Google has been slapped with a record-breaking €2.4bn (£2.1bn) fine by European regulators for abusing its dominant position in the fiercely competitive and rapidly expanding world of online shopping.
The European Commission said that the search engine has 90 days to end the misconduct. If it does not, it faces penalty payments of up to 5 per cent of the average daily worldwide turnover of Alphabet, which is Google’s parent company.
“Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals,” said commissioner Margrethe Vestager, who is in charge of competition policy.
“Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors,” she said.
1.Barclays CEO under investigation for trying to identify whistleblower Monday Paril 10 | “What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation,” she added. Getty
The Economic Secretary to the Treasury has vowed that the Government will crack down on money laundering practices, after several of the UK’s biggest banks were accused of processing money from a Russian scam, believed to involve up to $80bn (£65bn). Reuters
Two former HBOS bankers were among six people found guilty of bribery and fraud that cost customers and shareholders hundreds of millions of pounds, the BBC reports. Lynden Scourfield, 54, a manager at HBOS, forced struggling clients to use the services of his friends David Mills, 60, and Michael Bancroft, 73. In return, the two businessmen arranged sex parties, cash and lavish gifts. On Monday, the three were convicted at Southwark Crown Court on accounts including bribery, fraud and money laundering. Mark Dobson, another manager at HBOS, Alison Mills, and John Cartwright were also convicted. Getty Images
Former Reckitt Benckiser executive linked to death of 100 people in South Korea jailed for seven years – Friday January 6
A former South Korean executive of UK-based Reckitt Benckiser has been jailed for seven years over the sale of a humidifier disinfectant that killed about 100 people and left hundreds with permanent lung damage. Shin Hyun-woo, head of Reckitt Benkiser’s Oxy subsidiary from 1991 to 2005, was found guilty of accidental homicide and falsely advertising the deadly product as being safe even for children. The consumer product disaster affected many families in South Korea, where children and pregnant women often battle dry winter seasons with humidifiers. Other retailers such as Lotte Mart and Homeplus were also found guilty of selling the deadly product.
A French court cut the damages owed by rogue trader Jerome Kerviel from €4.9bn (£4.2bn) to just €1m (£860,000). The court ruled on that Kerviel was “partly responsible” for massive losses suffered in 2008 by his former employer Societe Generale through his reckless trades. Kerviel has consistently maintained that bosses at the French bank knew what he was doing all along. AP
Antonio Horta-Osorio, the chief executive of Lloyds Bank, has broken his silence over allegations about his private life admitting he regrets any “damage done to the group’s reputation”. In a message sent to the bank’s 75,000 employees, the banker said that anyone can make mistakes while insisting that staff had to maintain the highest professional standards.
The head of the International Monetary Fund (IMF), Christine Lagarde, must stand trial in France over a payment of €403 million (now £340m, then £290m) to tycoon Bernard Tapie, a France’s highest appeals court has ruled. The court rejected Ms Lagarde’s appeal against a judge’s order in December for her to stand trial over allegations of negligence in her handling of the affair. Ms Lagarde could risk a maximum penalty of one year in prison and a fine of €15,000 euros if convicted.
A senior executive at HSBC has been arrested at New York’s JFK airport for his alleged involvement in a conspiracy to rig currency benchmarks, according to reports. Mark Johnson, global head of foreign exchange cash trading in London, was reportedly arrested on Tuesday. He will appear before a federal court in Brooklyn on Wednesday charged with conspiracy to commit wire fraud, Bloomberg said. Getty
Two ex- PricewaterhouseCoopers staffers were found guilty in Luxembourg of stealing confidential tax files that helped unleash a global scandal over generous fiscal deals for hundreds of international companies. Antoine Deltour and Raphael Halet face suspended sentences of 12 months and 9 months and were ordered to pay fines of €1,500 (£1,230) and €1,000 (£822) for their role in the so-called LuxLeaks scandal. Despite the minimal sentences, the ruling was described by Deltour’s lawyer as “shocking” and “a terrible anomaly.” The ruling “puts on guard future whistle-blowers,” Deltour told reporters.The LuxLeaks revelations sped beyond Luxembourg, causing European Union regulators to expand a tax-subsidy probe and propose new laws to fight corporate tax dodging, while EU lawmakers created a special committee to probe fiscal deals across the 28-nation bloc. reuters
A former Goldman Sachs dealmaker trying to persuade Gadaffi-era Libya to invest $1 billion with the investment bank procured prostitutes and invited Libyan officials to lavish parties in the hope of winning the business, the High Court heard on Monday June 13.The Libyan Investment Authority sovereign wealth fund is suing Goldman Sachs for inappropriately coercing its naïve staff into giving its sovereign wealth fund cash to the bank to invest in products they did not understand. The products were designed to generate big profits for Goldman, the LIA claims.Goldman denies wrongdoing and says the LIA was treated as an arms-length customer Reuters
Darren Topp, the former boss of BHS, has said former owner Dominic Chappell threatened to kill him when he challenged him over a £1.5 million transfer out of the business. MPs on the Business, Innovation and Skills Committee asked Mr Topp about a £1.5 million transfer Mr Chappell made from BHS to a company called BHS Sweden.
Mike Ashley admitted paying Sports Direct employees below the minimum wage at a hearing in front of MPs. The company founder said that workers were paid less than the statutory minimum because of bottlenecks at security in an admission that could result in sanctions from HMRC. Reuters
Mitsubishi has admitted to using false fuel methods dating back to 1991. The scale of the scandal is only just coming to light after it was revealed in April that data was falsified in the testing of four types of cars, including two Nissan cars. AP
Millions of confidential documents have been leaked from one of the world’s most secretive law firms, exposing how the rich and powerful have hidden their money. Dictators and other heads of state have been accused of laundering money, avoiding sanctions and evading tax, according to the unprecedented cache of papers that show the inner workings of the law firm Mossack Fonseca, which is based in Panama.
Google’s tax avoidance Google reached a deal with the HM Revenue and Customs to pay back £130 million in so-called “back-taxes” that have been due since 2005. George Osborne championed the deal as a “major success”. But European MEPs have since called for the Chancellor to appear in front of the committee on tax rulings to explain the tax deal.
16. Martin Shkreli became known as the “most hated man in the world” after his drug company, Turing, increased the price of a 62-year-old drug that treated HIV patients by 5,000% to $750 a pill. He was charged with illegally taking stock from Retrophin, a biotechnology firm he started in 2011, and using it pay off debts from unrelated business dealings. Shkreli, who maintains he is innocent, and says there is little evidence of fraud because his investors didn’t lose money.
17. VW admitted to rigging its US emission tests so that diesel-powered cars would looks like they were emitting less nitrous oxide, which can damage the ozone layer and contribute to respiratory diseases. Around 11 million cars worldwide were affected.
18. Quindell was once a darling of AIM but its share price fell in April 2014 when its accounting practices were attacked in a stinging research note by US short seller Gotham City. In August the group was forced to disclose that the £107 million pre-tax profit it had reported for 2013 was incorrect, and it had in fact suffered a £64million loss.
19. The boss of Toshiba, the Japanese technology giant, resigned in disgrace in the wake of one of the country’s biggest ever accounting scandals. His exit came two months after the company revealed that it was investigating accounting irregularities. An independent investigatory panel said that Toshiba’s management had inflated its reported profits by up to 152 billion yen (£780m) between 2008 and 2014.
Fifa, football’s world governing body, has been engulfed by claims of widespread corruption since the summer of 2015, when the US Department of Justice indicted several top executives. It has now claimed the careers of two of the most powerful men in football, Fifa President Sepp Blatter and Uefa President Michel Platini, after they were banned for eight years from all football-related activities by Fifa’s ethics committee. A Swiss criminal investigation into the pair is ongoing. Getty Images
City trader Tom Hayes, 35, has become the first person to be convicted of rigging Libor rates following a trial at London’s Southwark Crown Court. Hayes worked as a trader in yen derivatives at UBS before joining the American bank Citigroup in Tokyo. He was fired from Citigroup following an investigation into his trading methods. He returned to the UK in December 2012 and was arrested following a two-and-a-half year criminal investigation by the SFO.
Google has consistently denied wrongdoing and Tuesday’s ruling will deal a sharp blow to the group, especially because online shopping searches are one of the company’s most important sources of sales growth as it takes on rivals as diverse as Facebook and Amazon.
It also indicates that the EU is cracking down on misconduct and will send a message of zero tolerance to other players. It’s the biggest fine ever handed to a single company in an EU anti trust case, beating a nearly €1.1bn penalty that US chipmaker Intel was forced to pay back in 2009.
“The decision is a real kicking for Google. The fine is around double the amount of the previous largest fine issued by the commission, showing how seriously the behaviour is viewed,” said Oliver Fairhurst, associate and competition law specialist at law firm Lewis Silkin.
He said that in addition to Google having to rethink the way in which it operates, it might also mean that the company faces legal claims from competitors – and even consumers – who say that they lost out because of the behaviour.
“One major caveat to all this though is that Google is very likely to appeal, and any such appeal process may take us well into the 2020s.”
Google reportedly uses a type of online advertising known as Product Listing Ads, or PLAs. The format lets a marketer place an ad for an item with large images and price information in the prime digital real estate at the top of search result pages.
The commission said that since 2008, Google has systematically given prominent placement to its own comparison shopping service, while demoting rival comparison shopping services in its search results. Research shows that consumers are much more likely to click on results that are more visible.
Even on a desktop, the commission said, the ten highest-ranking generic search results on the first visible page together generally receive approximately 95 per cent of all clicks on generic search result. The top result receives about 35 per cent of all the clicks.
Comparison shopping services rely to a great extent on traffic to be competitive, meaning that Google’s engineering of search results skewed the market unfairly.