Clear Law Weekly Roundup: Your Commercial Edge in Focus

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Today's Top 5 Headlines You Can't Miss!

Stay ahead of the game with the hottest stories shaping the business and legal world. 🚀 Here’s your fast track to this week’s must-know news:

1. EU Tech regulation: EU set to crack down on Asian online retailers Temu and Shein

2. Financial Services: UK’s “investability problem”

3. Cryptocurrencies: Trump effect fuels crypto boom

4. Advertising: Omnicom and Interpublic in merger talks to become largest advertising group

Which headline sparks your curiosity? Dive in and stay commercially sharp!

Today's Detailed Report: Dive into the Key Insights 📊 

EU set to crack down on Asian online retailers Temu and Shein

EU is preparing a crackdown on the growing flood of packages from Asian online retailers such as Temu and Shein, following a big increase in e-commerce that largely evades EU custom checks.

Measures under consideration include a new tax on e-commerce platforms’ revenue and an administrative handling fee per item that would make most shipments less competitive.

4 billion lower-value parcels will be flown to the EU this year, almost triple the number in 2022. The sheer volume and the fact that they are under €150 threshold for customs duties mean most are not checked, driving a rise in imports of dangerous goods like toxic toys.

[Toy Industries of Europe (TIE) said that 80% of the toys it tested did not meet EU safety standards, after buying more than 100 products on 10 online platforms: China’s AliExpress, Temu and Shein, Singapore’s Light In The Box, the US’s Amazon and Wish, France’s Cdiscount, UK’s Fruugo, the Netherlands’ Bol and Poland’s Allegro]

EU officials are worried about the undercutting of European competitors that face higher production costs to adhere to EU standards and the negative impact of cheap imports on high retailers.

China benefits from reduced postage costs, meaning it is cost-effective to send cheap goods by air. The EU executive has already proposed to scrap a €150 value threshold underneath which packages are exempt from customs duties, a step the US is also taking.

The block safety authorities have detected a growing number of dangerous and counterfeit goods, many of which are dispatched directly to consumers.

The bloc is also investigating Temu in a bid to reduce the flow of unsafe products such as toys and cosmetics that do not meet EU standards. Under Brussels’ digital services law, potential penalties include heavy fines and even the banning of platforms from operating in a particular country.

A tax on the revenue of e-commerce platforms, which would be applied to EU and foreign businesses, would require approval from the bloc’s 27 member states and could hurt European businesses at a time when the continent was trying to encourage digitisation.

Impact on Law Firms - EU’s E-commerce Crackdown

1. Regulatory Compliance Services: Law firms will need to advise e-commerce clients, both within and outside of the EU, on oncoming regulatory changes. This includes navigating new customs rules, digital services laws, and potential taxes. Companies like Temu and Shein may seek legal expertise to ensure compliance with the EU safety and customs standards.

2. Trade and Customs: With the removal of the €150 customs threshold, law firms will help clients manage tariffs, duties, and dispute resolution related to cross-border shipments.

3. Litigation: With the EU’s crackdown, companies are likely to face fines and bans. Law firms might represent e-commerce platforms in legal battles over penalties or platform restrictions under the Digital Services Act (DSA).

4. Impact on European Retailers: Firms will advise European manufacturers and retailers to leverage the situation to advocate for fair trade practices, navigate competition law, and ensure their compliance with evolving regulations.

The motor finance industry was left in disarray, leading to “investability problem”

The industry has been reeling since the Court of Appeal ruled it was unlawful for car dealers to receive commissions from the motor finance providers, unless such payments had been disclosed to the customer and consent had been given.

Industry executives and lawyers said the court’s decision to side with consumers who had complained about “secret commissions” on car loans upended the regulation that had governed the sector for years.

It also raised the spectre of lenders having to pay tens of billions of pounds in compensation. Lloyds owns Black Horse, the UK’s largest car finance provider.

Shares in some of the biggest providers of motor finance, including FTSE 250 lender Close Brothers, have fallen sharply since the court ruling.

Car finance sales practices had already drawn the scrutiny of regulators. In 2021, the FCA banned “discretionary commission arrangements” (DCAs) in which the interest rates customers paid on loans were linked to fees earned by dealers.

The regulator opened an investigation this year into potential historic mis-selling of DCAs. Lloyds has set aside £450mn to cover the potential costs of the FCA probe.

Lloyds Chief Executive Nunn has urged the government to intervene and work with industry and regulators ahead of a potential Supreme Court ruling on the Court of Appeal judgment.

Impact on Law Firms - Car Finance Commission Ruling

1. Litigation surge: There is likely to be a rise in claims and class-action lawsuits against car providers. Consumers may seek legal representations to claim compensation, while lenders and dealers will need robust defence strategies. This surge could keep litigation teams busy for years.

2. Regulatory advice: law firms specialising in financial services regulation will play a crucial role. They will advise car finance companies on compliance with evolving standards and help mitigate the risk of further breaches.

Crypto’s Boom

The recent surge in memecoins—cryptocurrencies inspired by internet trends and viral moments—has gained momentum following Donald Trump’s election win, driven by expectations of more crypto-friendly policies. Coins like Dogecoin and newer tokens such as PNUT and CHILLGUY have seen rapid growth, often outperforming established cryptocurrencies like Bitcoin.

Despite their popularity, memecoins lack intrinsic value, utility, or business models, making them highly speculative and volatile. Critics compare the frenzy to the NFT bubble of 2021, warning that most memecoins are likely to collapse. Concerns about pump-and-dump schemes and market manipulation are growing, prompting potential for regulatory scrutiny.

Crypto exchanges capitalise on this trend by quickly listing new memecoins, but the market's long-term stability remains uncertain. Many view this surge as a sign of market froth and speculative excess.

Impact on Law Firms

1. Securities Law and Token classification: Law Firms will need to assess whether memecoins qualify as securities under laws. Lawyers will advise on whether their memecoins fall under securities regulations. Assisting with registration or obtaining exemptions for tokens that may be classified as securities and defending clients in cases where regulators claim tokens were issued or traded in violation of securities law.

2. Litigation: Representing clients in class-action lawsuits by investors who suffer losses due to pump-and-dump schemes or market manipulation. They are also likely to defend client-facing investigations or enforcement actions from regulatory bodies over alleged fraud and misrepresentation.

3. Fraud and White-Collar Crime: Lawyers are likely to defend clients accused of crypto-related fraud or money laundering. Also, assisting victims of fraud in asset recovery and pursuing legal remedies and advising on how to detect and prevent financial crime in crypto transactions.

Omnicom and Interpublic are in talks to merge in a deal worth more than $30bn that would create the world’s largest advertising agency

The combined US group would probably overtake France’s Publicis and WPP in the UK who have been vying for the top spot for the biggest holding company in the industry based on net revenues.

The stock deal is structured as a takeover of Interpublic by its larger rival Omnicom. Together both will have a net revenue of more than $20bn.

Interpublic and Omnicom own a wide array of global advertising, marketing and PR agencies, with McCann, FCB and Mediabrands on one side and BBDO and TBWA on the other.

The deal is likely to attract regulatory scrutiny given the overlap in media and creative agencies.

Impact on Law Firms

1. M&A: Law firms are likely to offer services like due diligence, examining potential risks related to finances, operations, and legal obligations. They are also likely to draft and negotiate contracts, such as structuring the takeover agreement to address all the legal and commercial aspects. Finally, given the international scope of both companies, firms will need to navigate different jurisdictions and laws.

2. Antitrust and Regulatory Scrutiny: Due to the significant overlap in creative and media agencies, regulators like the FTC, the European Commission, and the CMA will closely review a deal. This will require assessing for potential monopolistic risks and ensuring the deal complies with antitrust laws. Also, the combined company may need to sell off parts of its business to gain approval, creating further legal work.

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