 March, Birnbaum). The move shows how hard Google plans to fight against the US Justice Department’s lawsuit, which was filed earlier this year. The case, which is also backed by eight states, calls for breaking up Google’s ad-technology business. Google argued in Monday’s filing that the case ignores the company’s biggest rivals in online advertising and fails to meet the legal thresholds for alleging a monopoly.

From "Google Asks Judge to Dismiss DOJ’s Digital Ad Antitrust Case"
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China’s Alibaba Group said on Tuesday that it would become a holding company with six different business groups, reports the New York Times (28 March, Wakabayashi). Alibaba described the restructuring as the “most significant” organizational overhaul in its 24-year history. It said each unit would have its own chief executive and board of directors to allow for quicker decision-making. The units will be allowed to seek outside capital with an eye toward eventual initial public offerings. Only its China e-commerce unit, Taobao Tmall Commerce Group, will remain a wholly owned Alibaba entity. The experience of Alibaba has become a cautionary tale for the cost of challenging China’s ruling Communist Party and the extent of Beijing’s campaign to curb the power of its technology giants. Alibaba’s decision to potentially break up the company into several smaller entities may also ease the government’s concerns about the concentration of power and influence among the country’s tech giants.

From "Alibaba, China’s E-commerce Giant, Will Split into Six Units"
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JPMorgan Chase Chair and CEO Jamie Dimon will be questioned in a civil lawsuit over the bank’s relationship with Jeffrey Epstein, reports the Wall Street Journal (29 March, Safdar, Benoit). The US Virgin Islands sued JPMorgan last year, claiming that the bank facilitated Esptein’s alleged sex trafficking and abuse by allowing him to remain a client and helping him send money to the late financier’s victims. Lawyers for the US Virgin Islands had asked a judge to order Dimon to answer questions under oath. JPMorgan resisted, saying he played no role in the bank’s dealings with Epstein. The two sides have now struck a deal for Dimon to be deposed, insiders say. Epstein banked with JPMorgan for a number of years until it cut ties with him in 2013. A judge earlier this month ordered the bank to turn over documents from Dimon through 2019, a wider time frame than the bank wanted to deliver. JPMorgan has denied that the bank aided Epstein and has sought to blame any relationship on former executive Jes Staley.

From "Jamie Dimon to Face Questioning in Lawsuit over JPMorgan’s Epstein Ties"
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Germany’s federal cartel office, or Bundeskartellamt, has launched a probe into Microsoft to assess its power in the market, reports the Financial Times (28 March, Chazan, Espinoza). The watchdog on Tuesday said that it would examine whether Microsoft should be designated of “paramount significance for competition across markets." The action is being launched under Section 19a of the German Competition Act, a law that places Berlin at the vanguard of European attempts to restrict the power of Big Tech. The law, which came into force in January 2021, gives Germany’s antitrust authorities powers to go after so-called gatekeepers such as Meta, Google, and Amazon, including the ability to impose sanctions like forced divestments against companies and even break them up. The investigation comes with Microsoft already under intense scrutiny from regulators in the US, UK, and EU over its attempt to acquire gaming company Activision.

From "German Antitrust Watchdog Probes Microsoft’s Market Power"
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