Earlier this month, French Prime Minister Edouard Philippe unveiled the government’s plan to decrease gender pay gaps in the workforce. If companies fail to erase the pay gap over three years, government inspectors could fine them up to one per cent of the company’s wage bill.

The plan will involve companies with employees numbering greater than fifty people. How does the government intend to detect wage gaps? Companies will have to install software designed to detect for unjustified pay gaps between men and women. The software will be connected directly to the company’s payroll systems.

One source cites France as the second worst country in a survey for gender wage disparities. Data from a World Economic Forum’s Global Gender Gap Report reports that France scores seventeenth best in the world for gender equality and is approximately 76 percent of the way towards achieving gender equality.

President Emmanuel Macron pledged in the beginning of 2018 to increase the government’s efforts in waging the war against gender pay disparities. Marlene Schiappa, France’s highest-ranking women’s right’s official went on record to say that France’s numerous laws on equal pay have not achieved its objectives. Moreover, she suggested that companies should be required to release data on salaries for its employees.

Within the broader European Union, the U.K. reported the largest increase in the gender pay gap in 2015. Today, the EU in general has an average pay gap of 16.3 percent, down from an approximate 25 percent in 1995. In practical terms, this amounts to labor provided by women to be ceased after early November. Experts attribute this pay gap to more males dominating senior management and other higher paid positions.

Some employers were hesitant to provide their approval of the new plan. These employers were in attendance during the press conference and they expressed concerns about the standards for determining whether a pay gap existed. In the coming months, the government will finalize details with employers, unions, and industry-insiders and could become part of a broader labor reform policy plan.

France Gives Companies Three Years to Erase Gender Pay Gap (PDF)

Last Thursday, Wells Fargo announced that four board members, including its three longest serving directors, will soon be stepping down. Federico F. Peña, Lloyd H. Dean, Enrique Hernandez Jr, and John S. Chen will officially leave by the next company’s annual shareholder meeting this April.

Since 2016, the bank has been on the loop for years of misconduct.  Among other malpractices, the bank was on account for charging customers with fraudulent bank accounts they did not consent to and for forcing them to take insurance they did not need.  This gave rise to one of the most relevant fraud scandals lately.

The Federal Reserve firmly condemned Wells Fargos board for failing to oversee the bank and not assessing the company’s and the CEO’s performance.  Since then, the Fed announced that the bank would be banned from getting bigger until they overhauled risk and strengthened its board’s oversight.  This forceful intervention meant that one of the biggest financial institutions would be unable to keep up with its fast-growing rivals.  Wells Fargo had nearly $2 trillion in assets at the end of 2017.

The Fed has been penalizing banks for misconducts, but they have never reached such an imposition that limited a major bank’s growth.  Ever since, the bank has been pushing for a quick recovery, and Well’s officials expect restrictions lifted within the next year.  Therefore, the announcement that directors were stepping down came to no surprise.

Jerome H Powell, the fed official overseeing the negotiations with Wells Fargo, said, “Across a range of responsibilities, we simply expect much more of directors than ever before; and there is no reason to expect that to change.”  Furthermore, Powell said that they have proposed a new framework for board oversight that introduces a new principles-based approach that intends to spotlight the Feds expectations of effective boards.

This represents a shift in the evolving relationship between regulators and banks and suggests that the board’s role will likely grow in importance.  Furthermore, it is a clear message that directors should be extremely vigorous in their duties and failure to oversee malpractices will bring about harsh consequences.  Perhaps it signals a corporate culture of more openness and shared accountability.

Four Directors will leave Wells Fargo’s Board (PDF)

In March 2018, President Trump signed his decision to impose tariffs on imports of steel and aluminum. In the wake of such a decision, international markets, longtime trading partners and members of the President’s own party are angry. The decision imposes a 25% tariff on steel imports and a 10% tariff on aluminum imports.

After announcing the tariffs, the President aggravated the situation by suggesting even broader tariffs for the European Union if it does not address the President’s (unspecified) concerns. On Twitter the President wrote, “The European Union, wonderful countries who treat the U.S. very badly on trade, are complaining about the tariffs on Steel & Aluminum. If they drop their horrific barriers and tariffs on U.S. products going in, we will likewise drop ours. Big Deficit. If not, we Tax Cars etc. FAIR!”

Unlike the European Union, Canada and Mexico are allowed an exemption, which is contingent on the three countries reaching a favorable renegotiation of NAFTA. Trump’s specific exemptions for Canada and Mexico come after what he thinks are large trade deficits with the two countries. On Twitter, he tweeted, “We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”

NAFTA talks have been laden with contentious issues. The President believes that the NAFTA accord is flawed, leading U.S. companies to move factories to Mexico and disenfranchising American workers. The Trump Administration’s most contentious proposal, among others, is to require “more automobile manufacturing in the U.S., seasonal barriers to farming goods, access to U.S. procurement deals, dispute resolution mechanisms, and a clause that would terminate the deal after five years.”

Canada and Mexico, however, have indicated their unwillingness to submit to the Trump Administration’s treatment. “Canadian Foreign Minister Chrystia Freeland called NAFTA and the tariffs ‘quite distinct issues’ and said ‘our negotiating positions are absolutely unchanged.’” Negotiations to update NAFTA are following their normal course after beginning in August 2017, missing a December 2017 target, and continuing into another soft deadline of March 2018. Despite negotiations, Trump has called out Canada and Mexico for not doing more to “stop trans-shipment of steel and aluminum through their countries and into the U.S.” His issue comes from what he believes were the previous administration’s unfair trade deals that adversely affected Americans.

The exemptions for Canada and Mexico are not going to last forever. The finalization of such exemptions is subject to the changes made to NAFTA that satisfy Trump. While the President will urge the renegotiations of NAFTA to be done quickly, it is likely that negotiations will continue until the year’s end, in light of Canada and Mexico’s stance against the new tariffs. What is clear, however, is that whatever the exemptions, countries and the international markets are not reacting well to the decision.

Canada and Mexico’s Exemption from Increased Tariffs Tied to NAFTA Renegotiation (PDF)

As protests rise against the National Rifle Association (NRA) in the aftermath of the shooting at Parkland High School, several businesses have said that they are ending their partnerships with the gun advocacy group.

These decisions are largely in response to tweets demanding change under the trending hashtag, #BoycottNRA. First National Bank of Omaha got the ball rolling on Thursday, February 22, when it announced via tweet that it “will not renew its contract with the National Rifle Association to issue the NRA Visa Card.” Rental car companies hopped on board the next day, with tweets coming from Alamo Rent A Car, Enterprise, National Car Rental, and Hertz, denouncing their rental car discount program with the NRA. On Saturday, February 24, Delta and United Airlines joined in, announcing via tweet that they are discontinuing their discounted rates for NRA members.

Companies involved in the sale of guns have also taken a stance. On February 28, just two weeks after the Parkland shooting, Edward Stack, CEO of Dick’s Sporting Goods, announced that the company is immediately ending its sales of military-style semi-automatic rifles, raising the minimum age for gun purchasers to 21, and will no longer sell high-capacity magazines.

After learning that the gunman behind the Parkland shootings had purchased a firearm from the retailer last November, Stack and his colleagues at Dick’s believed that action was necessary, citing that “thoughts and prayers are not enough.” In a statement issued on February 28, Stack echoed and commemorated the activism of the high school students who survived the Parkland shooting, saying “We have tremendous respect and admiration for the students organizing and making their voices heard regarding gun violence in schools and elsewhere in our country.”

That same day, Walmart announced that it is also raising the minimum age for purchasing firearms and ammunition from 18 to 21. With these moves, Dick’s and Walmart join a number of companies that have made policy changes in response to the Parkland shooting.

These actions have not been without controversy. For instance, Georgia Lt. Gov. Casey Cagle threatened to “kill any tax legislation that benefits” Delta Air Lines after the company ended its relationship with the NRA. Several other Twitter users have vowed to take their business elsewhere from companies who have cut ties with the NRA.

When asked about such pushback amongst gun rights advocates, Stack acknowledged that the move “isn’t going to make everyone happy,” but recognized that companies must be “brave enough” to make changes for what they believe in.

Companies Cut Ties With the NRA and Change Store-Wide Policies on Gun Sales (PDF)

United Parcel Service Inc., the “world’s largest” overnight package delivery and logistics company based in Atlanta, is suing for 1.74 billion euros (2.15 billion dollars) from the European Union Commission for blocking its attempted takeover of its Dutch competitor TNT Express NV in 2012. The European Union’s second highest court, the General Court of the European Union, found in March of 2017 that the antitrust regulators’ decision to block the proposed merger was incorrect. After this decision by the General Court, UPS filed suit against the commission, claiming it was damaged because of the wrongly blocked takeover and by being inhibited from the value that it could have gained from successfully completing the attempted takeover. UPS is seeking compensation, plus interest, that UPS claims reflect what it would have gained if it were allowed to move forward with the takeover in 2012.

When blocking UPS’s takeover of TNT in 2012, regulators cited concerns that the merging of the two companies would result in only two companies controlling the market, consequently disadvantaging other competitors. Antitrust regulators were concerned that the acquisition would ultimately hurt consumers as a market cornered by only two major companies would leave customers few choices for package delivery needs and ultimately drive up prices. The estimated $6.8 billion acquisition would assist UPS in its effort to gain a foothold in “Europe and in emerging markets.”

When presented with the European regulators’ concerns, UPS agreed to take measures to address those concerns, such as opening part of its airline network for access by competitors and divesting itself of certain business units. European regulators did not change their stance due to these concessions and UPS’s bid could not more forward.

UPS challenged the commission’s blocking of its 2012 bid for TNT in the General Court of the European Union, which led to the court’s March 2017 finding that the deal was wrongly stopped. The court invalidated the commission’s veto of UPS’s attempted takeover because the commission changed the economic model they were using to evaluate and “weigh evidence” without informing UPS of this change, effectively not allowing UPS to properly defend itself.

After UPS’s attempt to acquire TNT in 2012 was blocked, UPS’s direct competitor FedEx Corp. successfully acquired TNT instead in 2015 with full EU regulatory approval.

The European Commission is challenging the court’s 2017 decision that the commission wrongly vetoed UPS’s attempted takeover of TNT in the European Union’s highest court. The commission is also defending itself against the direct lawsuit waged by UPS.

UPS Sues EU Antitrust Regulator over Blocked 2012 Takeover Attempt of TNT (PDF)

The road to success is not a bed of roses. Although their deal was approved by more than thirty authorities around the globe, Bayer A.G. (“Bayer”), the German conglomerate chemical firm, still faces a legal challenge in the United States to win antitrust approval to buy American seeds supplier Monsanto Company (“Monsanto”). The U.S. government is worried that $62.5 billion deal could seriously hurt competition.

Looking back to August of last year, the decision on whether to approve the symbolic transaction has been postponed twice and suspended four other times. The deadline for the merger approval is currently scheduled to take place on April 5, 2018.

The significant proposed acquisition between Bayer and Monsanto would make the company the world’s largest integrated pesticide and seeds business. In fact, this would create a company with a market share of more than a quarter of the world’s seed and pesticides business. The transaction will constitute to the destruction of competition in at least three markets: pesticides, seeds, and traits.

In the United States, EU, and Brazil, the authorities are attempting to conduct further investigation of how combining Bayer and Monsanto will impact the price and supply of key products for farmers.

One of the effective solutions to solve potential antitrust issues is to sell a company’s assets when company seeking regulatory approval for a deal. After the CEO meetings, Bayer decided to resolve antitrust issue by selling assets to another company in order to carry out its project and achieve its $60 billion-plus takeover of St. Louis-based Monsanto. In particular, Bayer agreed to sell parts of its seed and herbicide assets to rival, BASF, for $7 billion to solve EU regulatory concerns. Moreover, Bayer agreed to divest its vegetable seeds business to BASF.

In the EU, the review of the Monsanto deal by the European Commission (“the Commission”) is set to greenlight after in-depth investigation by the Commission. The European Competition Commissioner, Margrethe Vestager, indicated that Bayer properly addressed its concern by selling its assets to competitor. She firmly stated that “Our decision ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets also after this merger.” The competitors can effectively compete with each other and the number of the competitors in these relevant markets will remain the same.

However in the United States, the intense review procedure is being led by Assistant Attorney General for the Antitrust Division, Makan Delrahim, who also spearheaded the filing of the antitrust lawsuit to block AT&T Inc.’s takeover of Time Warner Inc.

From the Justice Department’s antitrust division’s view, although selling the assets to BASF, a good buyer who can compete effectively in the business, does help with some of the issues, the officials do not think it goes far enough.  The government would like Bayer to take a step further and divest more.

In its substantive standard of review of the proposed merger, the Justice Department is analyzing the economic relationship among entities on the same level of market (“horizontal restraint”) as well as the economic relationship along supply chains (“vertical restraint”)

No one knows what the future holds, but the companies still have hope after two previous deals – the combination of Dow Chemical Co. and DuPont Co. and China National Chemical Corp.’s takeover of Syngenta AG that won antitrust clearance.

Bayer Faces U.S. hurdles for Monsanto Antitrust Nod

The venture capital investing world is ruled by risk, and people are willing to take those risks trusting in little more than their personal instincts. One investor who has done so with mastery is Softbank Group tech magnate, Masayoshi Son, UC Berkeley alumni. In 1981, Son founded SoftBank as a software distributor, leading to investments in more than 1,300 companies. The group, and Mr. Son, gained even more importance in the industry after the launching of Vision Fund, which started with under $100 billion in investments and a 12-year term, ushering a new force into a tech-investment world long dominated by Western bankers and Silicon Valley financiers.

But how Mr. Son spends his money shocks people in this industry due to the large sums he is willing to pay for start-up companies, and this astonishment affects even Mr. Son’s directors. Many were against him when he purchased Arm Holding PLC, an U.K. chip-design firm that Mr. Son paid $32 billion for after only two weeks of negotiations. They affirmed that this transaction marked a “paradigm shift” at the company to invest in the Internet of Things. Another time, he decided to invest $200 million in a startup that grows vegetable indoors after a 30 minute of contemplation. Subsequently, he continued a “buying spree,” purchasing stakes in several other companies, many of them characterized as being what is known as “unicorns” – startups that have grown to valuations over $1 billion – such as Uber Technologies, Inc. or WeWork Companies, Inc. In several of those deals, Mr. Son had to argue with his directors and advisors who were saying that he was paying too much.

These high valued investment and expensive purchasing of startups has led to many in the tech industry to believe his investments help keep startup valuations high. “We all thought the unicorn stuff was going to start slowing down,” says Tim Connors, founder of Silicon Valley venture capital firm PivotNorth capital. “Then along comes SoftBank and lobs another $90 billion into what many people thought was already an overheated market.” Investors want to understand just how Mr. Son goes about deciding on his billions of dollars of bets, among the largest in the tech industry, and according to those working closely to him, his thought process can be as methodical as it can be haphazard.

Understanding how Mr. Son thinks matters because of his outsize impact. Softbank has led investments totaling about $145 billion in companies since 1995, including $22 billion to buy U.S. mobile carrier, Sprint. He managed the world’s biggest tech fund (Vision Fund), and a $6 billion affiliate, brandishing investments that often makes him the company’s biggest shareholder. He affirmed that his goal is to take big stakes in a coalition of companies driving technological change that will help the group sustain long-term growth for the next “300 years,” strengthening Softbank’s role as one of the biggest players in the industry.

How SoftBank, World’s Biggest Tech Investor, Throws Around Its Cash (PDF)

Eleven states including Ohio, Connecticut, Idaho, Illinois, Iowa, Maryland, Michigan, Montana, Rhode Island, Utah, and Vermont, are involved in a lawsuit against American Express. These states argue that American Express’ unfair practice of prohibiting retail merchants from advising customers to use a credit card with lower transaction costs violates federal antitrust laws.

In the credit card industry where there are a small number of market players, as in an oligopoly, anti-competitive practices may result. In 2010, American Express, Visa, and MasterCard were accused of unfair practices. Subsequently, Visa and MasterCard voluntarily reached a settlement and agreed to give up their anti-steering provisions, which left America Express to proceed with a trial.

A policy known as an  “anti-steering” clause was imposed on merchants and retailers in American Express’ merchant agreement. This provision contractually forbids merchants from suggesting to customers that they should use competitors’ credit cards, such as Discovery, which has lower swipe fees. This was seen as stifling price competition. Merchants usually pass this hidden cost to customers in the price of goods or services. Therefore, the court has to determine whether businesses can encourage or discourage customers from using lower cost credit cards for their transaction payments.

The United States District Court for the Eastern District of New York, applying the rule of reason, found that American Express had violated antitrust laws because the anti-steering requirement in question caused harm to both merchants and credit card holders, who are the participants in American Express’ credit card network. The court further held that the restrictions on steering the customer’s free choice at the point of sale unreasonably restrains a competitive price, raises the cost of merchant fees, and inflates retail prices, which is in violation of Section 1 of the Sherman Act (15 U.S.C. 1). Notwithstanding the previous decision, the United States Court of Appeals for the Second Circuit conversely employed the two-sided market concept and reversed the District Court’s judgment by holding in favor of American Express. The Second Circuit held that the State of Ohio et al. had not shown that the anti-steering rules unreasonably restrain trade and cause harm to cardholders as well as merchants.

The credit card network is the cornerstone of a two-sided market, in which the credit card company is an intermediary linking two different user groups – customers and merchants. Merchants benefit from accepting a customer’s credit card only when there is an adequate volume of cardholders using that particular credit card, thereby covering the cost of the transaction fees charged by the credit card company. Meanwhile, using a credit card would be pointless for customers if the card could not be widely accepted by a full range of various merchants.

Even though the case has been pending in the United States Supreme Court, it is worth noting the possible vast impact if the Supreme Court upholds the Second Circuit’s judgment. This is because it may become the precedent case not only for credit card companies but also several large companies in other industries as well. It would enable numerous platform companies which have two-sides of users like Google, Amazon, Apple, Facebook, and Uber, among others, to be more powerful by taking advantage of such a ruling. Overall, the Supreme Court’s determination will carry great weight.

U.S. Supreme Court’s Pending Review of American Express Merchant Fees (PDF)

Telegram Messaging, a private digital communication application boasting approximately 180 million users, is poised to raise more than a billion dollars in potentially the largest ever I.C.O. (Initial Coin Offering). Over the past two months Telegram has already raised $850 million dollars for its newest concept, “Telegram Open Network” or “TON.” Moreover, over the next month Telegram plans to raise another $850 million.

Initial coin offerings rely on the creation and sale of a cryptocurrency to allow young companies to raise money. These digital vouchers can then be used in a secondary market to provide access to applications or services. As such, ICOs evade more traditional methods of fund raising, like relying on venture capitalists or initial public offerings.

Accordingly, ICOs offer the advantage of allowing companies to maintain complete ownership of their technology. Moreover, the crowd-funding facet of ICOs could potentially allow companies that may provide useful services but are often ignored by more conventional sources of funding, to raise money. One such sector of companies are start-ups working on open source projects such as Wikipedia.

Despite these potential advantages the relatively untested and unregulated nature of ICOs has created growing concerns about their legality in the United States and abroad. Many countries fear that ICOs may be used to defraud investors. That said, Telegam appears to be undeterred.

Telegram’s recent ICO comes on the heels of a 132-page white-paper released by Telegram that explains the company’s plans for “Telegram Open Network.” Telegram promises that “TON” will provide the support necessary to enable the creation of a new “third generation” digital currency Telegram calls “Grams.” Telegraph insists “TON” will improve upon efforts made by predecessors in the cryptocurrency field, such as Bitcoin. According to Telegraph “Grams” will offer a safer, more secure cryptocurrency, protected from the problems that have plagued other networks supporting virtual currencies. In particular, Telegraph claims “TON” will address theft via cyber-attacks and an inability to keep up with the rate of transactions.

In order to accomplish these objectives, Telegram plans to rely in part on its already existing private and secure communication network, which already provides encrypted voice and text message transmissions. Telegram plans to use its encrypted network to insure exchanges and transactions involving “Grams” remain anonymous. Telegram also claims that users of “TON” will be able to use “Grams” to transfer money across borders with low transaction fees and to pay for third party services. Telegram plans to release “TON” either late this coming year or during the beginning of next year.

Telegram Seeks Over $1 Billion in Potentially Historic Initial Coin Offering (PDF)