Business

By Imran Marashli
Agence France-Presse

LONDON — Sanjeev Gupta's Liberty Steel company — one of the world's largest steel empires — faces an uncertain future after announcing plans to sell three of its UK plants.

Liberty employs 3,000 UK workers and parent company Gupta Family Group (GFG) Alliance has 35,000 employees around the world, with metalworks and mines in Europe, the United States and Australia.

Gupta was once seen as the saviour of British steelmaking but is now fighting for survival following the collapse of its main lender Greensill Capital and fraud allegations.

The Indian-British billionaire has insisted none of his 12 UK sites will close.

Yet, this week's decision to sell three plants in northern and central England plunges 1,500 jobs into uncertainty and comes after three of GFG's French auto parts factories sought bankruptcy protection last month.

Clive Royston, who represents the Community trade union at Liberty's Stocksbridge site in northern England, said he wants Liberty to be a "responsible seller" and find a buyer who will "not just strip off assets".

"We're worried and don't have any details. It's hard because they [workers] are asking questions and I can't answer," he said.

Liquidity crisis 

Supply chain finance firm Greensill contributed to GFG's expansion through short-term corporate loans and avoided the stricter regulations imposed on traditional banks.

But its abrupt collapse in March triggered a liquidity crisis at GFG as creditors sought to recall their loans.

It has been reported that Greensill had £3.5 billion ($5 billion, 4.1 billion euros) of exposure with GFG.

Greensill's lawyers claimed its demise could threaten 50,000 jobs worldwide.

Liberty has reportedly not repaid an £18 million loan to Metro Bank, which accuses it of breaching "covenants and restrictions". Liberty denies the claims. 

Negotiations with Swiss banking giant Credit Suisse, which had 10 billion euros of exposure with Greensill, continue.

The UK government rebuffed Liberty's request for a £170 million bailout due to concerns over opaque corporate structure and governance.

'Red Flag' 

The risky nature of supporting distressed companies means investors either make huge profits or lose their whole investment, said Dirk Jenter, of the London School of Economics and Political Science.

As sustaining firms can be investors' best way to recoup their loans, "they [Liberty] are scrambling for money and trying to sell their most liquid assets. It's an attempt to buy time to keep the company alive," he added.

Gupta was the majority owner of the indebted Wyelands Bank, which was probed by the Bank of England in 2019 and wound down in March amid allegations of favouring Gupta's associates.

This month, the UK's Serious Fraud Office opened an investigation against GFG for alleged fraud, fraudulent trading and money laundering, including its financing activities with Greensill.

Jenter said this investigation and allegations of providing fake invoices would deter potential investors and compound Liberty's financial woes.

"It's a red flag. It would take an extraordinarily courageous investor to rely on the numbers provided by Liberty. It makes risking equity almost impossible," he said.

'A foundational industry' 

Union representative Royston said coronavirus "crippled" Stocksbridge, which supplies the hard-hit aerospace sector, and stressed the need to protect jobs that have defined the region despite several ownership changes over the years.

"There's not much industry around us. Stocksbridge has been built around the plant. As a lad, you follow your father into the steelworks," he added.

David Bailey, from the University of Birmingham business school, said all British steel manufacturers faced broader challenges, including higher electricity prices and business rates.

A longstanding glut in the global steel market and Chinese dumping have also undercut British steelmakers.

"You might have a period where companies are successful for a while, then these problems raise their heads again. Liberty ran into issues that are more structural," he said.

"They were far too reliant on Greensill when it went under and left themselves too exposed."

Bailey believes the British government should intervene with an American-style conservatorship — whereby the state runs and reforms companies before returning them to the private sector — to improve competitiveness and prevent damage to related industries.

"There's a big threat to jobs and this is a foundational industry. We should be doing more to preserve it," he said.

UK business minister Kwasi Kwarteng recently told lawmakers nationalisation was "unlikely".

Government support for steelmakers is linked with de-carbonisation as the sector pursues an 80 per cent reduction in carbon emissions by 2035.

Liberty has committed to achieving carbon neutrality by 2030 by using more scrap metal and electric arc furnaces powered by renewable energy sources.

PARIS — French oil and gas major Total on Friday won near-unanimous shareholder support for its climate strategy along with a new name, TotalEnergies, marking its shift — but NGOs dismissed it as "bogus".

Only a tiny minority rebelled against the company's plans at a shareholders' meeting, saying they fell short of what was needed to fight global warming.

Management's non-binding resolution, which followed similar moves at energy peers Chevron, ExxonMobil and Shell, secured 91.88 per cent backing at the assembly.

Total's pledges include reaching net-zero emissions in its global businesses by 2050, as well as for all its customers in Europe.

It also won 99-per cent support for a motion to change its name to TotalEnergies as the company wants to show that it is diversifying into renewable energies, which will account for 20 per cent of investments this year.

Shareholders had recognised "a true and sincere transformation process" and had backed "an audacious and demanding strategy", said Chairman Patrick Pouyanne, who also won approval for a renewed term for himself at the helm of the company.

The new name, he said, "marks our collective desire to create a new Total, a multienergy company and major actor in energy transition", Pouyanne said as he unveiled the new, multicolour logo.

'Climate chaos' 

NGOs and other investors were disappointed, having announced ahead of the assembly that they hoped 15 per cent of shareholders would call out management on their targets seen as too modest.

In a joint statement, Reclaim Finance and Greenpeace France cheered shareholders who opposed "the 'bogus' climate plan, while furiously condemning the large majority who backed Total's plan for increased fossil fuel extraction".

"By supporting Total's greenwashed strategy, shareholders have voted willingly for climate chaos," said Reclaim Finance founder Lucie Pinson.

In the run-up to the gathering, asset management firm Meeschaert AM had urged Total to refrain from any new drilling for oil and gas, echoing an appeal by the International Energy Agency to all energy giants.

Pouyanne rejected the call on Friday, saying "radical solutions are not the answer" and reminding his audience that "80 per cent of our economy runs on fossil fuels".

Dutch fund ACTIAM meanwhile said that Total's emissions strategy "falls short as it remains unclear how it will meet its goals given its current pace of fossil fuel production and investments that still significantly outpace those in renewables".

Meeschaert Asset Management, which also voted against the plan, said other shareholders had voiced their opposition by abstaining from the vote, though the number was not immediately known.

Eleven investors at last year's meeting put forward a motion for more ambitious climate targets — prompting Pouyanne to remark on "those who act like activists, not like shareholders" — but still won nearly 17 per cent in a vote at the time.

In the United States, investors put pressure on two oil giants to do better on climate change, installing activist board members at ExxonMobil and directing Chevron to deepen emissions cuts.

Shell, meanwhile, was ordered by a Dutch court this week to slash its greenhouse gas emissions by 45 per cent by 2030.

Last week, Shell shareholders backed a controversial climate strategy to reduce reliance on fossil fuels and become carbon neutral by 2050.

Another resolution, put forward by the environmental organisation Follow This, which called on Shell to set more ambitious targets, was supported by just over 30 per cent.

WASHINGTON — Amazon has agreed to buy the storied MGM studios for $8.45 billion, the companies said on Wednesday, giving the US tech giant a vast library to further its ambitions in streaming.

The deal bolsters Amazon Prime Video, which competes with Netflix and others in the fast-evolving market, with some 4,000 films — including the James Bond franchise — and 17,000 television shows.

"The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM's talented team," said Mike Hopkins, senior vice president of Prime Video and Amazon Studios. 

The deal comes with Amazon experiencing surging growth in online retail and cloud computing, while making a push into entertainment as consumers turn to streaming media.

It gives Amazon the fabled Metro Goldwyn Mayer studios, an iconic name in Hollywood which has been through a series of ownership changes and bankruptcy in recent years.

In addition to the James Bond franchise, MGM owns the rights to film productions including "Rocky", "Legally Blonde" and "Tomb Raider", and television shows such as "The Handmaid's Tale" and "Real Housewives of Beverly Hills".

"MGM has nearly a century of filmmaking history and complements the work of Amazon Studios, which has primarily focused on producing TV show programming," a statement from the companies said.

"Amazon will help preserve MGM's heritage and catalog of films, and provide customers with greater access to these existing works. Through this acquisition, Amazon would empower MGM to continue to do what they do best: Great storytelling."

Streaming gains steam 

The tie-up marks a new twist in a fast-evolving media landscape increasingly dominated by streaming giants such as Netflix, a trend which has accelerated during the coronavirus pandemic.

The deal could increase scrutiny for Amazon, one of the Big Tech firms gaining unprecedented economic power in recent years and in the crosshairs of antitrust enforcers around the world. 

Amazon was sued this week by US capital city Washington for allegedly abusing its dominance of online retail

Last week, telecom giant AT&T said it was spinning off its WarnerMedia division — owner of the Warner Bros studios — in a combination with Discovery, creating a new entity to focus on streaming and competing with the rapidly growing Disney+ and new entrants such as Apple TV+.

Amazon has said its Prime Video is used by some 175 million people worldwide. Its "Manchester by the Sea" in 2017 became the first film from a streaming service to be nominated for a best picture Oscar.

MGM studios, which has struggled to gain box office hits in recent years, is not connected to the MGM Resorts group which owns hotels and casinos around the world.

BERLIN — Germany's antitrust regulator said on Tuesday it has opened an investigation into Google over anti-competitive practices, wielding a new law that has already been used to scrutinise other US tech giants.

The Federal Cartel Office will investigate European units of Google in Germany and Ireland, as well as its parent company, Alphabet, in California, it said in a statement.

The investigation will probe whether Google is considered to be "of paramount significance for competition across markets" due to the breadth of its digital products, Cartel office head Andreas Mundt said.

"Google's business model relies to a very large extent on processing data relating to its users," Mundt said. "Due to its established access to data relevant for competition, Google enjoys a strategic advantage."

A key question in the probe was "whether consumers wishing to use Google's services have sufficient choice as to how Google will use their data", he said.

Google spokesman Ralf Bremer said the tech giant would cooperate fully with the investigation.

"People choose Google because it's helpful, not because they're forced to, or because they can't find alternatives," he said, adding that German consumers are offered "simple controls to manage their information and limit the use of personal data".

Under the amendment to Germany's competition law passed in January, the watchdog said it now has more power to "intervene earlier and more effectively" against big tech companies, rather than simply punishing them for abuses of their dominant market position.

The Federal Cartel Office said last week it is examining whether Amazon has "an almost unchallengeable position of economic power", having already launched two traditional abuse control proceedings.

If so, it too could be deemed of "paramount significance", Mundt said last week, adding that the regulator could "take early action against and prohibit possible anti-competitive practices by Amazon".

The watchdog has also employed its new powers to widen the scope of an investigation into Facebook over its integration of virtual reality headsets.

The German reform coincided with new EU draft legislation unveiled in December aimed at curbing the power of the internet behemoths that could shake up the way Silicon Valley can operate in the 27-nation bloc.

The push to tighten legislation comes as big tech companies are facing increasing scrutiny around the globe, including in the United States, where Google and Facebook are facing antitrust suits.

Germany and France have also joined calls from the United States to impose a global minimum corporate tax of at least 15 per cent, a move which targets huge multinationals like Amazon and Google.

Critics have repeatedly warned that many of the world's biggest companies use tax havens or used loopholes little to no tax, far less than some individuals.

SAN FRANCISCO — Apple's online marketplace would become a "toxic" mess if the iPhone maker were forced to allow third-party apps without reviewing them, chief executive Tim Cook told a high-stakes trial on Friday challenging the company's tight control of its platform.

Cook, the last scheduled witness in the case brought by Fortnite maker Epic Games, offered a robust defence of Apple's procedures for reviewing and approving all the apps it offers for iPhone and iPad users.

"We could no longer make the promise... of privacy, safety and security," without full control of the marketplace, Cook said under questioning from Apple Attorney Veronica Moye in federal court in California.

Cook said Apple's review process helps keep out malicious software and other problematic apps, helping create a safe place for consumers.

Without this review, the online marketplace "would become a toxic kind of mess," he said.

"It would also be terrible for the developer, because the developer depends on the store being a safe and trusted place."

Cook's testimony caps a high-profile trial which opened earlier this month in which Apple is accused of abusing a monopoly on its marketplace by creating a "walled garden" that squeezes app makers.

Epic, maker of the popular Fortnite video game, is seeking to force Apple to open up the marketplace to third parties seeking to circumvent Apple's procedures and commissions of up to 30 per cent.

Apple booted Fortnite from its App Store last year after Epic dodged revenue sharing with the iPhone maker.

'Not about money' 

Under cross-examination, Cook sparred with Epic lawyer Gary Bornstein about the profitability of the App Store.

Cook disputed Epic's contention that its profit margin on apps was some 80 per cent, but financial details were not disclosed in court due to confidentiality concerns.

The Apple executive said the proprietary payments system challenged by Epic was about convenience for consumers, more than about profits.

"We always put the user at the centre of everything we do," Cook said. "It has nothing to do with money."

During his testimony, Cook defended Apple's policy of barring apps directing consumers to other platforms to purchase subscriptions or credits for games and other services.

"It would be akin to Best Buy advertising that you can go across the street to the Apple Store to buy an iPhone," he said.

But District Court Judge Yvonne Gonzalez Rogers, in a series of harsh questions for Cook at the end of his testimony, suggested that Apple's cut is too high even if reduced to 15 per cent after the first year.

"It does appear to be disproportionate," the judge told Cook. "After that first interaction.. the developer is keeping those customers, Apple is just profiting from them."

Cook retorted quickly, "I see it differently," and then added: "We are creating the entire amount of commerce on the store and we are doing that by getting the largest audience there."

Apple does not allow users of its popular devices to download apps from anywhere but its App Store, and developers have to use Apple's payment system, which takes its cut.

The Epic lawyer also questioned Cook about Apple's arrangement with Google to be the default search engine for the iPhone maker's Safari browser, another area scrutinised by antitrust officials.

Cook acknowledged that Google pays for this position but added that Apple made the arrangement "in the best interest of the user".

The case in Oakland comes with Apple feeling pressure from a wide range of app makers over its control of the App Store, which critics say represents monopolistic behaviour.

The European Union has formally accused Apple of unfairly squeezing out music streaming rivals based on a complaint brought by Sweden-based Spotify and others, which claim the California group sets rules that favour its own Apple Music.

A recently formed Coalition for App Fairness, which includes both Spotify and Epic, have called for Apple to open up its marketplace, claiming its commission is a "tax" on rivals.

Closing arguments in the bench trial in California were expected soon, with the judge expected to rule within several weeks.

LONDON — The Group of Seven wealthy countries on Friday agreed to end state financing of coal-fired power plants by the end of this year, and to "mostly de-carbonise" electricity supplies in the 2030s.

Ahead of a leaders meeting in Britain next month, G-7 countries' climate and environment ministers also reaffirmed their commitment to limit keep temperature rises below 1.5ºC by 2050, following a two-day virtual meeting.

Scientists say any increases beyond that will trigger uncontrollable climate change.

"Recognising that continued global investment in unabated coal power generation is incompatible with keeping 1.5ºC within reach, we stress that international investments in unabated coal must stop now," the ministers said.

UK lawmaker Alok Sharma, who is president-designate of the COP26 UN climate summit to be held in Glasgow in November, said the consensus was "a clear signal to the world that coal is on the way out".

The move follows a recommendation from the International Energy Agency earlier this week that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050 and limit warming to 1.5ºC.

German Environment Minister Svenja Schulze called the agreement "an important step forward" that gave credibility to industrialised nations to urge others to follow suit.

Her French counterpart, Barbara Pompili, said it "sets the stage for a radical transition towards clean energy", hailing Japan, which had resisted, for getting on board.

The G-7 countries — Canada, France, Germany, Italy, Japan, the United States and Britain — are home to major carmakers, and further agreed to "significantly accelerate" the shift away from petrol in the transport industry within the decade.

Fossil fuels should also be mostly phased out from G-7 countries' electricity supplies by the 2030s.

The grouping reiterated that it aimed to eliminate "inefficient fossil fuel subsidies" by 2025 and encouraged all countries to follow suit. 

Meanwhile, it vowed to "champion" new global biodiversity targets, including conserving or protecting at least 30 per cent of global land and at least 30 per cent of the global ocean by 2030 to halt, and reverse biodiversity loss.

Nations around the world committed under the 2015 Paris accord to keeping the global temperature increase to under 2ºC and ideally closer to 1.5ºC by 2050.

However, many of the largest emitters have so far failed to do so and countries have not even agreed on a unified rulebook governing how the Paris agreement works in practice. 

Sharma said earlier this month that the upcoming COP summit — the biggest climate talks since the Paris talks — were "the last hope" of realistically keeping to the targets.

All G-7 nations now have 2030 emissions reduction targets, aligned with 2050 net zero aims.

The German government recently raised the ambition on its emissions reduction targets after a landmark ruling by the country's top court declared a flagship climate protection law "insufficient".

Under the new targets, the government expects to slash emissions by 65 per cent by 2030 compared to 1990 levels, going further than the current 55 per cent reduction target.

Germany is also aiming to be carbon neutral by 2045, five years earlier than previously planned.

Environmental activists broadly welcomed the commitments struck Friday, but urged wealthy countries to produced more detailed plans and timeframes.

"The commitment on ending international coal funding is a real positive and leaves China isolated globally with its ongoing international financing for the most polluting fossil fuel," said Rebecca Newsom, of Greenpeace UK.

"Unfortunately though, too many of these pledges remain vague when we need them to be specific and set out timetabled action."

Nick Mabey, chief executive of the E3G climate think-tank, said the agreements provided "real momentum" ahead of COP26, pinpointing the deals around investment in coal and other fossil fuels as particularly significant.

"It puts the burden on any fossil fuel development now to prove that it's 1.5ºC compatible," he told the BBC.

LONDON — British retail sales surged last month as non-essential stores reopened from virus lockdown, sparking a boom in clothing demand, data showed on Friday.

Sales by volume soared 9.2 per cent in April from March as Britain's economy cranked back into action.

"Retail sales volumes grew sharply... reflecting the effect of the easing of coronavirus restrictions," the Office for National Statistics said in a statement.

Demand for clothing rocketed by almost 70 per cent, aided by good weather as consumers splashed their cash on new outfits after one year of lockdowns.

Easing travel restrictions prompted a similar spike in demand for motor fuel.

"Pent-up demand built up during lockdown continues to be released as the reopening of non-essential retail offered the public a welcomed opportunity to visit many of their favourite shop," said Helen Dickinson, head of the British Retail Consortium.

"Improved weather during April meant greater sales of fashion, particularly in outerwear and knitwear, as the public renewed their wardrobe and made plans to meet friends and family outdoors."

Overall sales rocketed 42.4 per cent compared with April last year, which was the first full month of the initial UK lockdown at the start of the crisis.

Online sales boomed during lockdowns as consumers were forced to shop via their smartphones and computer screens, soaring by 56 per cent compared to April 2019 before the pandemic struck.

Britain is exiting lockdowns at a gradual pace, allowing the economy to further recover from pandemic fallout.

At the same time, analysts are fearful that reopening economies will spark a global inflationary spike.

British inflation soared last month to 1.5 per cent, the highest level since the early stages of the pandemic, separate data showed earlier this week.

Dose of retail therapy 

"Retailers were in dire need of a spring sales boost after a long dark winter of lockdowns and the grand reopening delivered just that," said Susannah Streeter, analyst at stockbroker Hargreaves Lansdown.

"Shoppers indulged in a major dose of retail therapy, after being banned from browsing the racks for months."

Non-essential retailers reopened for business from April 12 in England and Wales and from April 26 in Scotland.

Lifting the stay-at-home order started in early March, while pubs, restaurants and cafes reopened last month — alongside non-essential retail — but had been limited to outdoor dining and drinking.

"The prospect of being able to go out once more and frequent bars and restaurants, saw consumers splashing the cash on the latest fashions," Streeter said.

The UK economy began to recover strongly at the end of the first quarter, despite only minor easing of lockdowns.

Gross domestic product jumped 2.1 per cent in March, although by not enough for the UK economy to avoid contracting by 1.5 per cent in the first quarter.

The government plans to lift most virus restrictions from June 21.