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Data-driven policy has its problems, but single issues are alive and well
Michael Green is not just the ‘alter ego’ of Grant Shapps, whose personal image continues on its ‘slow burn’ after a mass of ridiculous stories concerning his business activities. Michael Green is the name of a top Carlton Communications figure, known to be a personal friend of David Cameron, like Andrew Cooper, the founder and strategic director of the Populus voting initiative.
There are many problems with polling as a way to make policy. Not least, it can produce results which are at odds with domestic and European law, such as repeal of the Human Rights Act, encouraging a swop for fundamental employment right in share ownership, or ‘bash a burglar’. The further problem is that the results themselves can be intrinsically unreliable on public policy grounds; such as the vast majority of survey respondents in the Sun who believe that the death penalty should be re-introduced. Furthermore, it is generally acknowledged that in politics the whole is more than the sum of its constituent parts; therefore the ‘gestalt’ of the policy must overall make sense. However, data-driven policy is attractive from an ‘efficiency’ aspect of the operations management of politics; money can be spent in producing data, which can be number-crunched, to act as the input for a speech-writer. The impact of the delivery of the speech written by Clare Foges and colleagues can then be ascertained through further polling, in a ‘feedforward’ mechanism of feedback control.
The idea of ‘strivers’, as Isabel Oakeshott points out, sounds like the product of a computer cluster analysis of polling data (though she did not phrase it in such statistical words.) The concept of strivers does not make sense if you consider that members of the Conservative Party also wish to cut non-employment benefits, the economy has been imploding under the direction of George Osborne since May 2010, parts of the government wishes to take away basic legal rights (such as human rights or employment) which would protect and enhance the wellbeing of a ‘striver’. Oh – that’s another aspect of data-driven policy which doesn’t make sense; how can you pursue an agenda of happiness and wellbeing, when you wish to impose austerity and swingeing cuts that is doing much short-term damage to the economy and much long-term damage to society?
It has been interesting to watch how the mainstream and blogosphere have responded to ‘single issue’ politics. It is perhaps true that general polling data do not give a helpful picture of the value of disability issues to non-disability voters, but Sonia Poulton’s articles have had a genuine captive audience. On welfare, Kaliya Franklin was even shortlisted for this year’s coveted Orwell Prize, and her friend and fellow campaigner for disability issues, Sue Marsh, has had a remarkable impact in breaking the ‘glass ceiling’ of this topic which previously had barely been addressed. Likewise, Dr Eoin Clarke, in the blogosphere, has been addressing with considerable bravery previously taboo issues of potential conflicts of interest and the implementation of the NHS Act, which would be felt by most reasonable people to be issues of public interest. Mainstream media may of course be frightened to tackle the complex issues of the Health and Social Care Act, or simply do not understand them, but it is noteworthy that the Daily Mail has recently, and successfully, embarked on a campaign against A&E closures.
That Hunt has decided to frame the argument as ‘modernisation’ of the NHS, which Andy Burnham MP, had started is indeed interesting. David Cameron hardly mentioned the NHS in his speech, which perhaps does reflect the polling data. Recent estimates have provided that the Labour Party is indeed around 30% ahead on the NHS, ‘can be trusted with the NHS’ and so forth. On the other hand, there has always been ambivalence about Labour’s record in public spending, despite the fact that this double-dip recession was directly caused by the policy of the Conservatives, and that George Osborne MP in opposition had promised to meet the spending commitments of Labour, a fact which has conveniently forgotten with his Liberal Democrat accomplices.
Danny Finkelstein has previously warned that the Conservatives should not put all their eggs in the austerity basket. The austerity plan has of course been utterly discredited, with the economy going into reverse under the Conservative-led government, and the Financial Times recently warned that due to the ongoing problems austerity would have to continue until 2018 at least. The austerity agenda could be another ‘single issue’ which might cause pain for Ed Balls and Ed Miliband, if members of the public sector continue to ‘feel the pain’ in the relative absence of a Labour government wishing to tax heavily the top 1% of earners.
Voters are likely to produce a decision on a combination of factors, and certainly predicting this less than three years ahead of a general election is not easy. Whilst ‘Bigotgate’ probably did not lose Gordon Brown the 2010 election, though it might have been representative of a confusion on Labour’s part in understanding the aspiration of voters in an immigration context, certain issues can seem to prove fatal. It is perhaps significant that the poll tax debacle was necessary and sufficient in toppling Thatcher, but it is also significant perhaps that the Conservatives went on to win the 1992 general election. That was the last election they actually won, as many members of Labour will remind you.
BPP Student Societies – Legal Awareness Society
The BPP Legal Awareness Society is one of the most popular student societies at BPP. Its entry on the official BPP students website is here (the foot of this page is where you can join if you are a present, past or future student of BPP).
Its mission is to further awareness of the importance of law and regulation in corporate strategy. It complements the introductory lecture on ‘business awareness’ given at the beginning of the BPP Legal Practice Course module in Business Law Practice (“BLP”).
There is a team of 19 podcasters currently, which is set to begin its recordings in the beginning of March, led by Katie-Claire. The podcasts are a joint initiative by the BPP Legal Awareness Society and the BPP Commercial Awareness Society to communicate with the general public the importance of transactions in the City and the fundamental strategic decisions taken by all stakeholders.
The Society actively promotes accessibility and inclusivity in society, especially for disabled law students. It furthermore is very much involved in an independent project called ‘Legal Recruit’, with the intention of helping law students negotiate online psychometric tests for vacation scheme or training contract placements. This platform has lots of free material, including factsheets, videos and worked examples, including tips on how to complete the online application form and how to write a cover letter.
The Society is encouraged by Laila Heinonen, BPP Chief Executive of Students.
‘Legal Aware’ has a prominent presence in the social media. Our Twitter thread currently has over 3,270 followers, and 160 individuals on Facebook have liked our profile. Again, both are updated virtually updating, with links to the wider network of Legal Aware. A growing group is ‘In search of the elusive training contract’, again on Facebook.
Committee
The officers of the society are as follows.
President and Disability Officer, Shibley
Vice-President and Corporate Firm Liaison Officer: Gizem
Meetings Coordinator: Sam
Corporate Firm Liaison Officer: Claudia
Local Communications Officer: Rebecca
Corporate News Editor: Zerbakht
External affairs Co-ordinator: Majid
New media and podcasts Officer: Katie-Claire
BPP CA Society Liaison Officer: Harry
Meetings
Meeting 5 Thursday 1 Mar 2011 Social media and technology, room 2.4, 5 – 6 pm
“The Facebook IPO” and “Introduction to online verbal reasoning tests”
http://legal-aware.org/category/technology-and-media/
Meeting 6 Thursday 15 Mar 2011 Taxation and business accounts, room 2.4, 5 – 6 pm
“What next week’s budget might show” and “Introduction to situational judgement tests”
Meeting 7 Thursday 3 May 2011 Share acquisitions, room 2.4, 5 – 6 pm
“Recent share acquisitions by City law firms” and “Introduction to numerical reasoning tests”
http://legal-aware.org/category/share-acquisitions/
Meeting 8 Thursday 17 May 2011 Insolvency and English company law, room 2.4, 5 – 6 pm
“Famous companies facing financial difficulties” and “Overview of the online application form for training contracts”
Funding
The Society thus far has not sought funding for any of its activities, including up-keep of its popular blog. This blog is updated virtually daily, and reflects the activities of BPP in the community, as well as wider City news; for example, we recently covered the forthcoming ‘Walk the Thames’ event to raise funds for legal aid (and law centres). If you are interested in helping to support the activities of the Society, or wish to suggest a speaker, please contact Gizem using our email correspondence@lasmeetings.org
Sale of Maxinutrition to GSK
Macfarlanes have recently advised Darwin Private Equity and Management on the sale (exit) of Maxinutrition Group Holdings Limited (Maxinutrition) to GlaxoSmithKline (GSK) for £162m. The Macfarlanes team was led by Luke Powell with competition partner Marc Israel advising in relation to the OFT filing. Nabarro was acting for GSK on the competition law side, which was subject to approval from the Office of Fair Trading. Slaughter & May acted for GSK. The exit is three years to the day since Darwin acquired the business for £75m.
Commercial rationale
GSK is a world-leading healthcare group engaged in the development, manufacture and marketing of pharmaceutical and consumer healthcare products. Its shares are listed on the London Stock Exchange and the New York Stock exchange. GSK has its corporate head office in London with operations in 120 countries and products sold in over 150 countries. GSK’s global turnover in 2009 was £28,368 million, and includes well-known brands such as Lucozade.
Maxinutrition, a European sports nutrition company, supplies and distributes sports nutrition products. Its main brand is Maximuscle. It is currently Europe’s leading sports nutrition business in market share terms and recorded a sales total of 36 million in the most recent fiscal year, as well as achieving a compound annual growth rate of 21% in the last three years. In its last financial year, Maxinutrition’s UK turnover was £34.9 million.
The sports nutrition market appeals across a broad spectrum of consumers from elite athletes to sports participants and those seeking additional nutritional supplementation. Through this share acquisition, GSK will are investing in Maxinutrition’s science-proven products to extend the growth of Maxinutrition within its UK and European infrastructure and expand to the global marketplace, where GSK already has proven success.
The acquisition is further a demonstration of GSK’s strategy to expand its Consumer Healthcare business through appropriate “bolt-on” acquisitions which meet their strict financial criteria. Maxinutrition is a fast growing, focused sports nutrition business with excellent growth prospects and a strong management team – it’s a natural fit for GSK and its ambition to extend and expand its Nutritional Healthcare business. GSK’s strong commercial and R&D capability, coupled with a strong record in investment in expanding their global nutritional healthcare franchise in new markets and territories, does offer substantial new opportunities to develop the Maxinutrition brands and continue to deliver impressive growth in the coming years.
Legal Awareness
This transaction shows the importance of both commercial awareness and legal awareness to furthering the business ambitions of the commercial parties involved: Maxinutrition and GSK. The three major components are the private equity, share acquisition and competition issues. These are described below.
1. Private Equity
The Macfarlanes private equity lawyers are highly-regarded specialist lawyers in all areas who hold the key to private equity, including funds, financial services regulation, tax structuring, pensions and environment. As private equity transactions become increasingly international, their international legal network ensures that they can offer commercial clients access to the best lawyers at the best independent firms in the world.
The history is that Darwin Private Equity and Management acquired Maxinutrition in 2007. Hogan Lovells acted for Zef Eisenberg and Paul Hick, the founder and the former chairman of the business respectively, who both retained stakes in the business when it was sold to Darwin Private Equity in December 2007. Hogan Lovells had also acted on the original Darwin MBO, advising previous owners Piper Private Equity and the selling shareholder group on the sale of the business.
For an introduction to private equity, please see the Legal Aware debt finance page here.
Share acquisition
On 10 December 2010, GSK and Darwin signed a conditional Share Sale Agreement under which GSK agreed to acquire the entire issued share capital of Maxinutrition, for a consideration of approximately £162 million. As a result of this transaction, the enterprises GSK and Maxinutrition will cease to be distinct.
For an introduction to share acquisitions, please see the Legal Aware share acquisitions page here.
Competition issues
This proposed transaction was not referred to the Competition Commission under section 33(1) of the Competition Act. In successfully obtaining approval from the OFT, the parties submitted that the relevant product markets are the supply of soft drinks, within which the sports and energy drinks segment is most relevant, and the supply of sports nutrition products. In any event, the OFT did not believe it was actually necessary to define the precise product scope in this case since no material competition concerns arise howsoever defined.
On the basis that:
(1) there are only nominal increments caused by the merger in the supply of sports and energy drinks, the supply of sports nutrition products, and the supply of energy and nutrition bars in the UK;
(2) the parties cannot, and are not considered to be close competitors; and
(3) no third parties raised any material concerns,
the OFT did not consider that the proposed transaction gives rise to a realistic prospect of a substantial lessening of competition on the basis of horizontal unilateral effects.
Conglomerate effects
The OFT also considered “conglomerate effects”. As stated in the OFT’s Merger Assessment Guidelines, mergers between firms producing complementary products may give rise to anticompetitive effects if they enhance the merged firm’s scope for tying or bundling. In such a case, customers would have an incentive to buy the second product from the merged firm (where they may not do so if purchasing both products separately), such that rivals in the second product market would be at a disadvantage. The OFT looked at the ability, incentive and the effect of such a strategy. The OFT did not consider that this particular merger created or strengthened the ability of the merged firm to foreclose others by tying or bundling. In particular, the OFT notes that the customer base and distribution channels for sports and energy drinks are significantly different from that of sports nutrition products.
For an introduction to competition, please see the Legal Aware competition page here.
For more information about this transaction, please refer to the Macfarlanes website here.
The implementation of the Bribery Act
The Bribery Act is currently under review as part of the Government’s aim to reduce the regulatory burden on business and will introduce a new offence of failing to prevent bribery by individuals acting on behalf of an organisation. The law was intend to align Britain with the US Foreign and Corrupt Practices Act, but it has been argued that the government postponed its implementation after companies said the guidance on the new rules was unclear in areas including corporate hospitality. The serious criminal offences that the Act will introduce will affect businesses of all sizes and shapes, both private sector and public sector. Essentially, anyone carrying out an economic activity in the UK will be caught by the Act and a serious breach of the Act could result in a 10-year imprisonment and/or an unlimited fine and/or a prohibition from tendering for public contracts. The Ministry of Justice argues that the Bribery Act intends to “reform the criminal law to provide a new, modern and comprehensive scheme of bribery offences that will enable courts and prosecutors to respond more effectively to bribery at home or abroad.”
In a strong response to those who have criticised the Act, Prof. Mark Pieth, who heads the OECD’s working group on bribery in international business transactions, has said that a failure to implement will have the opposite effect: “This move will hurt the competitiveness of British industry at a moment when it is most vulnerable. Allowing companies to continue to generate business by bribery actually weakens their competitive clout as they become dependent on illegal means.”
The Act has the following aims, to:
- provide a more effective legal framework to combat bribery in the public or private sectors
- replace the fragmented and complex offences at common law and in the Prevention of Corruption Acts 1889-1916
- create two general offences covering the offering, promising or giving of an advantage, and requesting, agreeing to receive or accepting of an advantage
- create a discrete offence of bribery of a foreign public official
- create a new offence of failure by a commercial organisation to prevent a bribe being paid for or on its behalf (it will be a defence if the organisation has adequate procedures in place to prevent bribery)
- require the Secretary of State to publish guidance about procedures that relevant commercial organisations can put in place to prevent bribery on their behalf
- help tackle the threat that bribery poses to economic progress and development around the world.
The Bill was published in draft on 25 March 2009 for pre-legislative scrutiny by a Joint Committee of both Houses of Parliament. The Bill received Royal Assent on 8 April 2010.
Businesses and the public sector must now start to take care about corporate hospitality. Corporate ‘entertainment’ has become a commonplace part of most industries and is itself a large industry. People will have to be proportionate with the entertaining they do and judge circumstances carefully. Indeed, many public sector organisations and multi-national corporations already have policies on gifts and entertaining. The Serious Fraud Office guidance suggests businesses should have written policies to cover gifts, hospitality, facilitation payments, political contributions and lobbying activities. SMEs are therefore being encouraged to have “adequate procedures” in place to prevent bribery and corruption. For example, it is likely that, in any event, having a Bribery Act policy will be necessary when tendering for public sector contracts.
Furthermore, any dilution of the Bribery Act would be “bad” for Britain’s reputation as a centre for investment, according to some of the world’s largest institutional shareholders. In a recent letter, the International Corporate Governance Network, representing mainly institutional investors across 50 countries, has asked for reassurance that the act will be implemented. The warning comes after the implementation of the Bribery Act, passed by parliament last April, was delayed earlier this year.
Full details are available here. http://www.opsi.gov.uk/acts/acts2010/ukpga_20100023_en_1
