Daily Financial News Analysis – 21st Oct’20 – Free PDF Download

Google Antitrust Violations

  • The Justice Department on Tuesday sued Google for antitrust violations.
  • It alleged that the company abused its dominance in online search and advertising to stifle competition and harm consumers.
  • The lawsuit marks the government’s most significant attempt to protect competition since its groundbreaking case against Microsoft more than 20 years ago.
  • “Google is the gateway to the internet and a search advertising behemoth,” US Deputy Attorney General Jeff Rosen told reporters.
  • “It has maintained its monopoly power through exclusionary practices that are harmful to competition.” Antitrust cases in the technology industry have to move quickly, he said. Otherwise “we could lose the next wave of innovation.”
  • It could be an opening salvo ahead of other major government antitrust actions, given ongoing investigations of major tech companies including Apple, Amazon and Facebook at both the Justice Department and the Federal Trade Commission.
  • Critics contend that multibillion-dollar fines and mandated changes in Google’s practices imposed by European regulators in recent years weren’t severe enough and that structural changes are needed for Google to change its conduct.
  • Google responded immediately via tweet: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to — not because they’re forced to or because they can’t find alternatives.”
  • The department isn’t seeking specific changes in Google’s structure or other remedies at this point, but isn’t ruling out seeking additional relief, officials said.
  • The case was filed in federal court in Washington, DC. It alleges that Google uses billions of dollars collected from advertisers to pay phone manufacturers to ensure Google is the default search engine on browsers.
  • Eleven states, all with Republican attorneys general, joined the federal government in the lawsuit.

Airtel – Aatmanirbhar – 5G

  • Bharti Airtel is developing 5G network technologies in India through own R&D and in collaboration with local, US and Japanese firms.
  • This is a dramatic shift in the mobile phone operator’s strategy.
  • It may develop its own intellectual property rights (IPR), as against depending on third-party equipment vendors.
  • Airtel is not just developing technology for 5G, home broadband, Internet of Things (IoT) and other wireline products in India, but is also aiming to locally produce the equipment through contract manufacturers like US’s Flex and India’s Tejas Networks.
  • Airtel is wants achieve economies of scale.
  • This comes at a time when bitter rival Reliance Jio has said it is developing its own end-to-end 5G technology, and has highlighted its ‘Make in India’ credentials.
  • The company though believes India can wait until 2022 for 5G, by which time the ecosystem, including handsets and India-specific use cases, will be more developed.
  • The government is planning to hold spectrum auctions sometime in 2021.
  • Under its Make in India strategy, Airtel is planning to bring a large ecosystem of partners including US’s Mavenir, Xilinx and Altiostar (part owned by Japan’s Rakuten), Japan’s NEC and Taiwan’s Sercom that will help the telco develop equipment using OpenRAN technology.

Local Cos in Road Projects

  • India is set to make it easier for local companies, especially new entrants, to bid for road projects as the government gives a big push towards Atmanirbhar Bharat Abhiyan.
  • Major changes in the eligibility criteria for projects built on the engineering, procurement and construction (EPC) mode, including easing of financial and technical criteria, are under way.
  • Government of India has maintained for quite some time that financial and technical criteria of infrastructure projects should not be forbidding.
  • The annual turnover requirement has been reduced to 15% of the estimated project cost from 20%.
  • The capital cost of prior projects executed has been reduced to 75% of the estimated project cost.
  • “Earlier, the financial capacity criteria was in the 1:1 ratio and that made very few contractors eligible for the projects,” the official said.
  • “So many of these projects would languish because of lack of competition.”
  • With the proposed relaxations, the bidding capacity of smaller companies in EPC projects is expected to increase by almost 50%.
  • For tunnel construction of up to 200 metres, the ministry has scrapped the need for prior experience.
  • Similarly, prior experience is not needed for a company to be eligible to build a bridge up to 60 metres long.
  • For hybrid annuity mode (HAM) projects, the net worth condition has been lowered to 15% of the project from 25%.
  • For build-operate-transfer (BOT) and HAM projects, a wider range of sectors in which there is prior experience will be acceptable, making companies that have executed works in hospitals, hotels, smart cities, warehouses and oil and gas eligible to bid for road contracts.

Timely Dispute Resolution – Contract Farming

  • The government has rolled out time-bound rules and procedures for dispute resolution in the recently-enacted farm law on contract farming.
  • As per the rules notified for the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, sub-divisional magistrates would resolve the dispute by forming a conciliation board having equal representation from both the sides.
  • “The process of conciliation should be completed within 30 days from the date of appointment of conciliation board,” said an official.
  • “If the conciliation board fails to resolve the dispute, either of the party can approach sub divisional authority, who will have to decide the case within 30 days of filing application after proper hearing.”
  • The official said that there are several instances where land of farmers falls across more than one sub divisions. “In such cases, the sub-divisional magistrate having jurisdiction over the largest portion of the land would be the deciding authority,” the official informed.
  • The official said that parties involved in the farm agreement will have the right to move to higher authority for review.
  • “The collector of the concerned district or the additional collector nominated by the collector would be the appellate authority. The aggrieved party may, within 30 days of passing of such order, file an appeal to the appellate authority in physical or electronic format,” the official said.
  • The authority would then have to dispose of the case within 30 days from the date of the appeal. “The order passed by the appellate authority would have the force of the decree of the civil court,” the official said.
  • Dispelling the apprehension, the official said that the farm laws have been constituted in the interest of farmers.
  • “Even after entering into an agreement, farmers will have the flexibility to terminate the contract any time as per their choice. However, the other party will have to abide by the clauses in the agreement. They can’t get out of the contract without fulfilling obligations,” the official said.

Nods Fast-tracked for Cos

  • India is expediting approvals to companies that have minor investments from Hong Kong and China.
  • An inter-ministerial committee with joint secretaries from various ministries and departments has been set up to assist a home secretary-headed panel in examining such proposals.
  • A host of proposals from non-Chinese-origin companies, some even from the US, are stuck for security clearances after the change in the foreign direct investment policy.
  • Some of these proposals involve minor investment from Hong Kong.
  • The official said these proposals would be examined as outlined in the PRESS NOTE 3 of the FDI policy.
  • The Department for Promotion of Industry and Internal Trade had said the changes to the FDI framework were aimed at “curbing opportunistic takeovers/acquisitions of Indian companies due to the pandemic”.
  • This was largely aimed at curbing direct and indirect Chinese investment owing to growing security concerns.
  • This move to approve certain investments is beneficial for startups as many of them have investments from China.
  • The government is assured that the de facto control stays with Indians and its concerns on national security, control, data security and data localisation are also addressed without compromise.
  • Over 100 proposals have been stuck for clearances since the policy came into effect.
  • The inter-ministerial panel headed by the home secretary was set up some time back, but no proposal has been approved so far.




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