Monday, February 28, 2011

Administrative Conference of the United States/Ethics: ACUS Committee to Consider Possible Government Contractor Ethics Recommendation

On February 28, the Administrative Conference of the United States (ACUS) blog, Administrative Fix, posted that on March 16, from 9:00 to noon ET, the ACUS Committee on Administration and Management will "consider a draft recommendation concerning the ethics rules applicable to government contractors and their employees." Additional information about the project is available on the ACUS Government Contractor Ethics page.
Public comments should be submitted in writing no later than noon on March 15 via comments@acus.gov. Members of the public who want to attend the meeting in person should reply to comments@acus.gov.

Antitrust and Trade Regulation/International Law: Canadian Competition Bureau Announces Plans to Revamp Merger Guidelines

On February 25, the Canadian Competition Bureau issued an announcement that it plans to "undertake moderate revisions to the Merger Enforcement Guidelines (MEGs)." The anouncement made clear that the Competition Bureau plans to address only "certain discrete areas where the MEGs do not fully reflect current Bureau practice and current economic and legal thinking."

Specific areas that the Bureau stated it is exploring for possible revision include: (1) "additional guidance on monopsony issues, consistent with the Competitor Collaboration Guidelines, and our OECD submission on this topic"; (2) "how the Bureau assesses transactions in which minority interests or interlocking directorates are at issue, building on the Bureau’s OECD submission on this topic"; (3) "clarif[ication] that merger review is not a linear process that must start with market definition, but rather an iterative process in which evidence of market concentration is considered alongside other evidence of competitive effects, with the goal of determining whether a merger creates or enhances market power"; (4) "more detailed guidance on how the Bureau assesses the unilateral effects of a merger, particularly in light of current economic thinking"; (5) clarif[ication of] the framework used to assess coordinated effects"; (6) "more accurate guidance on how the Bureau assesses vertical issues, focusing on foreclosure effects"; and (7) "incorporat[ion of] the Efficiencies Bulletin into the MEGs." The Bureau "intends to publish the revised draft MEGs during the second quarter of 2011, and to seek public feedback on the revisions prior to publishing the final revised MEGs in the Fall."

Friday, February 25, 2011

Intellectual Property/International Law: Federal Court of Australia Rejects Movie Companies' Infringement Claims Against Australian ISP

On February 24, in Roadshow Films Pty Ltd. & Ors v. iiNet Ltd., No. NSD179/2010, [2011] FCAFC 23, the Federal Court of Australia Full Court dismissed an appeal by a bevy of international movie and entertainment companies against the decision of the primary judge that the Internet service provider iiNet Ltd had not infringed the companies' copyrights when iiNet's customers had illegally downloaded the companies' content. In a lengthy opinion that analyzed numerous provisions of Australian law, the Full Court found it to be "common ground that there have been primary infringements of the copyrights of the Copyright Owners by use by iiNet users of services provided by iiNet." The Court went, however to state that "while the evidence supports a conclusion that iiNet demonstrated a dismissive and, indeed, contumelious, attitude to the complaints of infringement by the use of its services, its conduct did not amount to authorisation of the primary acts of infringement on the part of iiNet users."

Thursday, February 24, 2011

Banking and Financial Services/International Law/International Trade: Australia and New Zealand Sign Important Investment Protocol

On February 16, the governments of Australia and New Zealand signed an Investment Protocol to the Closer Economic Relations Trade Agreement. According to a new report by Kelly Buchanan of the Library of Congress, and as reflected in press releases by the Australian and New Zealand governments, the Protocol "increases the screening thresholds above which foreign investments require regulatory approval in each country. In Australia, the screening threshold for New Zealand investors will increase from AU$231 million (about US$233.6 million) to AU$1.005 billion (about US$1.016 billion), and in New Zealand, the screening threshold for Australian investors will increase from NZ$100 million (about US$76 million) to NZ$477 million (about US$362 million)."

Banking and Financial Services/International Law: New Developments on Iceland Icesave Deposits

Over the last ten days, there have been two significant developments in Iceland with regard to Icesave deposits, the high-yield savings accounts offered by the online bank Icesave in the Netherlands and the United Kingdom. On February 16, the Icelandic Parliament, the Althingi, passed a bill that -- according to a report by Wendy Zeldin of the Library of Congress -- would "enable the Icelandic government to guarantee loans from those two countries to cover Dutch and U.K. depositor claims stemming from the collapse of Icesave's parent company, Landsbanki Islands h.f. Passage of the bill comes more than two years after the Iceland financial system's near collapse in October 2008."

Second, on February 22, Iceland's President, Olafur Grimsson, called a referendum on the bill. According to a BBC article, President Grimmson told reporters, "It is important that the nation again will get its say." In a March 2010 referendum on a previous version of the Icesave deal, 93.2 percent of Icelandic voters rejected that deal. The BBC noted that "[u]nder the terms of the latest deal Iceland will have longer to repay, and at a lower interest rate than before." Moody's warned, however, that if the bill were to be rejected, it would "likely downgrade the government's ratings to Ba1 or below, given the negative repercussions that would follow for the country's economic and financial normalisation," and might "lead to a cut-off in the remaining $1.1 billion committed by the other Nordic countries and probably also to delays in Iceland's IMF program."

Intellectual Property/International Law: Law Library of Congress Publishes Report on Māori Culture and Intellectual Property Law

In December 2010, the Law Library of Congress published online a report by Kelly Buchanan, a Foreign Law Specialist with the Library of Congress, on Māori culture and intellectual property law. The report "discusses some of the issues and challenges in protecting cultural expressions and traditional knowledge in the law, and examines two examples of this in the context of the use of Māori cultural expressions. It also sets out the changes (or proposed changes) to New Zealand’s intellectual property legislation that seeks to enable Māori concerns and concepts to be taken into account through a consultative process."

Wednesday, February 23, 2011

Intellectual Property: White House Announces Strategy for American Innovation

On February 4, the White House issued the "Strategy for American Innovation." The Strategy, which updates the "Innovation Strategy" issued in 2009, includes a patent reform agenda that the White House declared "essential to reducing the enormous backlog of patent applications at the U.S. Patent & Trademark Office (USPTO). By stalling the delivery of innovative goods and services to market, this backlog impedes economic growth and the creation of high-paying jobs. The patent reform legislative agenda will enable the USPTO to adequately fund its operations through user fees and allow the agency to implement new initiatives to improve patent quality while reducing the average delay in patent processing times from 35 months to 20 months. Once implemented, the USPTO’s proposed three-track model will allow applicants to prioritize applications, enabling the most valuable patents to come to market within 12 months."

Antitrust and Trade Regulation/International Law: South African Competition Commission Announces "Fast-Track Settlement" Process for Construction Firms

On February 1, the South African Competition Commission announced the establishment of a "fast-track settlement" process for construction firms "who have been party to collusive practices in bidding for projects in the public and private sectors." The Commission has been conducting an investigation in the construction industry that "has uncovered widespread anticompetitive conduct through various arrangements," such as meetings between major firms "to allocate tenders and police each other's behaviour through a structure referred to as 'The Party'."

The Commission's announcement specified that it had "devised a fast-track settlement procedure to incentivise firms to enter into a comprehensive settlement that is financially advantageous." It invited firms "to apply for fast-track settlement with complete and truthful disclosure of information regarding collusion. In addition the firm must undertake to cooperate and cease anti-competitive conduct. Upon complying with the requirements, the Commission will settle with participating firms with a reduced administrative penalty compared to the penalty if each transgression were to be prosecuted separately."

Criminal Process/Intellectual Property/International Law: Renault Files Criminal Complaint with French Prosecutors on Alleged Industrial Spying

On January 13, according to a New York Times article, Renault filed a criminal compaint with the Office of the Public Prosecutor in Paris, alleging that a foreign company tried to obtain secrets relating to Renault's electric-car program. Renault previously had suspended three of its executives, whom it suspected of seeking to pass on data relating to the electric-car program, and reportedly had scheduled disciplinary hearings on January 11. After a French Member of Parliament publicly intimated "that a Chinese intermediary had sought to obtain secrets from the three Renault executives," a Chinese Foreign Ministry spokesman responded with a statement that such charges were "totally baseless and irresponsible."

Tuesday, February 22, 2011

Securities, Commodities, and Exchanges: FINRA Proposes New Rule on Private Placements and Member Firm Participation

On January 11, the Financial Industry Regulatory Authority (FINRA) requested comment on a proposal to amend FINRA Rule 5122. Rule 5122, according to the FINRA regulatory notice, "requires, subject to certain exemptions, disclosure in the offering document of the intended use of offering proceeds, expenses, and the amount of selling compensation to be paid to the broker-dealer and its associated persons, in any private placement in which a participating broker-dealer (or its control entity) is the issuer. The rule also requires that at least 85 percent of the offering proceeds must be used for the business purposes identified in the offering document. Lastly, the rule requires each offering document to be submitted to FINRA to allow the staff to conduct ex post reviews to assess compliance with the rule and to identify problematic terms and conditions. "

The proposal would expand Rule 5122 "to reach all private placements in which a member firm participates—not just those in which the member firm (or its control entity) is the issuer—while retaining nearly all of the existing exemptions, including those for offerings sold solely to certain institutions, qualified purchasers and other sophisticated investors." To reflect the broader scope of the proposed rule and its prior experience with Rule 5122, FINRA also proposed "to eliminate the exemption for offerings in which a member acts primarily in a wholesaling capacity." The comment period ends March 14.

Energy/Environment/Homeland Security/International Law: United Kingdom Energy Minister Announces Review of Offshore Drilling Policies

On January 12, immediately after the January 11 issuance of the National Commission on the BP Deepwater Horizon Oil Spill and Oil Drilling's final report, United Kingdom Energy Minister Charles Hendry issued a statement that offered favorable comments on the report. The statement also announced that the United Kingdom Government intended to review the United Kingdom’s oil and gas offshore regulatory regime "against the findings of the US investigations," and that the review would begin within a month.

Energy/Environment/Homeland Security: Deepwater Horizon Commission Issues Report

On January 11, the National Commission on the BP Deepwater Horizon Oil Sill and Offshore Drilling issued its final report to the President. The report reached seven principal conclsions:
1. "The explosive loss of the Macondo well could have been prevented."
2. "The immediate causes of the Macondo well blowout can be traced to a series of identifiable mistakes made by BP, Halliburton, and Transocean that reveal such systematic failures in risk management that they place in doubt the safety culture of the entire industry."
3. "Deepwater energy exploration and production, particularly at the frontiers of experience, involve risks for which neither industry nor government has been adequately prepared, but for which they can and must be prepared in the future."
4. "To assure human safety and environmental protection, regulatory oversight of leasing, energy exploration, and production require reforms even beyond those significant reforms already initiated since the Deepwater Horizon disaster. Fundamental reform will be needed in both the structure of those in charge of regulatory oversight and their internal decisionmaking process to ensure their political autonomy, technical expertise, and their full consideration of environmental protection concerns."
5. "Because regulatory oversight alone will not be sufficient to ensure adequate safety, the oil and gas industry will need to take its own, unilateral steps to increase dramatically safety throughout the industry, including self-policing mechanisms that supplement governmental enforcement."
6. "The technology, laws and regulations, and practices for containing, responding to, and cleaning up spills lag behind the real risks associated with deepwater drilling into large, high-pressure reservoirs of oil and gas located far offshore and thousands of feet below the ocean’s surface. Government must close the existing gap and industry must support rather than resist that effort."
7. "Scientific understanding of environmental conditions in sensitive environments in deep Gulf waters, along the region’s coastal habitats, and in areas proposed for more drilling, such as the Arctic, is inadequate. The same is true of the human and natural impacts of oil spills."

Thursday, February 17, 2011

Banking and Financial Services/Securities, Commodities, and Exchanges: Financial Crisis Inquiry Commission Issues Final Report

On January 27, the Financial Crisis Inquiry Commission (FCIC) issued its final report on the 2007-2008 financial crisis. The FCIC, created in 2009 pursuant to the Fraud Enforcement and Recovery Act, Public Law 111-21, reached six general conclusions in the majority report: (1) the crisis was avoidable; (2) "widespread failures in financial regulation and supervisionproved devastating to the stability of the nation’s financial markets"; (3) "dramatic failures of corporate governance and risk management
at many systemically important financial institutions were a key cause of this crisis"; (4) "a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis"; (5) "the government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets"; and (6) "there was a systemic breakdown in accountability and ethics."

The majority report also reached three conclusions with respect to specific components of the financial system: (1) "collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis"; (2) "over-the-counter derivatives contributed significantly to this crisis"; and (3) "the failures of credit rating agencies were essential cogs in the wheel of financial destruction." Finally, the majority report concluded that "the failures of credit rating agencies were essential cogs in the wheel of financial destruction." Four FCIC members filed dissenting views.

On February 16, members of the U.S. House Financial Services Committee reportedly divided along partisan lines in supporting or criticicing the FCIC report. According to the Los Angeles Times, "[o]nly Democrats supported the panel's majority findings, which cast blame widely among regulators, corporate executives and consumers for a crisis deemed avoidable."

Administrative Conference of the United States: Chairman Verkuil Announces ACUS Implementation of Google Apps for Government

On February 16, on the Administrative Conference of the United States (ACUS) blog, Chairman Paul Verkuil announced that ACUS had implemented Google Apps for Government. Chairman Verkuil stated that ACUS had "recently launched a collaborative workspace for Members and staff using Google Apps for Government to share documents, calendars and websites."

Agriculture/Commodities: CFTC Issues Proposed Rule on Agricultural Swaps

On February 2, the Commodity Futures Trading Commission published in the Federal Register a notice of proposed rulemaking on agricultural swaps. According to the notice, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) "provides that swaps in an agricultural commodity (as defined by the Commission) are prohibited unless entered into pursuant to a rule, regulation or order of the Commission adopted pursuant to [the] Commodity Exchange Act . . . ." Dodd-Frank also includes options (other than an option on a futures contract) in its definition of swaps.

In general, the proposed rule "would implement regulations whereby swaps in agricultural commodities and all commodity options (including options on both agricultural and non-agricultural commodities), other than options on futures, may transact subject to the same rules as all other swaps. The proposed rules for swaps in an agricultural commodity would repeal and replace the Commission's regulations concerning the exemption of swap agreements. Because the Dodd-Frank Act defines commodity options (other than options on futures) as swaps, the proposed rules for options would substantially amend the Commission's regulations regarding commodity option transactions." The deadline for comments is April 4.

Securities: SEC Issues Final Dodd-Frank Rules Relating to Asset-Backed Securities

On January 20, the Securities and Exchange Commission issued two sets of final rules to implement various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). The first rule, which implements section 943 of Dodd-Frank, involves "new rules related to representations and warranties in asset-backed securities offerings. The final rules require securitizers of asset-backed securities to disclose fulfilled and unfulfilled repurchase requests. [The] rules also require nationally recognized statistical rating organizations to include information regarding the representations, warranties and enforcement mechanisms available to investors in an asset-backed securities offering in any report accompanying a credit rating issued in connection with such offering, including a preliminary credit."

The second rule, implementing Section 945 of Dodd-Frank, is a new rule under the Securities Act of 1933 requiring "any issuer registering the offer and sale of an asset-backed security ('ABS') to perform a review of the assets underlying the ABS." The rule also amends Item 1111 of Regulation AB "that would require an ABS issuer to disclose the nature of its review of the assets and the findings and conclusions of the issuer’s review of the assets." Both sets of rules take effect March 28.

Agriculture/Commodities: FT Report on Algorithmic Trading in Sugar Futures

On February 8, the Financial Times published an article on growing concerns among some in the commodities industry that so-called "algorithmic" trading -- futures trading with high-speed computers -- is causing price distortions. As the article put it, "Ten years ago it took the sugar market six months to move 2 cents. In the past three months, it has moved 2 cents in just one day on five occasions. Last Thursday, it moved this much in a single second."

The article also stated, however, that not everyone agrees that high-speed traders are to blame. Some traders reportedly said that "the increase in volatility simply reflects high prices for sugar."

Criminal Process: United Kingdom High Court Approves Extradition of Defendant in Foreign Corrupt Practices Case

On January 20, in Tesler v. Government of the United States of America, a panel of the High Court of Justice in London dismissed an appeal by Jeffrey Tesler, who had been indicted in the United States on charges of conspiring to violate, and aiding and abetting violations of, the Foreign Corrupt Practices Act (FCPA). Tesler, a dual United Kingdom and Israeli national residing in London, had been indicted in the Southern District of Texas in 2009 for his alleged participation in a scheme to bribe Nigerian Government officials to assist an international joint venture consortium.

Tesler appealed from a ruling by a District Judge in the United Kingdom that the requirement for his extradition to the United States pursuant to the United Kingdom Extradition Act 2003 had been satisfied. The High Court (Lord Justice Pill) held that "[t]he appellant's acts in furtherance of the aims of the Joint Venture were performed outside the United States but that did not defeat the United States connection," and that "[t]he effects of his actions were to be felt in the United States and were intended to be felt there," even if "the eventual 'harm' may be in Nigeria."