NEWS,14. AND 15.08.2013

China probe could target oil firms, banks

China's powerful price regulator could target the petroleum, telecommunications, banking and auto sectors next in its investigations into violations of the country's anti-trust laws, state media quoted a senior official as saying.
The National Development and Reform Commission (NDRC) would look at industries that have an impact on the lives of ordinary Chinese, China Central Television (CCTV) quoted Xu Kunlin, head of the anti-monopoly bureau at the NDRC, as saying on one of its programmes.
The NDRC has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.
But the scope of its investigations in the world's second-biggest economy have gathered pace in recent months and coincide with criticism in official media about the price of goods such as milk powder, medicine, luxury cars and jewellery.
"When you look at activities around the world, regulators tend to investigate sectors where their investigations can have a direct impact on consumers and that will look good," said Sebastien Evrard, Beijing-based partner at law firm Jones Day, which specialises in anti-trust law.
Last week the NDRC fined six milk powder firms for anti-competitive behaviour. It is also investigating 60 foreign and local pharmaceutical companies over pricing and costs.
Companies in the petroleum, telecommunications, banking and auto sectors were on the NDRC's radar for future investigations, CCTV's official blog quoted Xu as saying.
Xu gave a hypothetical example, saying that if banks fixed deposit or lending rates if and when China liberalised its interest rate regime, such behaviour could prompt an investigation.
CCTV gave no other details and NDRC officials could not be reached for comment.
China has been taking incremental steps towards liberalising interest rates. Last month the central bank removed controls on bank lending rates, giving commercial banks the freedom to compete for borrowers.
Evrard said that while telecoms companies and fuel prices were often the target of regulators around the world, they would not be obvious choices in China because of the involvement of state-owned companies.
State-owned majors PetroChina , Sinopec Corp and CNOOC Ltd dominate China's oil and gas industry, both upstream and downstream.
Domestic fuel prices are also set by the NDRC.
The country's three biggest telecom firms  China Unicom Ltd , China Mobile Ltd and China Telecom Corp Ltd are state-owned.
Similarly, the top four banks are controlled by the state.
The China Automobile Dealers Association told earlier this week that its officials were collecting data on the price of all foreign cars sold in the country for the NDRC.
The State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, kicked off a separate three-month investigation into bribery in the pharmaceutical and medical services sector on Thursday.
Foreign executives and bankers in China say the various investigations are a hot topic of discussion but many are still puzzled by the motivation behind the probes and whether they will impact their business.

Europe online sales seen doubling - poll

Online retail sales in Europe are seen doubling by 2018 to €323bn  ($428.51bn) with Amazon.com expected to grow even faster than that, market research firm Mintel said.
In a survey of 19 markets in Europe made exclusively available, Mintel predicted that online sales would grow to €188bn in 2013 from €166bn in 2012.
Mintel said Germany, Britain and France would remain by far the biggest markets for online retail by 2018, although the Netherlands, Spain and Poland should grow at a faster rate and Norway and Sweden have the highest online per-capita spend.
"There is a big North-South divide in e-commerce in Europe," said Mintel European retail analyst John Mercer, noting French participation levels lag Britain and Germany by five years and Spain, Greece, Portugal and Italy are even further behind.
Mintel said Amazon is extending its lead on the continent, growing market share to 9.8% in 2012 from 9.2% in 2011, while Germany's Otto, its next closest rival, saw its share slip to 3.3% from 3.9%.
Mintel predicted Amazon could double its Europe-wide market share in the next three to four years despite negative publicity in Britain over its low tax bills and in Germany prompted by strikes at its distribution centres.
Mercer said Amazon was performing strongly despite having only five dedicated country websites in Europe - in Britain, Germany, France, Spain and Italy.
"Italy is a tiny market. Perhaps it would be more worthwhile to have launched dedicated sites for the Nordics," he said. "In terms of spend per capita, the Nordics are much higher."
Mintel said it would still be 2021 before Amazon overtook Germany's Schwarz group, owner of Lidl discount stores, as Europe's biggest retailer, assuming current trends continue.
Amazon last month forecast disappointing income and revenue as it grapples with a weaker international market, overshadowing improving profitability and economic conditions in the United States.
British grocers are also well represented in Mintel's European top 10, with Tesco holding its market share steady at 2.3% and Walmart-owned Asda and Sainsbury on 1.1% and 0.9% respectively, reflecting the popularity of online grocery shopping in Britain.
"In mainland Europe, online shopping is largely non-grocery," Mercer said. "That is not going to change fast."
The Mintel report said Britain and France have the strongest demand for buying online and collecting in-store, a trend yet to take off for Germans, who prefer their goods to be delivered.

Solar tax angers Spaniards

Two weeks after Spain's government slapped a series of levies on green energy, Inaki Alonso hired two workmen to remove the solar panels he had put on his roof only six months earlier.
Alonso, an architect who specialises in ecological projects, calculated the cost of generating his own power under a new energy law and decided the numbers no longer added up.
Neither was it possible to leave the panels on his Madrid home without connecting them to the electricity grid; that would have risked an astronomical fine of between €6m and €30m ($8m to $40m).
"The new law makes it unviable to produce my own clean energy," Alonso said.
Spain's conservative government announced a reform of the energy system last month, including the "support levy" on solar power in a country blessed with abundant sunlight.
Imposed by decree, the reform aims to raise money for tackling a €26bn debt to power producers which the state has built up over the years in regulating energy costs and prices. The solar levy was fixed at 6 euro cents per kilowatt-hour.
Under the constitution, the government can impose emergency measures by decree and has done so repeatedly since it came into office in late 2011.
With Spain in economic crisis, power consumption is falling but the energy debt will continue growing by €4bn to €5bn a year unless the government takes action.
Utilities such as Iberdrola, Endesa and Gas Natural have attacked other revenue-raising measures in the reform.
However, Spaniards who have generated power independently for their own homes under a system known as "autoconsumo" are among the hardest hit by policies which they say punish, rather than encourage, energy efficiency.
Industry Minister Jose Manuel Soria accepts the measures are painful but says they are needed to plug the energy deficit.
"I support 'autoconsumo' ... but the power system has infrastructure, grids that the rest of us Spaniards who are in the system have to pay for. And we pay for it through our electricity bill," said Soria.
As a decree law, the measures are unlikely to undergo much scrutiny in parliament where the ruling People's Party has an outright majority, meaning the opposition cannot force a debate.
Green savings crack-down
Spain imports over 80% of its energy needs, spending more than €40bn - or about 4.5% of gross domestic product - a year.
Supporters of solar power says the government ought to be supporting the industry to cut this bill and achieve renewable energy targets set by the European Union.
Soria announced the measures just as home-produced solar power had become increasingly attractive compared with electricity supplied over the grid by traditional utilities.
In the past, the high cost of solar panels discouraged many consumers from taking the plunge, but prices have more than halved in the last three years.
A 240-watt solar panel kit, enough to power household appliances, is now available on the Internet for as little as 500 euros.
Under the old regime, Spanish consumers could recover a typical €1 600 to €2 100 investment in solar panels through savings on their utility bills in about five years.
According to FENIE, an association for solar panel installations, this will jump to 17 years when the levies are imposed under the new law.
Moreover, the law does not allow homeowners to sell electricity they do not need back to the grid, a common practice in other countries such as Germany.
Spain's climate offers huge potential for solar power. In Germany, a four-person household can cut its consumption of power from the grid by 30% by using panels.
In Spain, which has among the highest electricity prices in Europe, the figure is three times that - offering big savings for consumers hit by the recession and 26% unemployment.
Solar rebels
In the end, Alonso moved his solar panels to a friend's house deep in the Spanish countryside. This was far enough from the nearest mains supply to be exempt from the stipulation that panels must be hitched up to the grid.
Apart from people in isolated communities, Spaniards must connect their panels to the grid within two months. This allows their solar power production to be metered remotely - and taxed.
However, some panel owners plan to rebel by ignoring the government's deadline, confident the courts would hesitate to uphold the huge fines. These were laid down in an old 1997 energy law and, while possibly appropriate for a large corporation, no private individual could ever pay them.
"If I spend €600 to install solar panels and get fined €6m, let the judge decide," said Sergio Pomar, chief executive of energy-efficient installation firm INEL.
Courts already expect a series of legal challenges to other elements of the reforms, which investors in renewable energy says renege on the terms of their investment.
Teresa Ribera, senior adviser to the Paris-based Institute for Sustainable Development and International Relations (IDDRI), said the law could provoke civil disobedience.
"This law is illogical in terms of energy efficiency and costs ... and is a serious invitation by the government for citizens to become anti-system," she said.
She dismissed the idea that independent solar power producers should pay for costs such as running the grid and subsidising other energy forms. "It's like asking cyclists to pay a levy to keep open the petrol stations they don't use," said Ribera, who served as secretary of state for the environment under the former Socialist administration.
Backtracking on renewables
Ribera said the law is a setback for Spain in the competitive renewable energy industry, where it was once a frontrunner.
It also threatens to prevent Spain from meeting an EU goal of producing 20% of its energy from renewable sources by 2020.
"If we continue burning more coal and stop installing renewables capacity, the targets are at risk," said renewable energy advocate Mario Sanchez.
Javier Garcia Breva, chairman of Spain's renewable energy foundation, said the country had to cut its energy import bill. "Failing to support energy efficiency will only make these costs go up," he said.

China targets many sectors in price probe

China's powerful price regulator could target the petroleum, telecommunications, banking and auto sectors next in its investigations into violations of the country's anti-trust laws, state media quoted a senior official as saying.
The National Development and Reform Commission (NDRC) would look at industries that have an impact on the lives of ordinary Chinese, China Central Television (CCTV) quoted Xu Kunlin, head of the anti-monopoly bureau at the NDRC, as saying on one of its programmes.
The NDRC has launched nearly 20 pricing-related probes into domestic and foreign firms in the last three years, according to official media reports and research published by law firms.
But the scope of its investigations in the world's second biggest economy have gathered pace in recent months and coincide with criticism in official media about the price of goods such as milk powder, medicine, luxury cars and jewellery.
"When you look at activities around the world, regulators tend to investigate sectors where their investigations can have a direct impact on consumers, and that will look good," said Sebastien Evrard, Beijing-based partner at law firm Jones Day, which specialises in anti-trust law.
Last week the NDRC fined six milk powder firms for anti-competitive behaviour. It is also investigating 60 foreign and local pharmaceutical companies over pricing and costs.
Companies in the petroleum, telecommunications, banking and auto sectors were on the NDRC's radar for future investigations, CCTV's official blog quoted Xu as saying.
Xu gave a hypothetical example, saying that if banks fixed deposit or lending rates if and when China liberalised its interest rate regime, such behaviour could prompt an investigation.
CCTV gave no other details and NDRC officials could not be reached for comment.
China has been taking incremental steps towards liberalising interest rates. Last month the central bank removed controls on bank lending rates, giving commercial banks the freedom to compete for borrowers.
Evrard said that while telecoms companies and fuel prices were often the target of regulators around the world, they would not be obvious choices in China because of the involvement of state-owned companies.
The country's three biggest telecom firms China Unicom Ltd , China Mobile and China Telecom  are state owned.
Similarly, the top four banks are controlled by the state. And the price of oil in China is set by the government.
The China Automobile Dealers Association told earlier this week that its officials were collecting data on the price of all foreign cars sold in the country for the NDRC.
The State Administration for Industry and Commerce (SAIC), a regulator in charge of market supervision, kicked off a separate three-month investigation into bribery in the pharmaceutical and medical services sector on Thursday.
Foreign executives and bankers in China say the various investigations are a hot topic of discussion but many are still puzzled by the motivation behind the probes and whether they will impact their business.

Smartphones top mobile sales - poll

Smartphones took a majority of mobile phone sales worldwide for the first time in the April-June quarter, a survey showed on Wednesday.
The report by the research firm Gartner found smartphone sales totaled 225 million in the second quarter, or 51.8% of all mobile phones sold in the period.
It was the first time smartphone sales exceeded those of feature phones, which are more basic phones with limited or no access to the Internet and applications.
The survey found Samsung remained the leading vendor of smartphones and all mobile phones, and that the Google Android system solidified its position with a 79% share of smartphones sold.
Gartner said Windows Phone, the mobile operating system from Microsoft, moved into third place with a 3.3% share, ahead of troubled BlackBerry, whose share slid to 2.7%.
"While Microsoft has managed to increase share and volume in the quarter, Microsoft should continue to focus on growing interest from app developers to help grow its appeal among users," said Anshul Gupta, a Gartner analyst.
Apple's iOS, the operating system for the iPhone, remained second with a 14.2% share, down from 18.8% a year earlier.
Gartner said Apple's average prices dropped because many of its phones sold were older, discounted models of the iPhone. This "demonstrates the need for a new flagship model," Gupta said, but added that "it is risky for Apple to introduce a new lower-priced model too."
Gartner's data showed Samsung sold 71.3 million smartphones in the quarter, representing a market share of 31.7%.
Apple was second with 31.9 million, followed by South Korea's LG, with 11.4 million and a share of 5.1%, and China's Lenovo and ZTE.
Samsung was also the top seller of all mobile phones, with a total of 107 million in the period, or 24.7%. Finland-based Nokia was second with a market share of 14% and 60.9 million phones sold, Gartner said.

UK flirts with a new house price bubble

Britain is flirting with another runaway rise in house prices, according to a poll of economists, with a firm majority putting the chances at 50-50 or higher over the next five years.
Despite those concerns, there was a clear consensus that the recent improvement in data heralds a sustainable economic recovery for the UK, which has struggled over the last three years to escape recession.
A clear pick-up in Britain's housing market, accelerated by the government's "Help to Buy" programme introduced in this year's Budget and other measures to boost lending, is a sign of rising confidence in the economy.
But with the last housing boom of 1997-2007 still fresh in the mind, there are concerns that Britain is falling back into the same mentality that led to a tripling of the average house price in 10 years.
Only nine out of 29 economists surveyed since Friday said the prospect of another house price bubble - whereby prices rise so fast they would be vulnerable to a sharp correction - is small. The other 20 were split between seven describing the risk as even, 11 as likely, and two as very likely.
The sample comprises economists working for major banks, and research institutions and consultancies.
Danny Gabay, economist at Fathom Financial Consulting, said media talk of a new housing bubble wasn't very helpful, and that rising house prices are not intrinsically a bad thing.
"We're not concerned about a new housing bubble, we're concerned about the fact we never worked off the last one before they began to re-inflate it," he said.
"We've stopped any attempt at any of the repair work that is essential for this economy to be able to heal properly."
Sustainable economic recovery
A July survey from the Royal Institution of Chartered Surveyors showed the fastest growth in house prices since 2006. Official data showed house prices in London, which typically lead the rest of the country, jumped 8.1% in June compared with the same month a year ago.
Despite declining sharply in 2008 and 2009 after Britain and other advanced economies plunged into severe recession, UK house prices have remained overvalued compared to economic fundamentals, according to every quarterly UK housing market poll since then.
Gabay argues that not only have the government and the Bank of England stopped the process of deleveraging, they're now encouraging homebuyers to take on more debt.
British Finance Minister George Osborne said last month that the "Help to Buy" programme - which provides government-backed equity loans to first-time buyers and people moving to new-build houses worth up to £600 000 pounds ($927 700) - was a targeted response to a malfunctioning mortgage market. He dismissed concerns property prices had become a one-way bet.
"I don't think in the current environment a house price bubble is going to emerge in 18 months or three years," Osborne told parliament.
Bank of England Governor Mark Carney, asked last week at a press conference about the prospect of another housing bubble, did not address whether or not that was a risk for the economy. He said the market should be put into context: mortgage applications are still well below historic averages.
Rising house prices would support economic recovery as they make homeowners feel wealthier and more likely to spend.
The poll showed the UK economy is likely to improve further from here over the next 18 months at least.
The vast majority of respondents, 30 of 35, said upbeat purchasing managers indexes, burgeoning consumer confidence and an improving retail outlook all pointed to the battered economy getting back on track.
Britain's economy is expected to grow by between 0.4 and 0.5% per quarter from here through to the end of next year, with the consensus barely changed from last month's poll, although the outlook is not without risks.
"Though sustainable, the prospective recovery is likely to face headwinds from the euro zone, a weak UK credit system and the economy's structural problems - over-reliance on finance, lack of skills," said Stephen Lewis, chief economist of Monument Securities.