January 15, 2021

F.T.C. Said to Have Begun New Inquiry on Google

People who have been contacted in connection with the inquiry said that the F.T.C. had begun asking questions about Google’s practices, specifically whether the company was bundling advertising services together in a way that prohibited rivals from competing for the business of advertisers.

The F.T.C. said in December 2007 that it would monitor Google’s practices in that area. At that time, the commission found that Google’s proposed acquisition of DoubleClick, an online advertising company that specialized in display ads, was “unlikely to substantially lessen competition.”

“We want to be clear, however,” the F.T.C. wrote at the time, “that we will continue to watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the commission intends to act quickly.”

Officials at the F.T.C. and Google declined to comment Friday on the possibility of a new inquiry, which was first reported Thursday evening by Bloomberg News. One person close to the matter, who spoke on the condition of anonymity because the inquiry is in its early stages, said the F.T.C. had not yet contacted Google about a new antitrust inquiry.

Another person who has been briefed on the F.T.C.’s work said that the commissioners themselves had not approved the issuance of subpoenas or civil investigative demands, which would be part of any formal investigation.

The F.T.C. closed an antitrust investigation of Google’s search business less than five months ago, voting unanimously not to proceed with an antitrust case after months of pressure from Google’s rivals.

That investigation focused on how Google’s search engine presented results of consumer queries, and whether the company purposely gave higher rankings and more prominent display to results that featured its own businesses.

In the new inquiry, according to a person in the advertising business who said he was contacted by the F.T.C., commission staff members asked about Google’s practices in providing, or serving, advertisements to customers’ Web sites and about the practices of its Ad Exchange, where companies bid on opportunities to aim at certain consumers with ads.

F.T.C. officials were interested in whether Google was tying one application to another by offering below-cost pricing in exchange for a customer’s guarantee not to buy ads through Google’s competitors, the person said.

At the time it approved the DoubleClick deal, the F.T.C. said it also would monitor issues concerning consumer privacy, including whether the collection of information from one part of Google’s business – for example, its search operation – was being used in its other units to unfairly exploit its size and drive rivals from the market.

Article source: http://www.nytimes.com/2013/05/25/technology/ftc-said-to-have-begun-new-inquiry-on-google.html?partner=rss&emc=rss

DealBook: Commerzbank to Raise Capital and Pay Back Bailout

The Frankfurt headquarters of Commerzbank, Germany's second-largest lender.Michael Probst/Associated PressThe Frankfurt headquarters of Commerzbank, Germany’s second-largest lender.

11:41 a.m. | Updated

FRANKFURT – Commerzbank said on Wednesday that it would repay a taxpayer bailout and ask shareholders for more capital, moves that would reduce the German government’s influence over the bank but also dilute current shareholders.

Commerzbank, Germany’s second-largest bank after Deutsche Bank, said it would raise 2.5 billion euros ($3.3 billion) by selling new shares to existing shareholders. The issuance of new shares will reduce the German government’s stake in the bank to less than 20 percent, from 25 percent. As a result, the government would no longer have the right to veto management decisions.

The bank said it would use the money to bolster its capital reserves. Martin Blessing, the chief executive of Commerzbank, said the transaction signaled “the beginning of the end of the Federal Republic’s engagement in Commerzbank.” He said Commerzbank would save on interest by repaying its government loans earlier, and would be able to resume paying shareholder dividends sooner than expected.

Shareholders were disappointed, however, because the new shares would dilute the value of existing equity. Commerzbank shares fell more than 9 percent in Frankfurt trading on a day when German stock prices were otherwise flat.

Commerzbank said it Wednesday that it would pay back the remaining 1.6 billion euros of the 16.4 billion euros it received from the government in 2008 and 2009. That sum does not include an additional 3.7 billion euros in aid that the German government provided to the bank by buying its shares, some of which it will retain. the German federal agency for financial market stabilization, which administers bank bailout funds, said Tuesday that it would gradually sell off the rest of the government’s stake as market conditions allow.

The transaction is the latest effort by Commerzbank, and European banks in general, to move back to a semblance of normality after the turmoil of the last five years. While Germany has a reputation as an industrial powerhouse aloof from the financial crisis, almost all of its large banks are struggling and many would be bankrupt without public support. Moody’s has a negative rating on the German banking sector.

German and European banks still have a long way to go before the financial system can be considered healthy. Many banks remain dependent on the European Central Bank for cash, and credit remains scarce in much of the euro zone. Many banks are barely profitable or not at all. Commerzbank reported a loss of 716 million euros in the fourth quarter of 2012, compared with a profit of 316 million euros in the period a year earlier.

Commerzbank is taking advantage of relatively favorable market conditions for German banks because the country is regarded as a haven from financial turmoil, said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels. But whether the transaction leads to a healthier banking system depends on whether current managers do a better job than their predecessors managing risk, he said.

“They might erase losses from previous bad risk management but that doesn’t mean their risk management going forward will be any better,” Mr. Véron said.

Commerzbank will also repay 750 million euros to the German insurer Allianz. The loan, a so-called silent participation, grew out of Commerzbank’s acquisition of Dresdner Bank from Allianz in 2008.

The bank said it would determine the number of new shares to be issued and the price in mid-May. Before that, Commerzbank will also consolidate existing shares, with one new share equaling 10 old shares. Deutsche Bank, Citigroup and HSBC will serve as underwriters.

Shareholders must approve the capital increase at the annual meeting, which is scheduled for April 19, about a month earlier than planned.

Commerzbank will use the cash raised to meet new regulations, known as Basel III, that require banks to increase the amount of capital they hold in reserve. Although the rules do not take full effect until 2019, banks are already under market pressure to comply.

Article source: http://dealbook.nytimes.com/2013/03/13/commerzbank-to-raise-more-capital-and-repay-taxpayer-money/?partner=rss&emc=rss

European Union Softens Bid to Rein In Credit Ratings Agencies

In particular, the commission failed to agree to a plan by Michel Barnier, the European Union’s commissioner for the internal market, that could have allowed a regulator like the European Securities and Markets Authority to ban the issuance of new sovereign ratings while bailouts were being considered.

Some of the initiatives proved “a bit too innovative” for other members of the commission, Mr. Barnier said in a news conference in Strasbourg, France.

That still left open the possibility of a later amendment by the European Parliament to include a ban at sensitive times for markets when it comes to review the legislation, officials said.

After a meeting that lasted much of the afternoon, the commission did agree to other measures that would increase the liability of the agencies for improper ratings, oblige issuers of debt to use a wider range of agencies and require agencies to issue ratings in a manner that was least likely to provoke volatility in the financial markets.

Lawmakers from Britain, which zealously protects the interests of London as a financial center, welcomed the decision to put aside the plan to effectively ban ratings agencies from operating at certain times.

Ashley Fox, a British member of the European Parliament, said that “at least the commission has stepped back from a position that could have created yet more mistrust in the markets.”

Preserving financial stability was a major concern during the debate in Strasbourg on Tuesday. A number of commissioners from across the political spectrum and from several countries blocked the measure out of concern that it could do more harm than good without further refinement, according to a person knowledgeable about the discussions who asked to remain anonymous because the meeting was not public.

The commission also dropped plans to limit the largest credit rating agencies from taking over smaller ones, partly because of concerns that such a move would run counter to the European Union’s competition rules.

That initiative had been aimed at helping smaller ratings agencies compete in a sector dominated by Standard Poor’s, Moody’s and Fitch. But the commission did agree to impose new limits on cross-shareholdings between agencies.

The three largest agencies together have 95 percent of the global market for credit ratings, according to the commission. The rest of the market is made up of smaller agencies. Some are specialized in areas like insurance while others are focused on specific countries, like Japan and China.

Mr. Barnier insisted that the proposals agreed to Tuesday were still significant because they could help reduce over-reliance on ratings agencies and allow for greater remedial action.

The rules the commissioners agreed to would encourage investors to sue the credit ratings agencies in national courts for incorrectly assessing the ability of countries and companies to pay their debts “intentionally or with gross negligence.” They also agreed to put the burden of proof on the agency to prove it carried out its work properly.

The new rules would require companies that issue debt to rotate at least one of the agencies they work with once every three years in many cases. No agency would be able to work with an issuer for more than six years in a row. That measure was aimed at reducing conflicts of interest and could give more of an opportunity to newcomers to the market to gain a toehold.

Another change approved by the commission was to make issuers of complex debt seek ratings from two different agencies.

In addition, agencies would need to give notification of a rating change a full working day before publication to give a company or government the chance to notify of any factual errors it made in its ratings. The current notice requirement is 12 hours.

Sovereign debt ratings would be done every 12 months, rather than every six months.

This article has been revised to reflect the following correction:

Correction: November 15, 2011

An earlier version of this article misstated the day of the European Commission’s meeting. It was Tuesday, not Wednesday.

Article source: http://www.nytimes.com/2011/11/16/business/global/european-commission-backs-away-from-strict-control-of-rating-agencies.html?partner=rss&emc=rss

A.I.G. Tells Shareholders Stock Sale Still Planned

The Treasury Department has been planning to sell some of its shares for months, as the Obama administration has worked to return the big insurer to the private sector. But questions about the size and the price of the deal have mounted, as A.I.G.’s share price has been sliced in half this year.

No specific selling price was quoted by top company executives, who answered questions about the insurer’s planned return to the private sector at the company’s annual meeting. But the planned offering of 300 million shares would yield about $9 billion at the stock’s current price, much less than anticipated just a few months ago.

The Treasury, which now owns 92 percent of A.I.G.’s common stock, aims to sell 200 million of its 1.66 billion shares, leaving it with 77 percent of the company, according to an offering document filed Wednesday. At the same time, A.I.G. plans to sell 100 million new shares.

A person familiar with the company’s plans said some of the proceeds would be used to increase the company’s available cash and capital, allowing it to eliminate a line of credit from the Treasury.

Several factors have depressed the company’s shares. In recent months, A.I.G.’s biggest remaining operating unit, renamed Chartis, has posted losses on earthquake claims from Japan and New Zealand. It has had to bolster its reserves too.

The company’s share price has also fallen sharply since the issuance in January of a warrant that allowed shareholders to buy stock for $45 a share. The warrant had been announced in October to encourage investors to hold the stock while the Treasury executed a series of restructuring transactions. Until January, the value of the warrant was included in A.I.G.’s stock price.

“You’re now selling this stock at one-half of what it was selling for just a few months ago,” Kenneth Steiner, the owner of 600 A.I.G. shares, told the board at the annual meeting. “What’s happened here is a real shame and a real tragedy, and it’s only being made worse now by this dilutive offering.”

From a 2011 high of $61.18 in January, A.I.G.’s stock closed at $30.65 on Wednesday in regular trading, up $1.03 for the day.

Treasury officials have said that taxpayers will break even as long is A.I.G. can sell its stake for at least $28.72 a share. The price on the first tranche will be determined in part by demand as the company and its bankers begin a road show to market the shares. The big banks underwriting the deal are said to want a lower price, in hopes of maximizing how much they will make on the sale.

Mr. Steiner, the investor, said he considered it unfair for the company to announce stock offering terms suddenly at an annual meeting, depriving investors of information that they could analyze to decide whether to support the current management.

He said that the stock would be offered at two-thirds of A.I.G.’s book value, about $47 a share, “way below what most insurers would have sold their stock at.”

A.I.G.’s chairman, Steve Miller, said the board had decided to go ahead because a broader shareholder base would be helpful. The stock would then be less vulnerable to the sharp price swings that plague thinly traded stocks. That, in turn, could encourage more investors to buy, and the stock would eventually rebound.

He added that the Treasury’s portion of the sale was not dilutive, because it would not increase the number of shares outstanding — it would simply shift a block of shares from the government to many owners.

Along with paying down the Treasury line of credit, the company said that $550 million of its proceeds would go to settle a lawsuit filed by three Ohio pension funds in 2004.

The current chief executive, Robert H. Benmosche, said the company could not begin paying dividends to shareholders until all the Treasury’s holdings were sold. He suggested shareholders might recover some value as soon as 2012 or 2013, when A.I.G. could begin to buy back some of the shares now being put on the market.

Article source: http://feeds.nytimes.com/click.phdo?i=6282ab53dc4450196fec0703a8b9ed78