Commercial Awareness Update – W/C 8th March 2020

The round-up of the stories that a budding Student Lawyer should be aware of this week. Sign up here to get these updates in your inbox every week.

Virgin Media’s Data Breach

Article by Gina Asadi (recent BPP LLM Legal Practice (Solicitors) graduate)

The UK’s second largest broadband company, Virgin Media, recently discovered that one of its databases had not been configured properly. It has been reported that Virgin Media has been struggling to deal with the aftermath of this discovery.

As a result of the poor configuration, one of Virgin Media’s marketing databases that contains personal details of 900,000 customers has been left unsecured for 10 months, from April 2018 until late February 2020. During that period, at least one person outside of the company has had access to the unsecured database.

An investigation into the incident carried out by Virgin Media confirmed that the data breach is likely to affect around 15% of the company’s fixed line customers, and extends to its Virgin Mobile customers. There are also fears that the breach will also affect non-Virgin Media customers, who have had their details given to the Company through its ‘refer a friend’ promotions.

Further, Virgin Media has confirmed that the data breach was not a result of a cyber-attack, rather it was due to a staff member’s failure to follow the correct procedures. Virgin Media has made attempts to reassure customers by stating that there are no indications of the leaked data being used for illegal purposes; and maintaining that the database did not contain any passwords or financial details. However, this is unlikely to ease customers’ concerns as Virgin Media has confirmed that the database did include names, email addresses, phone numbers and contract details. This information could be used against the customers, especially if the data is now in the hands of a malicious third party that could pretend to be a Virgin Media employee and ask the customers to give them even more sensitive data.

Virgin Media has communicated the data breach to the Information Commissioner’s Office (‘ICO’), however, it has failed to inform the affected customers immediately as the data was not of financial nature. It is likely that the ICO will not take this lightly and will enforce the strict GDPR data protection laws, leaving Virgin Media with a hefty fine in an unstable market.

You can read more here and here.

Airbus: Are Fines Enough to Tackle Corruption?

Article by Tofunmi Oluwatobello (Corporate and Commercial Law LLM , University of Sheffield)

Airbus will pay 4 billion dollars to settle a lengthy corruption investigation. The investigation period in itself spans from 2004 and 2016 across authorities in France, Britain and the United states for corruption accusations. During these years it ran schemes involving highly ranked persons and now has to pay 3.6 billion euros in penalties to regulators across those three countries.

Airbus has been discovered to be using intermediaries to bribe officials in numerous countries to buy its planes and satellites over rival competitors such as Boeing. Due to the ordeal, their reputation took a major hit and has since attempted rebranding under new management. These bribes were executed through shell companies set up by executives working for an autonomous marketing unit. This unit made their bribes effective by forging documents such as fraudulent contracts, accepting fake invoices for services never delivered, and creating false activity reports.

The hefty fine is a huge achievement for bribery reforms implemented in France in 2016. Airbus hopes the settlements, approved by courts in the three countries, will end turbulence within its management which had led to scores of senior executives being sacked. The firm is one of the largest employers in the UK, with a workforce of 13,500. The settlement surpasses the previous UK record for a corporate fine for bribery – the £671m paid by Rolls-Royce, Britain’s leading multinational manufacturer, in 2017. It also spans more territories covering Indonesia, Malaysia and Russia amongst others.

Under the deal, known as a deferred prosecution agreement (DPA), Airbus will pay the penalties and promise to mend its ways. In return, any prosecution of the firm as a corporation will be suspended for three years.

Brexit: Mitigating Damage to the Economy

Article by Jamie Howarth (Second year LLB at ULaw)

Recent reports show that a UK-US trade deal would only boost the UK economy by 0.16% over the next 15 years. This figure pales in comparison to the loss the UK economy will incur following Brexit, which is expected to be around the 5% mark over a similar period. Whilst the UK-US trade deal is essential, with the US accounting for nearly 19% of exports and 11% of imports in the UK in 2018, the question remains; how do we bridge the economic gap of leaving the EU?

The Department for International Trade has revealed that the UK is currently negotiating similar trade arrangements to those it was party to as an EU member state. As yet, 19 deals representing c. 8% of total UK trade have been made, and further negotiations are still ongoing with other countries. These figures can be found on the gov.uk page on existing UK trade agreements with non-EU countries. It is hoped that these deals will reduce the economic damage of leaving the EU.

The alternative to attempting to make up for the losses is to mitigate them directly at the source; the UK-EU trade deal. Whilst negotiations are currently ongoing, it appears that a significant sticking point is the concept of the level playing field. In short, the further the UK intends to deviate from alignment with EU laws and regulations, the higher tariffs will be imposed on the UK’s access to the EU market. The EU intends to protect its member states by ensuring that British companies cannot undercut them, so the imposition of regulations would offset this damage. However, it appears the UK would sooner accept the tariffs than the laws and regulations of the EU, which is where a significant portion of the estimated loss of GDP is expected to arise out of.

The results of the ongoing negotiations between the UK and EU will likely not see the light of day until much later in the year, but the UK economy is most certain to take a hit on the above point as the EU enters the talks with significant bargaining power in comparison to the UK.

Covid-19: Hello Europe?

Article written by Francis William Louis (first-year LLB student at a London university)

Three months since the virus emerged in China, the country has seen a significant slowdown in the growth of those infected with the daily infected count hovering in the hundreds with most in the Hubei province and other provinces recording a single-digit count. Europe is currently facing the pandemic with Italy being the worst-hit nation. It has increased at a rate above 50% and sometimes even doubling the previous day count. As the days pass, there are more cases reported around neighbouring EU countries with the latest cases reported in Spain and Poland. The local authorities in many of the countries have used the same methodology as China to contain the virus by locking down areas and cancelling public events. Whether such methods would work, is yet to be determined because even though the authorities are simulating a similar approach, but China took a radical stance including shutting down factories and halting their economy. Would the EU takes the same stance and put businesses on hold for weeks? That is yet to be seen.

Needless to say, the outbreak has affected the EU economy severely. Italy has pumped €3.6 billion into the economy to cushion itself from the economic impact. School are closed in Italy until further notice. Furthermore, as the country has a high ageing population, many of those infected are senior citizens. The outbreak poses challenges to the government. Thus, the concerted effort to channel funds into the northern region could help to alleviate hardships, especially in hospitals.  In France, the Louvre was closed on Sunday as the infected count increases in the country. Authorities are closely watching the situation while awaiting the outcome of the discussion by the G7 leaders and Eurozone finance minister last week. The anticipated Barcelona Conference is at a dead-end with corporate leaders in companies such as Facebook and Amazon pulling out that resulted in the event being cancelled. The estimated economic loss to the economy is at a staggering $1 billion.

In the UK, Flybe, Britain’s largest airline entered into administration on Thursday after it has grounded all flights and ruled that the business is ceased with immediate effect. The CEO sent out an email to its staff implying that the coronavirus has been a major factor for the airline being grounded. Analysts believe that this is just the beginning. Many airlines are currently facing huge losses due to lower tourist traffic and fluctuating foreign exchange rate due to the uncertainty in the market. As a result, the industry is projected to lose $113 billion in revenue this year. However, the reality is that it could go either way. The airline could make smaller losses due to a fall in oil price after OPEC failed to reach consensus to lower oil supply or airlines could make a bigger loss if the current situation were to remain or worsen.

In the coming weeks, we would have better clarity on the precautionary methods and containment policies that countries in Europe would exercise. However, the policies they would enact, would no doubt cause the market and businesses to face a period of uncertainty.