This week’s top news stories include: Caterpillars Colin and Cuthbert in court, EU consider regulating AI, Virgin Media O2 merger provisionally approved, Deliveroo orders double to 71 million, European Super League announced, and more.
Legally Possible’s top news story of the week: Caterpillar’s in Court (point 6)
1. DELIVEROO ORDERS DOUBLE
Deliveroo has announced that its orders more than doubled to 71 million in the quarter ending on 31st March. The firm believed this to be the first step in proving itself after the food delivery company’s initial public offering was described as the “worst IPO in London’s history”.
Despite being predicted to be London’s debut of the decade, the stock plunged 30% on the first day, wiping more than £2 billion from the company’s initial £7.6 billion valuation.
For a fourth executive quarter, growth accelerated with group orders up 114% year-on-year to 71 million and gross transaction value (GTV) up 130% year-on-year to £1.65 billion, Deliveroo revealed.
Grocery delivery, in partnership with supermarkets Waitrose, Aldi, Coop, Morrisons and Sainsbury’s expanded at pace, with GTV growing by more than 700% to represent more than 10% of UK GTV.
THOUGHTS AND IMPLICATIONS
As lockdown restrictions ease, Deliveroo’s growth may begin to slow with more people eating out rather than ordering in. Chief Executive Will Shu has stated that they have “a lot of work” ahead of them, and stated “we are mindful of the uncertain impact of the lifting of COVID-19 restrictions. We wanted to be prudent when it comes to guidance.”
Deliveroo’s disappointing debut on the stock market is likely the result of investors becoming more reluctant to invest in companies who do not invest in their employees, as Deliveroo still classify their riders as self-employed contractors and therefore do not award them benefits such as minimum wage, holiday pay and pension contributions. Uber’s defeat before the Supreme Court last month plays a huge role here, as it ruled that Uber’s drivers were in fact workers, and not self-employed contractors. Deliveroo insists that Uber’s ruling has no relevance to its business, but investors evidently disagree. Will this be another push for Deliveroo to finally award their riders employee benefits?
Photograph: REUTERS/Toby Melville
2. VIRGIN MEDIA 02 MERGER APPROVED
Following an investigation last year and concerns that the deal could cause higher prices for wholesale customers and a lessening of competition, the £31 billion merger between Virgin Media and O2 has been provisionally approved by the Competition and Markets Authority (CMA), who found that the two companies are not in close enough competition and that the deal is “unlikely to lead to higher prices or a reduced quality of mobile services”.
This deal will create one of the UK’s largest entertainment and telecomes firms, and will mean that the companies will collectively hold a 30% share of the market and around 40 million customers; combining Virgin Media’s 5.3 million broadband, pay-TV and mobile customers and O2’s 34 million mobile customers. Analysts said it was a “blockbuster merger” that could create greater choice for consumers.
The two owners of the companies, Liberty Global and Telefonica, agreed to merge the companies last May, and will receive a combined £7.1 billion from recapitalisation proceeds.
Image: Andre M Chang/Shutterstock
3. FLYBE SET FOR SUMMER RETURN
Flybe, the collapsed airline, has been sold to private equity firm Cyrus Capital for an undisclosed sum after the regional flyer became the first casualty of the Covid-19 crisis.
Prior to its collapse, Flybe carried around 8 million passengers a year between 81 airports in the UK and Europe and employed around 2,000 people. EY restructuring partner Simon Edel, who was one of four administrators appointed to the airline in March 2020, said: “The launch of a new Flybe will enhance regional connectivity across the UK and create new job opportunities within the airline industry. Flybe stands to make an important contribution to local economies as they rebuild after the pandemic and as restrictions ease to allow an increase in air travel.”
The deal is seen by a spokesperson for the company as a “critical first step” in the company’s mission to “accomplish the first-ever rescue deal of an insolvent British airline”.
THOUGHTS AND IMPLICATIONS
However, plans to relaunch services this summer are heavily dependant on travel restrictions and success with vaccinations. The news of Flybe’s rebirth also comes as Scottish airline Loganair announced it will start services between Exeter and Norwich in Summer 2021. Loganair has stepped in to replace 42 of Flybe’s 46 services now since flying out of Exeter in mid-2020, so this causes concern over re-emerging competition.
Photograph: AFP Photos
4. EU TO REGULATE AI?
The European Commission is considering banning the use of artificial intelligence (AI) for social monitoring and mass surveillance. The legislation that the EU has drafted will prohibit its use to track people and rank behaviour – a system that is already used by some cities in China.
Social credit scoring is used in China which determines an individual’s ability to access education, use public transport or even get certain jobs. To determine an individual’s score, mass surveillance is used to allow the government to monitor social conduct. Those who commit “social misdeeds” such as spreading false information, travelling on public transport without a ticket and smoking in no-smoking zones, will receive a lower credit score.
The EU is therefore taking measures to prevent the use of such technology to be used within the EU. The draft regulations detail a fine of up to 4% of a company’s turnover if the guidelines or rules are breached.
The EU believes that there must be restraints on the use of such technologies to prevent the infringement of civil liberties.
However, the EU has said the use of advanced AI would be allowed for reasons such as public security.
THOUGHTS AND IMPLICATIONS
Whether the right balance will be struck between preventing the infringement of civil liberties and ensuring the bloc stays competitive in the development of new technologies remains to be seen.
The use of technology and artificial intelligence to assist the operations of a business is on the rise. Just this year, Amazon has now opened a new till-less store which allows customers to leave the store without scanning the items or visiting a till. Instead, sensors on the shelves detect when an item has been removed while cameras and other technology backed by artificial intelligence monitor individuals’ movement around the store and the goods chosen. The bill is automatically charged to a shopper’s Amazon account when they leave the store. Even now, China uses facial recognition payments and more than 100 million citizens have registered to use the technology. Alipay, the payment service operated by e-commerce giant Alibaba Group, and its main rival WeChat Pay from Tencent, are powering the trend. Even Spain is expected to have one of the largest networks of facial recognition-powered ATMs in the world.
This evidently raises many questions and concerns over an individual’s civil liberties and right to privacy, and how it may be a question of when, and not if, AI will be implemented much more across the world over the coming years, and whether the EU are delaying the inevitable.
5. BILLIONAIRE BROTHERS BUYS LEON
Asda owners Zuber and Mohsin Issa have bought Leon, a British fast food chain for £100 million. Over 70 of Leon’s restaurants, including their franchise sites, are included in the deal and have been acquired by the billionaire brothers’ giant petrol forecourt business EG Group.
The brothers have said the firm was a “fantastic brand” they have “long admired”, and has committed to keeping on Leon’s management team and staff.
This deal will boost the Issa brothers’ food business, who currently operate 700 outlets, including KFC and Greggs franchises. It wishes to expand the business as well as include drive-thru sites.
Leon was founded in 2004 and is operated in the UK and across mainland Europe, and turned over £95 million in 2018.
⭐ 6. CATERPILLARS IN COURT ⭐
Legally Possible’s top news story of the week.
Marks & Spencer and Aldi are in battle as M&S launched a trademark infringement lawsuit against Aldi over its Cuthbert the Caterpillar Cake. M&S believes that Cuthbert closely resembles their iconic Colin the Caterpillar cake, which M&S have been selling since the 90’s and has three trademarks relating to the product.
Commentators have argued that several other supermarkets sell their own caterpillar cakes, such as Asda’s Clyde the Caterpillar, Waitrose’s Cecil the Caterpillar, Tesco’s Curly the Caterpillar and so on, raising questions as to why M&S have decided to pursure only Aldi. However, M&S “have not ruled out” pursuing other retailers as well.
The situation has been handled somewhat lightly across both companies social media platforms, with Aldi starting the hashtag #freecuthbert, tweeting “This is not just any court case, this is #FreeCuthbert”, in an attempt to mock M&S’ slogan.
Aldi has also now announced they will be donating all profits made from selling a limited edition Cuthbert to cancer charities, including M&S’ partners Macmillan Cancer Support, hashtagging #caterpillarsforcancer. Colin is central to M&S’ partnership with Macmillan, and the retailer has created a Colin product for the annual World’s Biggest Coffee Morning fundraising event.
Gary Assim, an intellectual property specialist at law firm Shoosmiths, said “M&S may find their case against Aldi difficult, since there are other caterpillar cakes on the market. They should have taken a zero-tolerance approach from the start if they felt that Colin and Connie were so important to them.”
In a statement, M&S said: “Love and care goes into every product on our shelves. So we want to protect Colin, Connie and our reputation for freshness, quality, innovation and value.”
What exactly are M&S arguing?
M&S believe that Aldi’s actions amount to passing off, which prevents traders from misrepresenting their goods or services as that of another trader. To satisfy the law of passing off, M&S must show that Colin must have a distinctive character or reputation, which M&S believe to be true. They must show that Aldi are attempting to unfairly benefit from the well-known strong reputation that Colin holds, and whether Cuthbert is close enough to Colin to cause confusion among customers. But, the high court’s decision will ultimately come down to whether they think Aldi is attempting to benefit commercially by bringing a product very similar to market.
If you want to read more about the case, check out Legal Cheek’s new article here.
THOUGHTS AND IMPLICATIONS
Despite commentators wondering why Aldi are the only supermarket M&S are pursuing over the cake, it is evident that Cuthbert does bear very close resemblance to Colin, more so than the other supermarkets. If M&S’ case is successful, Cuthbert would be struck from the shelves permanently and Aldi must agree not to sell any similar products in the future ever again.
This raises questions as to whether this is likely to happen, as Aldi has had a tendency over the years to create ‘copycat’ products (check out an article discussing this here!).
Despite being confused and perhaps misled, consumers arguably benefit from the increased choice and savings that the cheaper ranges, being Aldi, offer. But, by Aldi using a similar product, they could be benefiting from the positive associations and impressions customers have of the well-known brands product, being Colin. It is therefore easy to see how this would harm current and future sales of Colin if shoppers opt for Cuthbert, the cheaper alternative.
So what do you think? Should the law go further and protect well-known products and brands from being copied, or should M&S expect competition from all areas of the market, even the larger stores like Aldi? Leave a comment below or message me on social media!
Image: Photos from M&S/Aldi
7. DRIVERLESS DELIVERIES?
Self-driving delivery vehicles may become the new thing as Ocado has teamed up with Oxbotica, an autonomous vehicle software company, investing £10 million into the company as part of a broader, multi-year deal to develop self-driving hardware and software. This could include forklift trucks at warehouses and self-driving delivery vans.
In its announcement, however, Ocado recognised that getting permission from regulators to operate autonomous vehicles on public roads may take some time. The prototypes will not be here anytime soon, as they are hoped to be developed by 2024 and it may be several years after that before autonomous Ocado delivery vehicles hits our streets.
As it attempts to project itself as a technology platform as well as an online grocery store, Ocado have developed robots which pick and pack groceries at its state-of-the-art fulfilment centres. The first warehouse to use this technology was unveiled this week for America’s Kroger supermarket chain.
THOUGHTS AND IMPLICATIONS
Inevitably, the pandemic has accelerated many companies plans to improve their online operations and develop with technological advancements. Many retailers have been struggling to cope with the sharp increase in demand for their online orders since lockdown started last March, and if demand continues then Ocado are definitely ahead of the game.
Photo: BBC/PA Media
8. EUROPEAN SUPER LEAGUE ANNOUNCED
New plans for a European Super League were revealed on Sunday night that has thrown European football into turmoil. The league would offer permanent spots to some of the world’s biggest clubs and play matches midweek, while allowing the involved clubs to remain in their domestic competitions. This plan is currently opposed by FIFA and UEFA, the governing bodies for international and European football.
However, this announcement has been met with staunch criticism. Less than 48 hours after the announcement, Manchester City, Atletico Madrid and Chelsea have announced they will be withdrawing. This decision creates a huge challenge to the other teams’ chances of success in their endeavour with the Super League.
The Premier League released a statement saying a super league would “destroy” the premise of open competition. “Fans of any club in England and across Europe can currently dream that their team may climb to the top and play against the best,” said the statement. “We believe that the concept of a European Super League would destroy this dream.”
Image: Sky News
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