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This is Business Live from BBC News,
with Alice Baxter and Victoria Fritz.
The digital divide, why the European Commission thinks consumers get a
raw deal when they shop online. That is our top
Why it costs you more to buy a download depending on where you
live, we investigate geoblocking. Also, fasten your seat belts because
the trial of two former Portia bosses, -- Porsche bosses.
Here in Europe, shares opening slightly higher on Friday
following gains in Asia and Wall Street overnight.
And we'll be getting the inside track on the $30 billon
tie-up between Deutsche Boerse and the London Stock Exchange.
This mammoth deal - where bankers' fees alone
could total $85 million - will create a European trading
powerhouse to take on the US and Asia.
Our business editor will enlighten us later.
We are also taking a look at dancing yourself happy and the rise of the
sober rave. But without alcohol sales they are having trouble making
money. Let us know what you think, tweet us.
Why should it cost you more to buy an iTunes download
Australian consumers pay almost 40% more for PC games and 52% more
for iTunes downloads than those in the US.
It's down to geo-blocking - a practise used by many big firms
and being investigated by the European Commission.
Preliminary findings of the investigation will be
Geo-blocking actually means geographically-blocking.
It uses the location of your computer -
your IP address - to stop you buying products and services
It's used by many multinational tech giants.
Apple, Microsoft and Amazon all geo-block.
While online streaming services like Netflix have stepped up
geo-blocking, under pressure from the film and TV studios
with whom they strike deals, more
than 50% of online retailers do not sell in other countries.
But Consumers can get round this by using Virtual Private Network
operators to disguise the location of their computers,
operators to disguise the location of their computers.
Simon Neill is the head of UK competition practice at the legal
Good morning. Thank you very much for joining the programme. Why
should it cost you more to buy eggs back Lee the same product elsewhere,
just because of where you are? Even if it doesn't go against the letter
of the law, surely it's against the spirit? I quite agree and the
commission agrees with that as well. What the condition is intending to
do is to look at the reason why products are not going across
countries, why the prices are different, why consumers are getting
a raw deal. That's very much what this is about. This statement coming
out later this morning is very much aimed at showing the commission's
emerging thinking. This is the first time the commission is issuing its
thinking on the commerce inquiry. This will give an indication of the
issues it is uncovering and also what it intends to do about it. Not
only does this potentially lead to price discrimination, it is against
the single market principles of the EU, but it is also restricting
consumer choice, so this is a big story. Correct, it is a big story
that I think we need to temper expectations as to what the
commission will be able to achieve today. I think this is very much a
signpost of where we're going. This is enormously important. It's not
just big companies who do this, small companies too. There are some
real barriers to small companies why they do not easily sell their
products across borders. The result of that is that consumers pay high
prices when we shouldn't do. The whole point of the common market is
that it is a free market across the EU. If someone in Poland is offering
a product for sale, I should be able to go online and I should be able to
buy that product if it is cheaper in Poland than it is over here. I
should have the same rights. There should be no reason why the Polish
operation should not be able to post it to me here in the UK. Why do the
big companies care so much about geoblocking? There was recently a
tie up between PayPal and Netflix. Currently it is very easy to
circumnavigate these geoblocking tactics. If you are relatively
Internet savvy, yes. For most of us, it's not that easy. You are touching
on issues around copyright and licensing. It is a genuinely complex
area and I think today's announcement is not going to touch
the copyright side of geoblocking. It is a very large issue. The
problem with copyright, where you have content which has rights
attached to it, those rights are generally set on a country by
country basis because copyright laws have not been harmonised across the
EU. That is a real problem because without harmonisation of copyright
laws, that allows companies to do geo-blocking. These companies are
not necessarily breaking the law by stopping you being able to go on and
download on iTunes song in France for example rather than the UK. So
to what extent is geo-blocking currently susceptible to challenge
in the court of justice? At the moment lawful geo-blocking based on
copyright is difficult to challenge. At the moment there is a grey area
where pay-TV services and streaming services, it is being investigated.
Sky and a number of Hollywood studios are locked in a big battle
with the European Commission around content and content rights. That is
whether the contractual restrictions on the likes of the broadcasters go
too far and artificially direct absolute barriers to stop
broadcasters from selling content lets say to a different country.
There I think the commission will make progress and that is the
exciting area coming up later on this year. Really good to talk to
you, thank you. Simon Neil, head of the UK competition practice at the
legal firm Osmond Clarke. Russia's Central bank is expected to
leave interest rates on hold at 11%. It is being forced to crank up rates
to try Douzable the ruble, which has plunged amid slumping oil prices and
sanctions over Ukraine. Analysts say that the recent recovery in crude
prices to around $40 a barrel could mean a return to stability for
Russia's crisis hit economy. The latest data out of China shows that
house prices rose 36% compared to a year ago, despite slowing economic
growth and the value of property is rising at its fastest rate in nearly
two years. Shares are up in Toshiba? It's a
very interesting story here and it has been pretty bumpy ride for
Toshiba in the last few days. They have closed up more than 4% today.
Yesterday they were down as much as 10%. A couple of key events
affecting this company. On the positive side they have sold their
medical device unit for close to $6 billion and that is good news
because Toshiba has been hit by a massive accounting scandal. That has
led to big job cuts and big losses, so bringing in some cash is welcome.
At the same time, this company has just confirmed that its North
American units are being looked at by US authorities over accounting
issues. That has to be a concern especially when you look at the
impact of accounting scandals have already had on the company in Japan.
Well, let's stay in Asia where stocks advanced on Friday
as higher prices for commodities, including crude oil,
pushed Wall Street stocks higher overnight.
But shares in Tokyo fell as the Yen's strength worried
Japanese government bonds rallied on Friday with 10-year
and 20-year yields hitting fresh record lows after strong results
at the Central Bank's bond-buying operations.
It's the first time since 1980 that the 10-year yield's fallen
below the bank's policy rate, currently at minus 0.10%.
Meanwhile here in Europe, shares opening slightly higher
on Friday following those gains in Asia and Wall Street overnight.
And Michelle Fleury has the details about what's ahead
2016 got off to a rocky start for the markets. After the US Federal
reserve signalled fewer rate hikes this year. With oil closing above
$40 a barrel on Thursday, stocks have turned positive for the year.
For many investors, the question is, how long will this last? Given the
enduring uncertainty about the state of global growth. Meanwhile the US
dollar 's slide this week couldn't come soon enough for one company,
for Tiffany and Coke, the luxury jeweller which relies on tourism for
a chunk of its sales. They report fourth-quarter earnings this Friday.
The rising dollar has made shopping trips to its flagship Manhattan
store that bit more expensive for those using other currencies. A drop
in tourism coupled with a tough retail environment is expected to
have cut into its sales. Joining us now is Richard Fletcher, the
business editor at the time newspaper group. Good morning and
welcome to the programme. Thank you. Let's talk about oil. Limes for the
fifth straight week. We are seeing above the $40 a barrel mark. -- it
climbs. Russia are trying to work out their interest rate decision
today. Not necessarily great news for everyone. A rise in oil used to
be bad news particular for equity markets because it was seen as
pushing up costs and that would hit company profits, but actually we
have seen oil fall to these near historic lows. It has started to
rise and markets have taken this as good news. Markets have moved up in
lockstep with oil, which is very different to what we used to see.
Oil has risen, it is now above $40. It hit $27 in January, a massive
load. It's seen as good news, it's seen as slightly more stable, it
makes the world more stable. Bizarrely, with oil rising we
actually seek equity prices move up, which is against the historic trend,
basically. It is good news, it does suggest we are moving towards more
stable times even though it does mean that you probably pay a bit
more at the petrol pumps for our petrol. Fascinating to see how it
plays out in Russia because the central bank keep playing down the
cost of oil that is required to balance the books over there. Over
the past couple of weeks there has been a flurry of activity in central
banks. We have had ten days of major announcements from all corners of
the globe. I suppose the best way to describe it is that we have emerged
unscathed! We've had the ECB paying their larval by delivering which we
thought they would. That has given emerging markets a
huge boost because obviously the fear was that as the federal bank
pushed up rates, money would move act from emerging markets into the
US. But it has been a great week in Asia. Markets. Chinese markets up
about 6% over the week. It's been a good week and the central banks have
done their bit, if you like. It could have been a lot more volatile
for the last ten days. Just before you go, very quickly. You said
doves... It's a terrible term but it basically means they're not going to
raise rates quickly. There goes been more peaceful, if you like. There we
go, peaceful doves! Still to come, the 30 billion tie-up
to create a multi-million dollar trading powerhouse to rival the US
and Asia. Here in the UK, the cost of fraud
appears to be rising. A report out today from financial forward action
UK says financial fraud is on the up. -- financial fraud action.
Morning, guys. A big rise over the last year despite all those attempts
to reduce fraud. That is partly because more and more of us are now
doing our banking and financial transactions online and not in
person at the banks, so that has contributed to a big rise in fraud.
It's up about 25% over the last year, to ?755 million. A staggering
amount of money if you also think that the banks have been trying to
tackle this tampering that number down. A large proportion of that is
coming from card fraud, up itself by about 18% to about half ?1 billion.
A staggering number and one that seems like it might grow and grow.
One expert that I talked to said one of the simplest and easiest ways,
when you login to your bank account to create a new payee, there should
be a delay of 24 hours. One login gives you access to many of the
accounts that you hold with one bank and that opened us up to much more
fraught than perhaps it would do if we were just carrying one card or
cheque-book around. A big rise but one that the banks say they are
taking seriously but these figures suggest they are struggling to keep
a lid on it. I have another set of figures, the
Government says that home-buyers are losing out on failed property
transactions, can you tell us more? You find a house you want to buy,
you do the survey sample legal fees, everything to get to the point where
you are ready to buy, then the purchase falls through. We are told
that that cost ?270 million in England and Wales Lestienne, money
that gets you nowhere and you don't even buy the house, and that is on
top of record sale prices up and down the country. Then, thank you
very much. This story has just appeared from
our personal financial porter Brian Milligan, writing about rail
passengers saying they should get help with compensation. 20 more on
the website. This affects millions of people up and down the country,
using the train to get to work. Our top story - why it costs
you more to buy an iTunes download The European Commission publishes
findings of its investigation into e-commerce and the
practise of geo-blocking. A staggering 11 banks and 30 bankers
slaved away to seal the $30 billon tie-up between Deutsche Boerse
and the London Stock Exchange Group. The deal creates a European
trading powerhouse. Simon Jack, our business editor,
joins us in the studio. Simon, really good to see you. And
congratulations on the new role, I am not sure we have had US business
editor? This is my first time. Congratulations. And I correct you
immediately? I am only joking! To seal the deal, the interesting
thing... The deal is not sealed. The big question is whether simply else
will come into by the London stock exchange, because this Deutsche
Boerse LSE merger is a merger of equals. They came together, it would
be the world peers biggest trading group and the question is whether
somebody else will come in. The other interesting thing, it is a
Frankfurt -based company buying one in London. We have a referendum
about whether the UK remains part of the EU around the corner. Some of
those who want us to leave are making a bit of hay out of this,
they are saying, come what may, we will do this deal and it shows there
is life on the other side. The shareholders have to vote before the
referendum? Correct. The parties say, we don't care what the outcome
is, there is probably an asterisk somewhere which says we will have to
reconsider if the UK decides to leave. So was Deutsche Boerse
devolving some sort of financial power to London or is it, in fact, a
strategic move to make sure that London has a foothold in Frankfurt
should... I see! So the politics are interesting. It is the third time
they have tried to merge. Is this about cost savings or attracting
business from other potential rivals? It is about scale, it is to
defend against people in the US and compete against Asia. You would have
much more listing, many more customers. The argument for
customers is that if you clear trades through Frankfurt or London
you had to put up a margin in case anything goes wrong. If you combine
them, it would be a bit smaller, you would save money. Picking up on that
thought, the chief executive of the LSE was saying that the deal would
provide an alternative to bank lending for millions of small and
medium-sized businesses across Europe, it is economies of scale and
the fact that trades can be cleared through? The question would be... It
is being billed as a merger of equals but it is not quite. If it
was a takeover there would be a huge premium on the London stock
exchange, we have a bit of a premium but not massive, it will be 54%
owned by Deutsche Boerse but headquartered in London. The current
boss of Deutsche Boerse would be the new chief. See you can argue whether
it is equals or not. And a question on Porsche, one of your top stories,
market manipulation, it's former bosses are being accused of, over
failed attempted over Volkswagen. This is worthy of a German opera!
The team are good people in the dock today, if you like, they have built
up a position in Volkswagen shares with options to buy many more, they
then announced the fact that they would do this Volkswagen -- they
would do this, then Volkswagen shares shot up a lot, they were
worth more than Exxon at one point. Then it was announced that the
funding that background the funding dried up. In the end, Volkswagen
ends up buying Porsche, but the Porsche ruling family owned 51% of
what gain, worthy of a soap opera. 88% of VW shares today are held by
three entities, 51% owned by the Porsche family. Do you think a
situation like that could have contributed to the other big German
diesel scandal going on, and the fact there are not enough critical
voices on board? The way that VW is run has come under scrutiny, they
have a weird, shudder we'd supervisory board. It is not a
normal company. That has all come to light to the diesel situation, you
saw the US boss standing down, they appointed another insider, nobody
was very satisfied, it is a big mess. What will the final act be?!
Simon, really good to talk to you. More on this saga.
Germany awaits the court's verdict in a scandal that's engulfed one
of the biggest names in the country's vast car industry.
Damien McGuinness explains Porsche's complicated
Porsche, the company, is the majority shareholder of VW. As you
mentioned, diesel gate has already had them hard, so the last thing
needed is another scandal, which is why VW and the Porsche family hope
for an innocent verdict. It has to be remembered that charges like this
of market manipulation are incredibly difficult to prove, in
most cases there is no prosecution after such an investigation because
it is difficult to prove market manipulation like this.
Damien McGrane is. Let's look to some of the reaction on social
media. We have had tweets in about the geoblocking story covered at the
top of the hour. Gaby has said that geoblocking pushes consumers to
finding illegal ways to find content, there is an illegal market,
fact, no denying it. Phil Brisas says geoblocking is
fuelling hacking and illegal activities. The measure should be
set to benefit all. Interesting debate.
Richard Fletcher is back to look at other stories. Intercontinental
exchange wants to shake up the libel situation. Libor is an important
measure which sets the rate for 350 trillion derivatives or some
enormous number. It is basically the interest rate that people use for
these contracts. It was at the heart of the fixing scandal around the
time of the financial crisis. There were huge fines on the bank and
traders for fixing Libor. There were suggestions that some of the central
banks had tried to nudge the Libor rates down. It used to be set by
somebody literally picking up the phone and asking somebody else what
the rate was. That is when the British bankers Association in
London was responsible for setting the rate. The responsibility has
passed over to ICT, they are looking at a different way. It was an
algorithm, is the best way to describe it. In 2012 a regulatory
review found that that devious raid was not fit for purpose. And before
we go, we have to ask you about dancing yourself happy, the rise of
the sober rave. Would you go in for this? I am not sure if I would love
it or hate it, you arrive and are greeted by Huget angels who hug you,
it is 9:30am, there is a super food bar, yoga and massages. Increasingly
big business. The difficulty to make it profitable is that they are not
making money from selling alcohol. Reportedly, teenagers these days are
not drinking alcohol or wanting to go to nightclubs. Today's teenagers
are very responsible, lots of them don't drink, or take drugs and
unwanted pregnancy rates are down. They are much more responsible than
we are. -- we were. There will be more business news
throughout the day on the BBC Live web page and on World Business
Report. After the sunshine across much of
the country yesterday, today brings a more cloudy and cool picture. We
start the day