Interview with Georgia Davies, a future trainee solicitor at Shearman & Sterling
December 9, 2021
Which One? SQE or LPC?
December 12, 2021
Christmas Shopping: Who really wins?
Black Friday and Cyber Monday have come and gone. Companies have made their buck, and customers have snapped up supposed bargains. Price promotions are there to entice shoppers in – that is no secret. What is less clear is how legitimate these promotions are. Are companies misleading their customers, and if so, what does the law say about it?
A Case Study
In 2019, H Samuel was fined £60,000 for their misconduct. One of their diamonds appeared to be discounted from £2599 to £1169, a great deal by all accounts. H Samuel failed to clarify that the ring had previously been reduced to £1160. Under consumer law, they ought to have displayed intervening prices, so customers understand the nature of the discount.
Having absorbed the modest fine, the company were credited for their guilty plea and good character. The question that begs itself is, how many companies are getting away with this behaviour?
The Law
In recent years, regulators have cracked down on price comparisons or ‘yo-yo’ pricing. In the lead up to Black Friday, companies might artificially increase the price of a product to then lower it drastically. The law is that an item must have a “reference price”, i.e., the same price for 28 days, before dropping it in the sale. This is one way that the regulators are holding companies to account.
To combat misleading advertising, there was the 10% rule. For example, companies will often offer “up to 50% off” discounts”. The law says that this offer had to apply to at least 10% of the range of products on offer. Canny retailers would comply with these guidelines whilst finding loopholes in the system. Considering this, the law has changed so that companies now have a “significant proportion” of their products on offer. The question that the courts will need to grapple with is, what is “significant proportion” as a percentage?
Another ambiguous clause in the documentation is that the “average consumer” should not consider the savings claim misleading or unfair. Despite there being some guidance to what this means, it remains terribly vague.
Where do we go from here?
If regulators enforce the rules, retailers act reasonably, and customers shop sceptically, the problem will cease to exist. One can only be so optimistic!
Written by Avishai Marcus
Would Omicron Lead To Another Economic Catastrophe?
The economy let out an outcry as the new variant, Omicron, besieged the public with horror and shock on the 24th of November.
Experts learnt that this variant was far different from its siblings. It has about 32 mutations on its spike protein and 18 in other parts of its viral genome. They had ascertained that these mutations rendered the new virus more transmissible, but its degree of severity remains unknown. The virus could run into two diametrically opposing ways, therefore it is cloaked with next level uncertainty.
The first possibility would be that its transmissibility is directly proportional to its severity. It is ostensibly more fatal. Alternatively, the South African Medical Research Council proposed that the mutations might have weakened the virus, resembling more of the flu. However, the answer the public demanded is whether the current vaccines will still be able to confer immunity. Many are worried that this virus may bring the whole world back to square one as the vaccines are not tailored towards destroying a variegated genome.
Uncertainty will undoubtedly lead to consumer anxiety
One chief and direct consequence of this volatility is consumer confidence or lack thereof. Even without the government’s advice, a considerable portion of the population had manoeuvred towards a more careful behaviour. Consumers had essentially grown anxious about how the new variant may open doors to another devastating death toll.
Considering consumer confidence is one of the key assets of businesses to sustain their position within the market, this may have a vast negative implication when confidence shifts into apprehension. From the average buyer towards sophisticated investors, hesitancy may be detrimental to many sectors within the business industry (from travel and hospitality to shares and index funds), which could give rise to worse inflation and supply crisis.
Travel and tourism take a detour again
The lack of information about the nature of the virus spurred various countries to implement precautionary measures — some draconian and some mild. Countries like China, Japan, Israel, Australia, New Zealand, and Vietnam closed their borders, no longer permitting foreign entry. Meanwhile, countries like the US and the UK reinforced the PCR tests (regardless of vaccination status) and travel bans across different countries in Africa.
The travel industry expressed its concerns as it predicted that the tightened restrictions would disincentivise the public from travelling. It is equally inconvenient and risky. Hence, there had been an enormous loss of revenue on top of the drop in its share value as investors sold their shares the moment the news broke out.
They had also raised questions about the efficacy of the current travel bans, identifying such as ‘blanket measures.’ The World Health Organisation (WHO) themselves obliged countries to avoid taking such measures as it does not stop the spread. They noted that it would no longer work when the virus entered the country. Vaccination programmes, and the Test, Trace and Isolate system should remain in the foreground instead.
Conversely, travel insurance companies are experiencing a spike in consumer demand. Shannon Lofdahl, president and CEO of Travelex Insurance Services, stated that the pandemic had ‘reassured their value.’
“The largest change is the consumer demand and desire for deeper understanding of the travel insurance coverages. The landscape of travel has changed, and consumers want to feel protected, both physically and financially,” she explained.
Omicron’s hostility towards the hospitality sector
The hospitality industry (i.e. hotels, pubs, restaurants) has been evidently bullied during this pandemic. Multiple businesses within the hospitality industry profit largely during the Christmas holidays, which is why the emergence of Omicron had never been more untimely. They have been experiencing a similar predicament – perhaps even worse – as the travel industry.
UK Hospitality reported that cancellation rates of various hospitality venues had increased to 10%. Apart from the virus, the reintroduction of masks in shops and public transport had rendered consumers apprehensive. It has been observed that consumers are ‘risk-averse,’ thus voluntarily enacting social distancing and other steps to minimise infection rate.
Enterprises such as the Best Western Hotel Group and Dartmoor Lodge had immediately felt the new variant’s impact. About 70% of the 290 Best Western Hotels had observed a downturn in winter bookings, whilst Dartmoor Lodge in Devon requested government support.
Moreover, some businesses held onto the Christmas season as their lifeline. Some anticipated going into administration if the government decided to go into another nationwide lockdown. Mr Damian Wawryzniak, an award-winning chef running House of Feasts in Peterborough, said, “We won’t be able to survive without that Christmas trade.”
Oil prices recoiled
The anticipated rise in oil prices took an approximately $10 a barrel plunge. Brent Crude’s international value is currently $70, which was formerly $79. It must be noted that Omicron was not the only cause of the fall but had aggravated the situation.
Nonetheless, consumers may not feel the quasi-benefits of this reduced price because retailers do not react as rapidly in bringing down their prices as they would in bringing it up to follow through with the cost of oil. RAC recognised what seems like ‘price gouging’ as retailers have been making a 19p a litre profit compared to its 6p profit before COVID-19.
The bear market had taken the bullish one by its horns
According to the BBC, the variant has “definitively intruded upon recent stock market euphoria.”
Ever since Omicron was announced, the market appeared bearish. The Dow Jones Industrial Average and the S & P 500 plunged 1.9% to 2.5% lower on Black Friday. UK’s FTSE 100, Germany’s Dax, pan-European Stoxx 600, Tokyo’s Nikkei index, and France’s Cac40 scaled back 1.5% – 1.6% each.
This plethora of indexes pared down as investors became frantic and steered towards more stable assets. The pandemic has proven that intangible assets are the most lucrative; thus, Zoom, Deliveroo, Netflix, and other famous stocks that had leveraged a more suitable model for this crisis are expected to remain appropriately positioned within the market.
Unsurprisingly, hospitality and the airlines could not say the same as their stocks continue to fall. British airlines and Carnival (a cruise line) dropped over 10%, and Boeing 5.7%, to name but a few.
Apart from investors, this nosedive will significantly affect people involved in pension schemes. The pension scheme’s pot is dependent on the performance of various shares, and this dramatic fall should be taken as a warning. Coming up with backup investments is advised.
A catastrophe or a mere setback?
The Confederation of British Industry (CBI) originally predicted an economic expansion of 8.2% in 2022 that recently dwindled into 5.1%. The economy had only started recovering, but owing to the new variant, and by extension the restrictions the government would impose to combat it, it might be halted.
The travel restrictions, to illustrate, had prevented consumers from spending on services within that industry. Consequently, their surplus savings and demands will concentrate on goods. This leads to higher inflation because the demand is disproportionate to the supply. The asymmetrical scale of supply and demand is also caused by issues in the supply chain also tethered to travel restrictions. Manufacturing countries, like Vietnam, had closed their borders, so resources dwindled and became more expensive.
However, there is a high likelihood of rapid recovery. This is chiefly through utilising the experiences from 2020 as precedent and avoiding the same mistakes. The government’s immediate response when South Africa had informed the world of the new variant’s existence was a testament to that.
What transpired in March 2020 was new, but the society, economy, and political sphere have been slowly adjusting. The unprecedented had been demoted as a setback that responsible response can salve. A stark difference between a year ago and today is that vaccines are at every country’s disposal and booster jabs are in the pipeline. Therefore, remedy may be furnished sooner, and consumer confidence may be restored.
Written by Nicole Mallare
A Brave New Metaverse
The term ‘Metaverse’, coined by Neal Stephenson, first became popular in the 1970s. Science fiction writers have used the concept to describe a parallel universe in which humans reside as digital avatars. The Metaverse has never been depicted as a utopia in science fiction literature. Instead, the real world has been represented as chaotic, and the only way to escape is by occupying these virtual realms.
During the pandemic, the phrase gained traction as the population became enslaved to its planet Earth, which was ravaged by a virus. The pandemic provided a chance for Mark Zuckerberg to benefit from the situation. The renaming of Facebook to Meta foreshadows a futuristic future.
What is the ‘Metaverse’?
The ‘Metaverse’ is a type of technology that combines virtual sound, sight, and sensation seamlessly. It is a technology that simulates the physical world in a virtual environment. In the Metaverse, you may live a Sims-like existence and give yourself the illusion of living in a better world. Mark Zuckerberg’s vision is for our perception of reality to be controlled by Facebook/Meta, one of the largest and contentious businesses. Zuckerberg is optimistic about his Utopian Metaverse and views it as the successor of the mobile internet.
What are the opportunities of Metaverse?
There are indisputable advantages that the Metaverse provides. The Metaverse, to state the obvious, will allow you to live out your desires. You may be slaughtering your foes, playing monopoly on the streets of Paris, and cruising amid the Caribbeans all in the same evening. All of this will be accomplished with breath-taking realism while also providing confidence that you are safe at home.
You will be able to express yourself as you choose in the Metaverse. For years, we represented ourselves online through profile pictures; now, your Avatar will be replacing your profile image. Your Avatar will be a three-dimensional representation of yourself. You may be whatever age, gender, or sexual orientation you desire. Your meta will resemble a person rather than a sim. Meta is working on a technology that will allow the construction of lifelike avatars. In the end, this will feel more like real life than a game.
Humans will be more productive because of the Metaverse. Moving out into the Metaverse to construct workplaces, simulations, and training will be possible. Facebook’s horizon workrooms, for example, are an attempt to compete with Zoom by giving employees new methods to communicate online in virtual reality. Learning will become more interactive. Googling will soon become obsolete since the Metaverse allows people to learn interactively through touching, examining, and obtaining information.
Digital commerce has been on the upswing, and the pandemic has undoubtedly expedited it. The Metaverse will develop into a new economy and is working on a Horizon marketplace. In a novel method, Metaverse will link buyers and sellers. Businesses will enter this realm to offer their wares. Users will also become merchants, for example, by selling their virtual apparel.
Why is the Metaverse a dystopia?
Facebook’s business strategy has undeniably measured engagement across a platform that it controls. Facebook measures what people enjoy and then optimises an algorithm to offer content that individuals interact with. All advertising and surveillance organisations have the same goal: to observe how people engage and adjust the environment to encourage them to connect more. This ambition is what has gotten us to where we are now, with Cambridge Analytica and Facebook’s previous data-handling issues.
If Facebook’s business strategy is to use data from prior interactions to influence what people connect with on the internet algorithmically, it is logical to infer that Meta has the same purpose. Physiological responses in the virtual realm can retrieve personal data. This implies that only the information you enjoy will be served to you, rather than the content you despise. This will simply reinforce our preconceptions and lead to us surrendering our views to others whose interests are not aligned with ours but benefit from advertising.
Offensive content such as hate speech is constantly moderated by Facebook. It is one thing to monitor printed language, where it is easy to look for potentially damaging terms. However, what would moderation look like in the Metaverse?
The Metaverse will be significantly more complicated, and any attempts to govern it will have to be quite intrusive. Someone or something would need to track all forms of activities or actions. If we do not want the Metaverse to devolve into a “State of War,” we will have to keep a close eye on everything we do. But this sounds very dystopian!
What is the legal ramification of the Metaverse?
Users may no longer be required to enter personal information proactively in the Metaverse. As a result, this option raises privacy concerns regarding data collecting. Businesses that participate in the Metaverse, for example, will be subject to data protection regulations. The main point of contention in this area is who will be accountable for enforcing data protection laws. For example, will several entities obtain personal data via the Metaverse, each with its own set of goals in mind? Another important concern is who is to blame if data is exploited while in the Metaverse.
Conclusion
There are several concerns globally, all of which are incorporated in the Sustainable Development Goals. One can only hope that humanity does not enter this virtual world in quest of a better world while neglecting the present global concerns that virtual reality cannot solve. While Metaverse has apparent benefits, there is also concern that it could take a dystopian turn.
Written by Tajinder Kaur
Energy Sector Tribulations
The UK energy sector is facing tumultuous times. More than two million households have seen their energy firm collapse, and nearly 50% of energy firms have folded since the start of 2021 due to soaring gas prices. Ampoweruk Ltd, MA Energy Limited, Omni Energy Limited and Zebra Power Limited are among the latest firms to stop trading, where the provision of cheap fixed deals to customers has meant they have not been able to pass on the cost of the hiking gas prices. In turn, firms have had to shut down following the effects of supplying customers at a loss.
The increase in gas prices comes from a worldwide squeeze on gas and energy supplies. More specifically, a lack of renewable energy in the UK (following the least windy summer since 1961), a fire at the UK’s main subsea electricity cable with France, and a reduced flow of gas to the UK from Norway, Russia and Continental Europe, has meant a perfect storm of global and socio-economic events has materialised to destabilise the UK’s domestic energy market. But what does this mean for law firms? The current crisis presents a number of commercial, legal and regulatory issues within the energy sector of which a variety of stakeholders need to be conscious.
To summarise but a few:
– Directors of the failed energy suppliers should be mindful of their duties to shareholders and conscious of wrongful trading allegations should they not implement strategies in good time to avoid the company entering an insolvency process.
– Incoming suppliers should be alert to future litigation risk, with the large volume of data within the industry making them vulnerable to potential exposures and requiring them to be especially cognisant of data protection legislation.
– The insolvency of energy suppliers is highly regulated, and key regulatory regimes must be complied with to protect consumer interests regarding the continuity of supply and the promotion of competition in the energy supply market.
Energy and Restructuring teams with experience across the whole spectrum of Energy sub-sectors will therefore be poised to advise on all issues arising out of the current difficulties, whether for energy suppliers, business customers, wholesalers, service providers, or creditors, or lenders.
