TheChek News Flow

It appears Elon Musk has more problems than simply corporate incest:

*NHTSA RECENTLY LEARNED OF FATAL CRASH W/ 2015 MODEL S

*NHTSA OPENING EVALUATION ON TESLA MODEL S

Tesla Statement: A Tragic Loss

We learned yesterday evening that NHTSA is opening a preliminary evaluation into the performance of Autopilot during a recent fatal crash that occurred in a Model S. This is the first known fatality in just over 130 million miles where Autopilot was activated. Among all vehicles in the US, there is a fatality every 94 million miles. Worldwide, there is a fatality approximately every 60 million miles. It is important to emphasize that the NHTSA action is simply a preliminary evaluation to determine whether the system worked according to expectations.

Following our standard practice, Tesla informed NHTSA about the incident immediately after it occurred. What we know is that the vehicle was on a divided highway with Autopilot engaged when a tractor trailer drove across the highway perpendicular to the Model S. Neither Autopilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky, so the brake was not applied. The high ride height of the trailer combined with its positioning across the road and the extremely rare circumstances of the impact caused the Model S to pass under the trailer, with the bottom of the trailer impacting the windshield of the Model S. Had the Model S impacted the front or rear of the trailer, even at high speed, its advanced crash safety system would likely have prevented serious injury as it has in numerous other similar incidents.

It is important to note that Tesla disables Autopilot by default and requires explicit acknowledgement that the system is new technology and still in a public beta phase before it can be enabled. When drivers activate Autopilot, the acknowledgment box explains, among other things, that Autopilot “is an assist feature that requires you to keep your hands on the steering wheel at all times," and that "you need to maintain control and responsibility for your vehicle” while using it. Additionally, every time that Autopilot is engaged, the car reminds the driver to “Always keep your hands on the wheel. Be prepared to take over at any time.” The system also makes frequent checks to ensure that the driver's hands remain on the wheel and provides visual and audible alerts if hands-on is not detected. It then gradually slows down the car until hands-on is detected again.

We do this to ensure that every time the feature is used, it is used as safely as possible. As more real-world miles accumulate and the software logic accounts for increasingly rare events, the probability of injury will keep decreasing. Autopilot is getting better all the time, but it is not perfect and still requires the driver to remain alert. Nonetheless, when used in conjunction with driver oversight, the data is unequivocal that Autopilot reduces driver workload and results in a statistically significant improvement in safety when compared to purely manual driving.

The customer who died in this crash had a loving family and we are beyond saddened by their loss. He was a friend to Tesla and the broader EV community, a person who spent his life focused on innovation and the promise of technology and who believed strongly in Tesla’s mission. We would like to extend our deepest sympathies to his family and friends.

EDF’s proposed Hinkley Point C nuclear power station in Somerset is supposed to be a crucial part of the UK’s future energy mix, providing 7 per cent of the country’s total electricity needs when up and running in 2025.

But even before the Brexit vote, the project has encountered years of uncertainty and multiple delays.

Critics say Hinkley Point is too expensive. Within EDF, dissenters are concerned the construction risk is too large for a company that has a stretched balance sheet and is battling with a drop in European power prices.

A majority of the EDF unions — which have considerable influence at the company by having six seats on the 18-member board — want to delay any binding commitment to Hinkley Point.

The unions are also concerned that the EPR reactor technology that will be used is still untested, with no working example in the world.

The EDF workers’ committee — an official body within the company made up largely of union members — is legally obliged to give its official opinion on whether Hinkley Point should go ahead on July 4.

Last week the committee filed a legal claim to try to delay that decision. It alleged that EDF has “refused” to give the body key documents about Hinkley Point C.

EDF has rejected the allegations. A court hearing about the workers’ committee claim is scheduled for September 22.

On Thursday, the CGT, CFE-CGC and the FO urged the EDF board not to make the final investment decision at least until after this legal hearing.

Emmanuel Macron, the French economy minister, on Tuesday insisted that the UK vote to leave the EU would have “no consequences” for the Hinkley Point project, urging EDF to press ahead with its final investment decision.

But in a BBC interview on Wednesday, Michel Sapin, the French finance minister, said the project had become “more difficult” following the Brexit vote.

BRUSSELS—The European Commission on Sunday authorized Italy to use government guarantees to provide liquidity support to its banks, a spokeswoman said, disclosing the first intervention by a European Union government into its banking system following the U.K. vote to leave the EU.

The June 23 referendum sparked a steep sell-off in banking stocks followed by intense volatility this week. That has exacerbated already existing troubles in the Italian banking sector, which is suffering from high levels of bad loans and poor profitability amid super-low interest rates.

The Italian liquidity-support program includes up to EUR150 billion in government guarantees, said an EU official. Several other European countries with weak financial systems already have similar support systems in place.

The commission spokeswoman declined to comment on the amount of guarantees that were authorized, but said that the budget requested by the Italian government had been found to be proportionate. The Italian economy ministry declined to comment.

Only solvent banks would qualify for the liquidity support, which will run until the end of the year. “There is no expectation that the need to use this scheme should arise,” the commission spokeswoman said.

The guarantees, which could be used to guarantee debt issued by banks, are separate from an Italian government blueprint to recapitalize weak lenders. Italian officials have said that the government hopes to inject up to EUR40 billion in fresh capital into domestic banks.

In contrast to liquidity support, which the commission can approve during times of market turmoil, capital injections fall under the EU’s new strict rules on bank bailouts. Those rules would require private investors, including bondholders, in the bailed-out bank to take losses.

“As this decision and other precedents demonstrate there are a number of solutions that can be put in place in full compliance with EU rules to address market turbulence,” the commission spokeswoman said. She said the support program was approved under the commission’s “extraordinary crisis rules for state aid to banks,” and that guarantee programs such as the one for Italy were generally approved for six months so they could be adjusted for new developments.

Diego Valiante, head of the financial-markets and institutions unit at the Centre for European Policy Studies, said the decision to allow extra support was a clear reaction to the market turbulence that has followed the Brexit vote.

“This is good news for the Italian banks,” he said, adding that similar programs could be set up for other countries with battered financial systems.

The victory of the “Leave” vote in the British referendum has triggered political turmoil in the U.K., where Prime Minister David Cameron has said he would step down after the summer. Questions remain about when—and if—a new government will trigger formal exit talks with the EU and what kind of relationship it would seek with the bloc.

“There will be a long period of uncertainty around this,” he said.

The post-referendum market moves have exacerbated preexisting problems in the Italian banking system, even though banks in other countries, such as Spain, have a bigger exposure to the U.K. market and have seen their shares drop even more.

Italian banks have lost more than half of their market capitalization since the beginning of the year, as investors fret about some EUR360 billion in bad loans still logged on their balance sheets. That drop in market value compares to an average decline of less than one third for European lenders.

Some Italian banks have seen their shares plummet by some 75% in the first half of the year.

A person familiar with the Italian government’s plans said the cabinet of Prime Minister Matteo Renzi hoped to use a liquidity backstop to contain investor panic, which could result in a run on deposit and affect banks’ liquidity.

The liquidity support provides a temporary cushion for Italian banks. But it doesn’t solve the broader issue of how to raise sufficient capital to sustain writedowns of loan portfolios gone bad.

The commission’s decision also comes ahead of several important supervisory announcements for European banks. The European Banking Authority will publish the results of its latest stress tests by the end of July. Although these stress tests aren’t designed to fail specific lenders, the European Central Bank could ask banks to raise more capital in their wake.

Later this summer, the ECB plans to publish draft guidance on how banks should deal with nonperforming loans, or NPLs.

Mondelez International Inc. has made a roughly $23 billion bid for chocolate giant Hershey Co. in what would be a blockbuster deal uniting two of the world’s best-known candy makers.

Mondelez, which makes Oreo cookies and Cadbury chocolate bars, recently sent a letter to Hershey proposing the tie-up at $107 a share, according to people familiar with the matter. The bid is 50% cash and 50% stock, they said.

Hershey shares surged 15% to $111.87 on The Wall Street Journal’s report.

The maker of eponymous Kisses and chocolate bars had a $21 billion market value Thursday ahead of the report. Mondelez had a $69 billion market value.

Any sort of deal would be contingent on the approval of the Hershey Trust, which holds 8.4% of the famous company’s common stock and 81% of its voting power. The Trust has been opposed to selling the company in the past, though Mondelez is prepared to go to lengths to win it over.

Mondelez is pledging to protect jobs following a merger of the companies, locate its global chocolate headquarters in Hershey, Pa., and rename the company Hershey, according to one of the people.

A Mondelez-Hershey deal would create the world’s biggest candy company, bringing together the second- and fifth-largest industry players by revenue, according to research firm Euromonitor. Mondelez currently ranks as the world’s second-largest confectionery maker, after Mars Inc.

The bid would be expected to face little resistance from antitrust authorities, as Mondelez doesn’t have its own presence in the U.S. chocolate market. Hershey, meanwhile, has a limited non-U.S. presence.

Still, it’s far from clear the offer will lead to a deal.

For one thing, the bid could cause others who have long coveted the iconic company to come out of the woodwork. Nestlé SA is one possibility. The Swiss food giant already licenses the KitKat brand to Hershey in the U.S. Nestlé has the right to reclaim control of the chocolate-covered wafer treat if someone else buys Hershey—at no cost, which could diminish Hershey’s value to Mondelez by $3 billion, according to a person familiar with the matter. Nestlé could have greater antitrust issues in the U.S. if it were to try to buy Hershey, however.

Then there’s the trust, which was established by the 122-year-old company’s founder, Milton Hershey, and runs a school in Hershey for underprivileged children. The trust’s mandate extends beyond simply maximizing shareholder value.

Mr. Hershey was considered as much a philanthropist as an entrepreneur. His Mennonite background led the son of German immigrants to a belief that businesses and their leaders are morally obligated to share their wealth with society. So as he built the chocolate company, he raised a town as well, erecting a bank, a department store, churches, golf courses, a zoo and a trolley system—public accouterments that were all completed by the early 1900s. Then he and his wife, Catherine, founded a school for orphan boys, now called the Milton Hershey School. The prime beneficiary of the Hershey School Trust is the Milton Hershey School, which was set up in 1909 to serve disadvantaged students and is now a lavishly appointed institution.

More than a decade ago, Wrigley, now a unit of the privately held candy giant Mars, tried to buy Hershey, but resistance from the trust scuttled the deal at the last minute.

There has been turnover recently on the trust’s board. The Pennsylvania Attorney General is investigating the board for alleged overpayment of directors and conflicts of interest. This year, several board members of the Trust have resigned or been fired, and it’s possible the shake-up could change the dynamic and sentiment of the board. The trust has said it is working with the attorney general’s office.

It’s also unclear what reception any deal would get in the town of Hershey, where the company is based and where the streetlights along Chocolate and Cocoa Avenues are topped with giant Hershey kisses.

Hershey had sales of $1.8 billion in the first quarter, a 5.6% decline from the year-earlier period, in part because of adverse currency moves. In 2015, the candy maker had sales of $7.4 billion and earnings of $513 million. Today, the company has about 80 brands, and has recently moved to court more health-conscious consumers.

Mondelez, based in Deerfield, Ill., had sales of $29.6 billion in 2015, a 13.5% drop from the year-earlier period—also in part because of currency pressure. In the first quarter, the company had revenue of $6.5 billion, down nearly 17% from the year earlier amid pressure on its coffee business.

Mondelez has a complicated deal-making history. The company is the product of a 2012 separation from Kraft Foods Inc., which had been under pressure from Trian Fund Management LP and other activist investors. That came only two years after Kraft had acquired the U.K. chocolate company Cadbury PLC for $19 billion, and the chocolate assets went with Mondelez in the separation, while Kraft Foods Group Inc. kept cheeses, nuts and other well-known grocery-store brands.

In 2015, Kraft Foods merged with ketchup giant Heinz, owned by Brazilian private-equity giant 3G Capital Partners. William Ackman’s Pershing Square Capital Management LP disclosed a $5.5 billion stake in Mondelez last year, betting the company would become a target, rather than an acquirer, in a coming wave of consolidation in the snack industry. Mr. Ackman, an investor in 3G, has pushed Mondelez to either cut costs or consider selling to Kraft Heinz Co., as it’s now known.

Amid trouble in his own portfolio, which led that bet to become an outsize holding proportionally, Mr. Ackman recently trimmed the Mondelez stake to 5.6% including options.

Trian also has a big Mondelez holding and firm founder Nelson Peltz is on the snack company’s board.

Trian in 2013 unveiled stakes in PepsiCo Inc. and Mondelez and began pushing for a merger of the two to be followed by a spinout of Pepsi’s beverage business, which Mr. Peltz argued was dragging down its more profitable and faster-growing snack business.

Pepsi rejected the idea, and Trian dropped its call for a merger when Mr. Peltz joined Mondelez’s board in 2014. Trian owns about 3% of the snack maker’s stock, a stake worth more than $2 billion at recent prices.

Spotify says Apple is making it harder for the streaming music company to compete by blocking a new version of its iPhone app.

In a letter sent this week to Apple’s top lawyer, Spotify says Apple is “causing grave harm to Spotify and its customers” by rejecting an update to Spotify’s iOS app.

The letter says Apple turned down a new version of the app while citing “business model rules” and demanded that Spotify use Apple’s billing system if “Spotify wants to use the app to acquire new customers and sell subscriptions.”

The letter, sent by Spotify general counsel Horacio Gutierrez to Apple general counsel Bruce Sewell on May 26, suggests that Spotify intends to use the standoff as ammunition in its fight over Apple’s rules governing subscription services that use its App store.

“This latest episode raises serious concerns under both U.S. and EU competition law,” Gutierrez wrote. “It continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple’s previous anticompetitive conduct aimed at Spotify … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors.”

Spotify has distributed copies of the letter to some Congressional staff in Washington, D.C. Yesterday, Senator Elizabeth Warren criticized Apple, Amazon and Google for what she called anticompetitive practices; Warren said that “Apple has long used its control of iOS to squash competition in music.”

Spotify declined to comment; Apple hasn’t responded to request for comment.

For the past year, Spotify has argued publicly, and to various regulators in the U.S. and Europe, that Apple’s subscription policies effectively punish third-party music services that use Apple’s platform, while boosting Apple Music, the home-grown service it launched in June 2015.

Apple doesn’t require subscription services to use its iTunes billing service, but it doesn’t allow them to use an alternate payment system within the app, as Google does. Apple charges a monthly fee of up to 30 percent for those who do use its billing system — and it doesn’t want app makers to use the apps to promote alternate subscription options outside the apps. (And, of course, app makers like Spotify can’t distribute their apps onto iPhones outside of Apple’s store.)

Those policies created lots of drama when Apple introduced them in 2011, but most publishers have ended up agreeing to use Apple’s in-app billing option and paying Apple its fee.

A handful that don’t, like Amazon, offer more limited versions of their apps in Apple’s app store; Amazon CEO Jeff Bezos recently suggested that Apple’s subscription rules led Amazon to stop selling the Apple TV box in its store.

In Spotify’s case, the company has used Apple’s billing system for years, but passed on Apple’s fee to customers by charging $13 a month instead of the $10 a month the service sells for outside Apple’s store. Last year, after Apple launched its own music service, Spotify became more vocal about encouraging users to pay for the service outside of iTunes.

Last fall, Spotify started a new end-run via a promotional campaign offering new subscribers the chance to get three months of the service for $0.99 — if they signed up via Spotify’s own site. This month, Spotify revived the campaign, but Gutierrez says Apple threatened to remove the app from its store unless Spotify stopped telling iPhone users about the promotion.

Spotify stopped advertising the promotion. But it also turned off its App Store billing option, which has led to the current dispute.

Spotify still has a commanding lead in the subscription music race. In March, it said it had 30 million paying subscribers; this month, Apple said it has 15 million paid subscribers for Apple Music.

- key remains the Hershey Trust as they will be the deciding vote