Week in Review (12 April)
More antitrust trouble for Apple
On 11 April the Netherlands Authority for Consumers and Markets (ACM) announced that it will investigate whether Apple abuses the position it has attained with its App Store. The investigation will firstly focus on Dutch apps for news media that offer their apps in Apple’s App Store. ACM also called on app providers to come forward if they experience similar problems with Google’s Play Store. This comes almost exactly one month after Spotify lodged a similar complaint with DG COMP which alleged that Apple had unfairly managed its dual role as a distributor, through its App Store and operating system, and as a competitor – through its Apple Music Service.
Trump resumes aggression on EU trade
On 9 April, Trump tweeted that the US will put tariffs on $11 billion of EU products in response to European Airbus subsidies. The action amounts to a reinvigoration of a dispute that has been ongoing since 2004 and which has involved European complaints
against Boeing. Tariffs will not be immediately imposed.
The re-emergence of the Airbus case, and the prominence that Trump has decided to give to it, complicates the EU-US trade relationship at a time when Europe is scrambling to forestall much more damaging tariffs on automotive imports. Trump needs to make a decision on tariffs by late May.
The EU’s hope is that car tariffs can be avoided through a commitment to negotiate a new trade dispensation with the EU. However, the EU and US disagree on what should be negotiated on. Furthermore, there are concerns from France about the process of negotiating at all.
Without a concession on agriculture from the European side and considering that EU Member States cannot even agree on the appropriateness of the negotiations, we see a heightened risk of Trump either imposing car tariffs, or imposing them with conditionality, in May.
ECB keeps policy on hold with tiering to be assessed in coming months
As expected, the ECB Governing Council (GC) kept forward guidance on rates and asset purchases unchanged at its 10 April meeting.
The opening statement of Mario Draghi’s press conference indicated that further detail on the new TLTRO will be forthcoming in a number of months, while the ECB will also carry out an assessment of ‘mitigating measures’ – a reference to potential deposit tiering.
Draghi was questioned further on this in his press conference, with his responses pointing to forthcoming data releases. This is consistent with our opinion, expressed in the preview, that ‘the gradualist approach of the ECB means that if the idea is to be adopted it will be more extensively trailed in the coming months, with any announcement likely to come in H2 2019.’
ECB extends time for potential Carige bidders
The fate of Carige remains the central priority for the Italian banking sector. Failure to
secure a buyer would require Carige to consider a rights issue, with which the bank has had considerable trouble in the last 12 months, or – more likely – would leave the Italian government forced to consider a ‘precautionary recapitalisation.’
It has become clear that the only interested buyers are in the US funds sector. Last week Varde ended their interest, reportedly leaving Blackrock as the only interested party. Blackrock’s interest is also far from emphatic, with the fund suggesting it is not interested in purchasing Carige in its entirety. It is possible that rather than buying the bank, Blackrock will act as underwriter for a rights issue of €630 million.
Failure of these schemes would require Carige to convert a €318 million bond held by Italy’s deposit guarantee fund into equity. It will also bring into focus the September deadline by which the Italian government needs to decide whether a precautionary recapitalisation is required.