RTR - Exclusive: Google faces hefty EU fine in shopping case by August - sources

Exclusive: Google faces hefty EU fine in shopping case by August - sources

EU antitrust regulators aim to slap a hefty fine on Alphabet (GOOGL.O) unit Google over its shopping service before the summer break in August, two people familiar with the matter said, setting the stage for two other cases involving the U.S. company.

The European Commission's decision will come after a seven-year investigation into the world's most popular internet search engine triggered by scores of complaints from both U.S. and European rivals.

The EU competition authority accused Google in April 2015 of distorting internet search results to favour its shopping service, harming both rivals and consumers.

The Commission and Google declined to comment. The U.S. company has in the past rejected the charges, saying that regulators ignored competition from online retailers Amazon (AMZN.O) and eBay Inc (EBAY.O).

Fines for companies found guilty of breaching EU antitrust rules can reach 10 percent of their global turnover, which in Google's case could be about $9 billion of its 2016 turnover.

Apart from the fine, the Commission will tell Google to stop its alleged anti-competitive practices but it is not clear what measures it will order the company to adopt to ensure that rivals get equal treatment in internet shopping results.

The regulator could set out general principles or specific instructions for Google to follow, said an observer.

The Commission's tough line is in sharp contrast with the U.S. Federal Trade Commission which settled its own web search case with the company in 2013 by requiring Google to stop "scraping" reviews and other data from rival websites for its own products.

Google made three unsuccessful attempts to settle the case with the previous European Competition Commissioner Joaquin Almunia in a bid to stave off a possible fine and a finding of wrongdoing.

Almunia's successor Margrethe Vestager, however, has shown no willingness to settle with Google.

The company has also been charged with using its Android mobile operating system to squeeze out rivals and with blocking competitors in online search advertising related to its "AdSense for Search" platform.

The platform allows Google to act as an intermediary for websites such as online retailers, telecoms operators or newspapers. The Commission has warned of massive fines in both cases.

>>> Fed to release Dodd-Frank bank stress test results on June 22nd, CCAR stress

Fed to release Dodd-Frank bank stress test results on June 22nd, CCAR stress test results on June 28th 
Results from the latest supervisory stress tests conducted as part of the Dodd-Frank Act will be released on Thursday, June 22, and the results from the Comprehensive Capital Analysis and Review (CCAR) will be released on Wednesday, June 28, the Federal Reserve Board announced on Thursday. Results for both exercises will be released at 4:30 p.m. EDT.

The Dodd-Frank Act stress tests are forward-looking exercises conducted by both the Federal Reserve and by large bank holding companies supervised by the Federal Reserve. The exercises assess whether firms have sufficient capital to absorb losses and continue operating during stressful economic and financial conditions over nine quarters. The results of the supervisory tests conducted by the Federal Reserve will include data such as projected post-stress capital ratios, revenue, expense, and loss estimates under hypothetical adverse and severely adverse scenarios previously published by the Federal Reserve. The standardized capital actions used for the Dodd-Frank Act stress tests assume no changes in recent levels of dividend payments and no common stock repurchases for each participating bank holding company, and allow the results to be compared across the firms. The same firms will separately release their company-run Dodd-Frank Act stress test results on or before July 7.

CCAR is an annual exercise undertaken by the Federal Reserve to assess whether large bank holding companies have forward-looking capital planning processes that account for their unique risks and are supported by sound risk-measurement and -management practices. As part of CCAR, the Federal Reserve evaluates each firm's plans to make capital distributions, such as dividend payments, stock repurchases, as well as planned acquisitions. CCAR results will include post-stress capital ratios under hypothetical adverse and severely adverse scenarios published by the Federal Reserve and will reflect the capital actions the firms plan to undertake during the nine-quarter period.

In a change from last year, the qualitative portion of CCAR, which evaluates the strength of each firm's capital planning processes, no longer applies to 21 firms with less complex operations. Rather, the capital planning processes of these firms will be evaluated in the normal course of supervision. The 13 larger and more complex firms continue to be subject to the qualitative assessment of CCAR.

>>> ConAgra big game hunting, PPG finally drops Akzo chase, Patterson por

The Flash: ConAgra big game hunting, PPG finally drops Akzo chase, Patterson portfolio watch (MergerMarket)
  • Connolly back chasing PF
  • PPG not as easy as 123
  • PDCO fires CEO
ConAgra Brands [NYSE:CAG] recently approached Pinnacle Foods [NYSE:PF] to discuss a possible takeover, according to Reuters, though PF’s response to the interest is unclear. The packaged food space is certainly ripe for consolidation as a consumer shift to healthier options has hurt growth. Given new PF CEO Mark Clouse’s appetite for some type of transformative deal, and the fact CAG CEO Sean Connolly previously pursued PF while leading Hillshire Brands, the Flash wondered earlier this year if CAG could make a move for PF. Connolly has made a number of divestitures to radically transform CAG and now with leverage at about 1.5x, CAG could look for a big deal. Both CAG and PF may eye Reckitt Benckiser’s [LON:RB] food business, which based on analytics from this news service, could fetch an equity valuation of GBP 1.49bn (USD 1.9bn). In February, PF said it could boost its leverage up to about 5.5x to do a deal, giving it about USD 2bn in firepower. PF’s previous agreement to sell to Hillshire, which fell through when Hillshire itself was bought, shows the company is open to a sale. And CAG is certainly looking for a deal. If the company is unable to land PF, it may move on to another target. And with a number of dealmakers on its board, including the addition of a high-profile seller last December, perhaps CAG could look for a suitor of its own. Fellow Chicago, Illinois-based food company Kraft Heinz [NASDAQ:KHC] has shown its hungry for a large deal after its failed bid for Unilever [LON:ULVR] earlier this year.
Three strikes and PPG Industries [NYSE.PPG] is out. After Akzo Nobel [AMS:AKZA] rejected a third bid of EUR 96.75 (including dividend payment), PPG has dropped its hostile pursuit of the Dutch coatings company. PPG noted that Akzo’s “boards have consistently refused to engage and did not respond to our call or letter.” PPG had run out of time after the Dutch Authority for the Financial Markets (AFM) made a decision not to extend the deadline by which PPG had to submit a formal tender offer past today. The Amsterdam Enterprise Court’s rejection of AKZA activist Elliott Management’s request to force an EGM to vote on the ouster of AKZA Chairman Antony Burgmans left the company with very few options to continue its hostile approach. AKZA acknowledged PPG’s withdrawal, restating that the planned split of the company into two divisions, Paints and Coatings and Specialty Chemicals, “will lead to a step change in growth and long-term value creation for our shareholders and all other stakeholders.”
What’s next for PPG? The company could continue to focus on Europe, where valuations are more reasonable. A tie-up with EUR 14bn Evonik Industries [ETR:EVK] could be a possibility. Both companies have been increasing their silica manufacturing capacity. EVK has been a rumored acquirer itself, though, and is thought to be interested in AKZA’s specialty chemicals business, as well as Dutch competitor DSM [DSM.EN]. EVK majority owner RAG Stiftung could be a stumbling block to any deal, as the German foundation has gone on the record as saying that it’s not interested in selling shares. PPG isn’t the only US company interested in Europe. Warren Buffett’s General Reinsurance recently purchased a 3% stake in German chemical company Lanxess [ETR:LXS], and this morning Deere & Company [NYSE:DE] announced the purchase of privately held road construction equipment company Wirtgen Group for EUR 4.36bn in cash. Wirtgen had EUR 2.6bn in sales last year. The deal is expected to close in 1Q18 and be accretive to DE’s EPS. We expect that it won’t be the last deal in the space. Blackstone Group [NYSE:BX] recently raised a USD 40bn fund, with USD 20bn coming from Saudi Arabia, to invest in infrastructure businesses.
Patterson Companies [NASDAQ:PDCO] announced that Chairman and CEO Scott Anderson has stepped down, effective immediately. Both Anderson and the board “mutually determined that now is the time for a new leader to guide PDCO going forward.” The 49 year-old was named CEO in 2010 and has overseen a recent transformation. PDCO doubled the size of its veterinary business with a USD 1.1bn acquisition in 2015 and divested its medical business later that year for USD 717m. Now split roughly 50/50 between dental and animal health businesses, PDCO has been focused on implementing a new enterprise resource planning initiative. Back before the medical divest, PDCO jumped on our radar as a possible three-way breakup candidate. It appears that the company plans to hold on to its lower margin animal health business for now, but the candidate picked as the next CEO could offer some hints into how the company views its future portfolio. Former CEO and Director James Wiltz has been appointed as interim CEO while the board searches for a replacement. Anderson has agreed to serve in an advisory capacity to the company through June 2019. PDCO also restated its previously announced fiscal 2018 guidance.