…

NEW YORK — The U.S. Justice Department filed an antitrust lawsuit against Visa on Tuesday, alleging that the financial services behemoth uses its size and dominance to stifle competition in the debit card market, costing consumers and businesses billions of dollars.

The complaint says Visa penalizes merchants and banks who don’t use Visa’s own payment processing technology to process debit transactions, even though alternatives exist. Visa earns an incremental fee from every transaction processed on its network.

According to the DOJ’s complaint, 60% of debit transactions in the United States run on Visa’s debit network, allowing it to charge over $7 billion in fees each year for processing those transactions.

“We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said Attorney General Merrick Garland in a statement. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa’s unlawful conduct affects not just the price of one thing — but the price of nearly everything.”

The Biden administration has aggressively gone after U.S. companies that it says act like middlemen, such as Ticketmaster parent Live Nation and the real estate software company RealPage, accusing them of burdening Americans with nonsensical fees and anticompetitive behavior. The administration has also brought charges of monopolistic behavior against technology giants such as Apple and Google.

According to the DOJ complaint, filed in the U.S. District Court for the Southern District of New York, Visa leverages the vast number of transactions on its network to impose volume commitments on merchants and their banks, as well as on financial institutions that issue debit cards. That makes it difficult for merchants to use alternatives, such as lower-cost or smaller payment processors, instead of Visa’s payment processing technology, without incurring what DOJ described as “disloyalty penalties” from Visa.

The DOJ said Visa also stifled competition by paying to enter into partnership agreements with potential competitors.

In 2020, the DOJ sued to block the company’s $5.3 billion purchase of financial technology startup Plaid, calling it a monopolistic takeover of a potential competitor to Visa’s ubiquitous payments network. That acquisition was later called off.

Visa previously disclosed the Justice Department was investigating the company in 2021, saying in a regulatory filing it was cooperating with a DOJ investigation into its debit practices.

Since the pandemic, more consumers globally have been shopping online for goods and services, which has translated into more revenue for Visa in the form of fees. Even traditionally cash-heavy businesses such as bars, barbers and coffee shops have started accepting credit or debit cards as a form of payment, often via smartphones.

Visa processed $3.325 trillion in transactions on its network during the quarter ended June 30, up 7.4% from a year earlier. U.S. payments grew by 5.1%, which is faster than U.S. economic growth.

Visa, based in San Francisco, did not immediately have a comment.
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Colombo, Sri Lanka — Sri Lanka’s new leftist president appointed his Cabinet Tuesday ahead of an expected snap parliamentary election as he prepares to renegotiate the bankrupt island nation’s unpopular International Monetary Fund bailout program.  

Self-avowed Marxist Dissanayake of the People’s Liberation Front (JVP) was sworn into office on Monday after a landslide win in weekend presidential polls.  

His once-marginal party currently has just three lawmakers in Sri Lanka’s 225-member parliament.  

But support for the 55-year-old surged after a 2022 economic meltdown that immiserated millions of ordinary Sri Lankans and the painful implementation of the IMF rescue plan.  

On Tuesday his office announced the appointment of lawmaker Harini Amarasuriya, 54, as premier with the additional portfolios of justice, education, health and labor.  

The sociology lecturer, who was first elected to parliament four years ago, is known for her activism on gender equality and minority rights issues.  

She and the remaining two JVP-aligned lawmakers will share all ministerial responsibilities between them, and also act as caretaker ministers after parliament is dissolved.  

“We will have the smallest Cabinet in the history of Sri Lanka,” party member Namal Karunaratne told reporters on Tuesday.   

“Parliament dissolution will happen thereafter. It could be within the next 24 hours.”  

Sri Lanka’s crisis proved an opportunity for Dissanayake, who saw his popularity rise after pledging to change the island’s “corrupt” political culture.  

He beat 38 other candidates to win Saturday’s presidential vote, taking more than 1.2 million more votes than his nearest rival.  

His predecessor Ranil Wickremesinghe, who had imposed steep tax hikes and other unpopular austerity measures under the terms of the $2.9 billion IMF bailout, came a distant third.  

The IMF offered its congratulations to Dissanayake on Monday, saying it was ready to discuss the future of the rescue plan.   

“We look forward to working together with President Dissanayake… towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery,” a spokesman from the lender of last resort said.  

‘Not a magician’  

A senior aide of the new president told AFP on the weekend that Dissayanake’s party would not repudiate the IMF deal.  

“Our plan is to engage with the IMF and introduce certain amendments,” Bimal Ratnayake said.  

“We will not tear up the IMF program. It is a binding document, but there is a provision to renegotiate.”  

In his first address after his inauguration, Dissayanake sought to lower expectations of a quick fix for the country’s economic woes.  

“I am not a conjuror, I am not a magician, I am a common citizen,” he said.   

“I have strengths and limitations, things I know and things I don’t,” he added. “My responsibility is to be part of a collective effort to end this crisis.” 
…

Berlin — Germany’s leading economic institutes have downgraded their forecast for 2024 and now see Europe’s largest economy shrinking by 0.1%, people familiar with the figures from the autumn joint economic forecast told Reuters on Tuesday. 

Germany’s economy was the weakest among its large euro zone peers last year with a 0.3% contraction.  

Even with inflation on a downward trend, consumption remains weak and high energy costs, feeble global orders and high interest rates are still taking their toll.  

The latest economic data paint a gloomy picture. German business morale fell for a fourth straight month in September and by more than expected, a survey showed on Tuesday. 

Data earlier this week showed German business activity contracted in September at the sharpest pace in seven months, putting the economy on track to notch up a second consecutive quarter of falling output. 

The economic institutes have also slashed their forecasts for the coming years, according to the sources. The growth forecast for 2025 has been cut to 0.8% from 1.4%, and for 2026, the institutes envisage growth of 1.3%, the sources said. 

The institutes’ joint economic forecast is due to be published on Thursday, meaning the figures could still change slightly before then. 

The economy ministry incorporates the combined estimates from the institutes — Ifo, DIW, IWH, IfW and RWI — into its own predictions. 

According to its latest forecast, the German government expects the economy to grow 0.3% this year. An update is due in October.  
…

Washington — The U.S. Commerce Department on Monday proposed prohibiting key Chinese software and hardware in connected vehicles on American roads due to national security concerns — a move that would effectively bar nearly all Chinese cars from entering the U.S. market.

The planned regulation, first reported by Reuters, would also force American and other major automakers in the coming years to remove key Chinese software and hardware from vehicles in the United States.

The Biden administration has raised serious concerns about the collection of data by Chinese companies on U.S. drivers and infrastructure through connected vehicles as well as about potential foreign manipulation of vehicles connected to the internet and navigation systems. The White House ordered an investigation into the potential dangers in February.

The prohibitions would prevent testing of self-driving cars on U.S. roads by Chinese automakers and extend to vehicle software and hardware produced by other U.S. foreign adversaries including Russia.

“When foreign adversaries build software to make a vehicle that means it can be used for surveillance, can be remotely controlled, which threatens the privacy and safety of Americans on the road,” Commerce Secretary Gina Raimondo told a briefing.

“In an extreme situation, a foreign adversary could shut down or take control of all their vehicles operating in the United States all at the same time causing crashes, blocking roads.”

The move is a significant escalation in the United States’ ongoing restrictions on Chinese vehicles, software and components. Earlier this month, the Biden administration locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles as well as new hikes on EV batteries and key minerals.

There are relatively few Chinese-made cars or light-duty trucks imported into the United States. But Raimondo said the department is acting “before suppliers, automakers and car components linked to China or Russia become commonplace and widespread in the U.S. automotive sector… We’re not going to wait until our roads are filled with cars and the risk is extremely significant before we act.”

Nearly all newer cars and trucks are considered “connected” with onboard network hardware that allows internet access, allowing them to share data with devices both inside and outside the vehicle.

A senior administration official confirmed the proposal would effectively ban all existing Chinese light-duty cars and trucks from the U.S. market, but added it would allow Chinese automakers to seek “specific authorizations” for exemptions.

The United States has ample evidence of China prepositioning malware in critical American infrastructure, White House National Security Adviser Jake Sullivan told the same briefing.

“With potentially millions of vehicles on the road, each with 10- to 15-year lifespans the risk of disruption and sabotage increases dramatically,” Sullivan said.

The Chinese Embassy in Washington last month criticized planned action to limit Chinese vehicle exports to the United States: “China urges the U.S. to earnestly abide by market principles and international trade rules, and create a level playing field for companies from all countries. China will firmly defend its lawful rights and interests.”

The proposal calls for making software prohibitions effective in the 2027 model year while the hardware ban would take effect in the 2030 model year or January 2029.

The Commerce Department is giving the public 30 days to comment on the proposal and hopes to finalize it by Jan. 20. The rules would apply to all on-road vehicles but exclude agricultural or mining vehicles not used on public roads.

The Alliance For Automotive Innovation, a group representing major automakers including General Motors, Toyota, Volkswagen and Hyundai, has warned that changing hardware and software would take time.

The group noted connected vehicle hardware and software are developed around the world, including China, but could not detail to what extent Chinese-made components are prevalent in U.S. models.
…

Brussels, Belgium — Eurozone business activity declined for the first time in seven months in September, as France lost steam after the end of the Paris Olympic Games, a key survey said Monday.  

S&P Global’s purchasing managers’ index (PMI) — a key gauge of the overall health of the economy — dropped to 48.9 in September, down from 51 in August. 

Any reading below 50 indicated contraction.    

“The eurozone is heading towards stagnation. After the Olympic effect had temporarily boosted France, the eurozone heavyweight economy, the Composite PMI fell in September to the largest extent in 15 months,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.   

“Considering the rapid decline in new orders and the order backlog, it doesn’t take much imagination to foresee a further weakening of the economy.”  

The survey showed that Germany and France, the eurozone’s top two economies, were largely responsible for driving the slump in the 20-country single currency area.  

French private sector output returned to contraction after the shot in the arm from the Olympics, while German business activity dropped the fastest since February.  

The “big decline” in eurozone PMI “suggests that the economy is slowing sharply, that Germany is in recession and that France’s Olympics boost was just a blip”, said Andrew Kenningham, chief Europe economist at London-based research group Capital Economics.  

“With France’s new minority government now planning to tighten fiscal policy significantly, prospects for growth in France look increasingly poor,” he said.  

President Emmanuel Macron named a new government led by Prime Minister Michel Barnier Saturday, 11 weeks after an inconclusive parliamentary election.  

The eurozone PMI data showed the manufacturing sector was down across the board, falling for the eighteenth month in a row.    

“Manufacturing is getting messier by the month,” de la Rubia said.   

“Looking ahead, the sharp drop in new orders and companies’ increasingly bleak outlook for future output suggest that this dry spell is far from over.”  

The decline in business activity could add impetus to calls for the European Central Bank (ECB) to cut its key interest rate again in October.  

The bank for the 20 countries that use the euro cut its deposit rate by a quarter point to 3.50% this month — the second decrease since June.  

The ECB had hiked rates at record pace from mid-2022 to tame surging consumer prices but has started easing the pressure as inflation drifts back down towards its 2% target.  
…

NEW YORK — A roaring rally in U.S. stocks will face a gauntlet of economic data, looming political uncertainty and a corporate earnings test in coming weeks as investors navigate one of the most volatile periods of the year for equity markets.  

The benchmark S&P 500 .SPX last week hit its first closing all-time high in two months after the Federal Reserve unveiled a hefty 50-basis point rate cut, kicking off the first U.S. monetary easing cycle since 2020.  

The index is up 0.8% so far in September, historically the weakest month for stocks, and has gained 19% year-to-date. But the rocky period could carry over until the Nov 5 election, strategists said, leaving the S&P 500 vulnerable to market swings.  

“We’re entering that period where seasonality has been a bit less favorable,” said Angelo Kourkafas, senior investment strategist at Edward Jones. “Despite the excitement about the start of the new rate-cutting cycle, it could still be a bumpy road ahead.”  

The second half of September is historically the weakest two-week period of the year for the S&P 500, according to a Ned Davis Research analysis of data since 1950.  

The index has also logged an average 0.45% decline in October during presidential years, data from CFRA going back to 1945 showed.  

Volatility also tends to pick up in October in election years, with the Cboe Market Volatility index .VIX rising to an average level of 25 at the start of the month, as opposed to its long-term average of 19.2, according to an Edward Jones analysis of the past eight presidential election years. The VIX was recently at 16.4.  

The market could be particularly sensitive to this year’s close election between Republican Donald Trump and Democrat Kamala Harris. Recent polls show a virtually tied race.  

“Unless the data deteriorates considerably, we think U.S . elections will start to be more at the forefront,” UBS equity derivative strategists said in a note.    

Investors are also looking for data to support expectations that the economy is navigating a “soft landing,” during which inflation moderates without badly hurting growth. Stocks fare much better after the start of rate cuts in such a scenario, as opposed to when the Fed cuts during recessions.  

The coming week includes reports on manufacturing, consumer confidence and durable goods, as well as the personal consumption expenditures price index, a key inflation measure.  

Attention will be squarely on employment after Fed Chair Jerome Powell said the central bank wanted to stay ahead of any weakening in the job market as the Fed announced its cut last week. The closely-watched monthly U.S. jobs report is due on Oct 4.  

“We’re going to have hyper-focus on anything that speaks to the strength of the labor force,” said Art Hogan, chief market strategist at B Riley Wealth. 

Meanwhile, the rally in stocks has pushed up valuations. The S&P 500 has a price-to-earnings ratio of 21.4 times expected 12-month earnings, well above its long-term average of 15.7, according to LSEG Datastream.  

With the scope for valuations to go higher now more limited, investors said that puts a greater burden on corporate earnings to be strong in order to support stock gains.  

Third-quarter reporting season kicks off next month. S&P 500 earnings for the period are expected to have climbed 5.4% from the prior year, and then jump nearly 13% in the fourth quarter, according to LSEG IBES.  

FedEx FDX.N shares tumbled on Friday after the delivery giant reported a steep quarterly profit drop and lowered its full-year revenue forecast.  

“Extended multiples put pressure on macro data and fundamentals to support S&P 500 prices,” Scott Chronert, head of U.S. equity strategy at Citi, said in a report. 
…

ABUJA, NIGERIA — The high inflation rate in Nigeria dropped slightly in August, but a decline in the value of the nairia and a continued increase in fuel prices are eroding the slight gains and threatening to reignite the inflationary trend.

Michael Anthony, an engineer and father of four, still faces high costs despite the small drop in inflation, which fell from 33.40% in July to 32.15% in August. His household expenses remain steep, with no real relief in sight.

“In the month of July, I bought a bag of rice at the rate of 65,000 naira, but … three days ago, I bought a bag of rice for 95,000 naira,” he said. “If you want to buy anything, price has risen because of the price of fuel. I’m worried that inflation rate might rise again.”

At a market in a suburb of Abuja, food trader Blessing Ochuba is also struggling. With customers unable to buy in bulk, she’s cutting back her stock and adjusting prices to stay in business.

Ochuba said patronage has been slow despite the reported dip in inflation rate.

“People that normally buy in bags, they now buy like half or quarter … because they can no longer afford to buy for now,” she said. “I used to buy like 10 bags of rice, but now I cannot afford to buy five. Honestly, I did not see the coming down, everything is going higher.

“It’s on the high side, and it is really affecting us.”

Despite lower inflation, Nigeria’s currency has weakened from 1,200 to 1,600 to the dollar, and gasoline prices have soared from 620 to nearly 1,000 naira per liter over the past three months.

Development economist Hauwa Mustapha credited a government policy in which food imports were not subject to excise duty for 90 days for the slight inflation drop.

“I think that helped a lot, and that also helped for them to boost the supply of food. … It does not indicate a long-term recovery,” she said, adding that a lasting recovery will depend on government measures.

“What the government can do to manage inflationary pressure for both short term and long term, I think for now, is to concentrate policy action in the area of food supply,” Mustapha said.

“Thankfully, we are approaching the harvest season. Typically, in Nigeria, we also know that we experience a lot of post-harvest loss. This is … the time for the country to manage the harvest, particularly control [and] minimize post-harvest losses, so that we can keep the food supply steady.”

Experts say the government’s next steps will determine whether this inflation dip signals a recovery or just temporary relief.
…

Frankfurt, Germany — Germany wants to support Volkswagen and help it avoid factory closures but the ailing car giant will have to fix most of its problems itself, Economy Minister Robert Habeck said Friday.  

Volkswagen said earlier this month it needed significant restructuring to stay competitive, and was considering shutting sites in Germany for the first time in its 87-year history.  

The announcement stunned employees and added to concerns about Germany’s flagship car industry as it grapples with high costs, increased competition from China and weak demand for electric vehicles (EVs).  

“The majority of the tasks will have to be solved by Volkswagen itself,” Habeck said during a visit to a VW plant in Emden in northwestern Germany.  

He refused to comment on media reports that thousands of jobs could be threatened at Volkswagen, saying he “cannot interfere” in company policy.  

But politicians could help the car sector by looking at ways to send the right “market signals”, Habeck said, stopping short of mentioning any possible state aid for Volkswagen.  

He pointed in particular to efforts to boost demand for EVs, insisting that electric driving “is the future.”  

Sales of battery cars have plummeted in Germany this year after the government phased out subsidies, dealing a blow to carmakers who have invested heavily in the transition away from fossil fuels.  

Berlin recently laid out plans for new tax breaks for electric company cars to help turn the tide, Habeck noted.  

The minister will on Monday host a high-level meeting with representatives from the car industry and unions to discuss the sector’s woes.  

Underlining the current challenges for carmakers, Mercedes-Benz on Thursday lowered its outlook for 2024 on the back of weak sales in the key Chinese market.  

German rival BMW likewise trimmed its profit guidance earlier this month, also citing muted demand in China. 
…

HONG KONG — Asian stocks surged Friday with Japan’s Nikkei leading regional gains after Wall Street romped to records following the Federal Reserve’s big cut to interest rates.

U.S. futures and oil prices were lower.

The Bank of Japan ended a two-day monetary policy meeting and announced it would keep its benchmark rate unchanged at 0.25%.

In Tokyo, the Nikkei 225 index soared 1.5% to close at 37,723.91 after the nation’s key inflation data in August accelerated for a fourth consecutive month. The core consumer price index rose 2.8% year-on-year in August, exceeding the central bank’s 2% target and leaving room for further rate hikes.

Markets are closely watching for hints on the pace of future rate hikes from BOJ Gov. Kazuo Ueda.

“For the BOJ, given current economic conditions and recent central bank rhetoric, further policy adjustments are not expected until later this year or early 2025,” Anderson Alves of ActivTrades said in a commentary.

The U.S. dollar fell to 142.47 Japanese yen from 142.62 yen. The euro rose to $1.1178 from $1.1161.

China refrained from further monetary stimulus as the central bank left key lending rates unchanged on Friday. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, stays at 3.45%, and the five-year rate, a reference for property mortgages, was held at 3.85%.

The Hang Seng in Hong Kong added 1.1% to 18,211.06 while the Shanghai Composite index fell 0.2% at 2,730.00.

Elsewhere, Australia’s S&P/ASX 200 rose 0.2% at 8,209.50. South Korea’s Kospi was up 0.5% to 2,593.12.

On Thursday, the S&P 500 jumped 1.7% to 5,713.64 for one of its best days of the year and topped its last all-time high set in July. The Dow Jones Industrial Average leaped 1.3% to 42,025.19, and the Nasdaq composite led the market with a 2.5% spurt to 18,013.98.

Wall Street’s gains followed rallies for markets across Europe and Asia after the Federal Reserve delivered its first cut to interest rates in more than four years on Wednesday.

That closed the door on a run where the Fed kept its main interest rate at a two-decade high in hopes of slowing the U.S. economy enough to stamp out high inflation. Now that inflation has fallen from its peak two summers ago, Chair Jerome Powell said the Fed can focus more on keeping the job market solid and the economy out of a recession.

Wall Street’s initial reaction to Wednesday’s cut was a yawn. Markets had already run up for months on expectations for lower rates. Stocks edged lower after swinging a few times.

“Yet we come in today and have a reversal of the reversal,” said Jonathan Krinsky, chief market technician at BTIG. He said he did not anticipate such a big jump for stocks on Thursday.

The Fed is still under pressure because the job market and hiring have begun to slow under the weight of higher interest rates. Some critics say the central bank waited too long to cut rates and may have damaged the economy.

Some investment banks raised their forecasts for how much the Federal Reserve will ultimately cut interest rates, anticipating even deeper reductions than Fed officials.

The U.S. presidential election adds to uncertainties. One fear is that both the Democrats and Republicans could push for policies that add to the U.S. government’s debt, which could keep upward pressure on interest rates regardless of the Fed’s moves.

In the bond market, the yield on the 10-year Treasury held steady at 3.71%, where it was late Wednesday. The two-year Treasury yield, which more closely tracks expectations for Fed action, fell to 3.58% from 3.63%.

In other dealings, U.S. benchmark crude oil lost 7 cents to $71.09 per barrel. Brent crude, the international standard, declined 9 cents to $74.79 per barrel.
…

WASHINGTON — President Joe Biden said Thursday the Federal Reserve’s decision to lower interest rates was “an important signal” that inflation has eased as he characterized Donald Trump’s economic policies as a failure in the past and sure to “fail again” if revived. 

“Lowering interest rates isn’t a declaration of victory,” Biden told the Economic Club of Washington. “It’s a declaration of progress, to signal we’ve entered a new phase of our economy and our recovery.” 

The Democratic president emphasized that there was more work left to do, but he used his speech to burnish his economic legacy even as he criticized Trump, his Republican predecessor who is running for another term. 

“Trickle down, down economics failed,” Biden said. “He’s promising again trickle down economics. It will fail again.” 

Biden said Trump wants to extend tax cuts that disproportionately benefit the wealthy, costing an estimated $5 trillion, and implement tariffs that could raise prices by nearly $4,000 per family, something that Biden described as a “new sales tax.” 

A spokesman for Trump’s campaign did not immediately respond to a request for comment. But Trump has routinely hammered Biden and Vice President Kamala Harris, the Democratic candidate this year, over higher costs. 

“People can’t go out and buy cereal or bacon or eggs or anything else,” Trump said during last week’s debate. “The people of our country are absolutely dying with what they’ve done. They’ve destroyed the economy.” 

Biden dismissed Trump’s claims that he supports workers, saying “give me a break.” Biden’s administration created more manufacturing jobs and spurred more factory construction, and it reduced the trade deficit with China. 

Trump’s economic record was undermined by the coronavirus outbreak, and Biden blamed him for botching the country’s response. 

“His failure in handling the pandemic led to hundreds of thousands of Americans dying,” he said. 

Biden struggled to demonstrate economic progress because of inflation that spread around the globe as the pandemic receded and supply chain problems multiplied. 

He expressed hope that the rate cut will make it more affordable for Americans to buy houses and cars. 

“I believe it’s important for the country to recognize this progress,” he said. “Because if we don’t, the progress we made will remain locked in the fear of a negative mindset that dominated our economic outlook since the pandemic began.” 

He said businesses should see “the immense opportunities in front of us right now” by investing and expanding. 

Biden defended the independence of the Federal Reserve, which could be threatened by Trump if he is elected to another term. Trump publicly pressured the central bank to lower rates during his presidency, a break with past customs. 

“It would do enormous damage to our economy if that independence is ever lost,” Biden said. 

During his speech, Biden inaccurately said he had never met with Jerome Powell, chair of the Federal Reserve, while he’s been president. 

Jared Bernstein, who chairs the White House Council of Economic Advisers, said at a subsequent briefing that Biden intended to say that he had never discussed interest rates with Powell. 

“That’s what he meant,” Bernstein said.
…

…

Brussels — Teresa Ribera will have to square up to Big Tech, banks and airlines if confirmed as Europe’s new antitrust chief, while juggling calls for looser rules to help create EU champions.

Nominated Tuesday by European Commission President Ursula von der Leyen for the high-profile antitrust post, Ribera has been Spain’s minister for ecological transition since 2018.

The 55-year-old Spanish socialist, one of Europe’s most ambitious policymakers on climate change, will have to secure European Parliament approval before taking up her post.

As competition commissioner, she will be able to approve or veto multi-billion euro mergers or slap hefty fines on companies seeking to bolster their market power by throttling smaller rivals or illegally teaming up to fix prices.

One of her biggest challenges will be to ensure that Amazon, Apple, Alphabet’s Google, Microsoft and Meta comply with landmark rules aimed at reining in their power and giving consumers more choice.

Apple, Google and Meta are firmly in outgoing EU antitrust chief Margrethe Vestager’s crosshairs for falling short of complying with the Digital Markets Act.

Another challenge will be how to deal with the increasing popularity of artificial intelligence amid concerns about Big Tech leveraging its existing dominance.

Ribera may ramp up a crackdown on non-EU state subsidies begun by Vestager aimed at preventing foreign companies from acquiring EU businesses or taking part in EU public tenders with unfair state support.

Recent rulings from Europe’s highest court, which backed the Commission’s $14.5 billion tax order to Apple, and its $2.7 billion antitrust fine against Google, could embolden Ribera to take a tough line against antitrust violations.

That would mean she would be in no hurry to ease up on antitrust rules, despite Mario Draghi’s call to boost EU industrial champions so that they are able to compete with U.S. and Chinese competitors.

Ribera was also named on Tuesday as executive vice president of a clean, just and competitive energy transition, tasked with ensuring that Europe achieves its green goals.

Her credentials include negotiating deals last year among EU countries on emissions limits for trucks and a contentious upgrade of EU power market rules.

 
…

CHENNAI, India — Police on Monday detained 104 striking workers protesting low wages at a Samsung Electronics plant in southern India as they were planning a protest march without permission, with the dispute disrupting output at the key factory for the past week.

The detention marks an escalation of a strike by workers at a Samsung home appliance plant near Chennai in the state of Tamil Nadu. Workers want higher wages and have stopped work at the plant that contributes roughly a third of Samsung’s annual India revenue of $12 billion.

The Samsung protests have cast a shadow on Indian Prime Minister Narendra Modi’s plan of courting foreign investors to “Make in India” and his goal of tripling electronics production to $500 billion within six years.

Lured by cheap labor, foreign companies are increasingly using India for manufacturing to diversify their supply chain beyond China.

On Monday, the workers planned to start a protest march, but were detained as no permission was given since there are schools, colleges and hospitals in that area, said senior police officer of the Kancheepuram district K. Shanmugam.

“It is the main area which would become totally paralyzed and [the protest would] disturb public peace,” he said.

“We have detained them in wedding halls as all of them can’t be in stations,” he said.

Samsung workers since last week have been protesting at a makeshift tent near the plant, demanding higher wages, recognition for a union backed by influential labor group the Centre of Indian Trade Unions (CITU), and better working hours.

Samsung is not keen to recognize any union backed by a national labor group such as the CITU, and talks with workers, as well as state government officials, have not yielded resolution.

The CITU Tamil Nadu Deputy General Secretary, S. Kannan, condemned the police action, saying “This is an archaic move by the state government.”

Despite Monday’s police action, 12 union groups, including one affiliated with the ruling party of Tamil Nadu, said in a public notice dated Sept. 11 that they will stage a protest in support of the striking workers in Chennai on Wednesday, a move that could intensify the tensions between the company and the workers.

“We are going ahead with Wednesday’s protest … no changes to the plan,” said A. Jenitan, a deputy district secretary for the CITU.

The protests add to Samsung’s challenges in India, a key growth market.

The South Korean company is planning job cuts of up to 30% of its overseas staff in some divisions, including in India. And India’s antitrust body has found Samsung and other smartphone companies colluded with e-commerce giants to launch devices exclusively, violating competition laws, Reuters has reported.

Samsung did not respond to a request for comment on Monday, but on Friday said it has initiated discussions with workers at the Chennai plant “to resolve all issues at the earliest.”

Video footage from Reuters partner ANI showed dozens of Samsung workers wearing the company uniform of blue shirts being transported in a bus to a hall.

The Samsung plant employs roughly 1,800 workers and more than 1,000 of them have been on strike. The factory makes appliances such as refrigerators, TVs and washing machines. Another Samsung plant that makes smartphones in the northern state of Uttar Pradesh has had no unrest.

The police also detained one of CITU’s senior leaders, E. Muthukumar, who was leading the Samsung protests at the factory near Chennai, according to the CITU’s Jenitan.

Kancheepuram police official Shanmugam said there was no timeline as to how long the workers will be detained.
…

OTTAWA, Ontario — Air Canada and the union representing its pilots have come to terms on a labor agreement that is likely to prevent a shutdown of Canada’s largest airline. 

Talks between the company and the Air Line Pilots Association produced a tentative, four-year collective agreement, the airline announced in a statement early Sunday. 

The prospective deal recognizes the contributions of the pilots flying for Air Canada and Air Canada Rouge while setting a new framework for company growth. The terms will remain confidential until ratification by union members and approval by the airline’s board of directors over the next month, the airline said. 

The pilots’ association said its Air Canada Master Executive Council voted to approve the tentative agreement on behalf of more than 5,400 Air Canada pilots. After review and ratification by a majority of members, the deal is expected to generate an additional $1.9 billion for the pilots over the period of the agreement, the union said in a statement. 

“While it has been an exceptionally long road to this agreement, the consistent engagement and unified determination of our pilots have been the catalyst for achieving this contract,” Charlene Hudy, the executive council’s chair, said in the statement. “After several consecutive weeks of intense round-the-clock negotiations, progress was made on several key issues including compensation, retirement, and work rules.” 

Federal Labor Minister Steven MacKinnon confirmed the agreement Sunday and lauded the company and the union. 

“Thanks to the hard work of the parties and federal mediators, disruptions have been prevented for Canadians,” MacKinnon said in a statement. “Negotiated agreements are always the best way forward and yield positive results for companies and workers.” 

The airline and its pilots have been in contract talks for more than a year. The pilots have sought wages competitive with their U.S. counterparts, but Air Canada continues to post record profits while expecting pilots to accept below-market compensation, the union said. 

The two sides could have issued a 72-hour notice of a strike or lockout beginning Sunday. The airline said the notice would have triggered its three-day wind down plan and started the clock on a full work stoppage as soon as Sept. 18. 

Air Canada spokesperson Christophe Hennebelle previously said the airline was committed to negotiations but faced union wage demands that the company could not meet. 

The airline was not seeking federal intervention, but cautioned the government should be prepared to help avoid major disruptions from the possible shutdown of an airline carrying more than 110,000 passengers daily, Hennebelle said. 

Business leaders had urged the federal government to intervene in the talks earlier in the week, but MacKinnon said there was no reason the sides should not have been able to reach a collective agreement. 

In August, the Canadian government asked the country’s industrial relations board to issue a back-to-work order to end a railway shutdown. 

Leaders of numerous business groups including the Canadian Chamber of Commerce and the Business Council of Canada convened in Ottawa on Thursday to call for action, including binding arbitration, to avoid the widespread economic disruptions of an airline shutdown. 

NDP Leader Jagmeet Singh said Thursday his party would not support efforts to force pilots back to work. 

“If there’s any bills being proposed on back to work legislation, we’re going to oppose that,” he said. 
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Washington — The Federal Reserve is gearing up to announce its first interest rate cut for more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the U.S. presidential election.   

Senior officials at the U.S. central bank including Fed chair Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool.   

The Fed, which has a dual mandate from Congress to act independently to ensure both stable prices and maximum sustainable employment, has repeatedly stressed it will make its decision on rate cuts based solely on the economic data.  

But a cut on Wednesday could still cause headaches for Powell, as it would land shortly before the election, in which former Republican president Donald Trump is running against the current Democratic vice president, Kamala Harris. 

“As much as I think the Fed tries to say that they’re not a political animal, we are in a really wild cycle right now,” Alicia Modestino, an associate professor of economics at Northeastern University, told AFP.   

How big a cut? 

The debate among policymakers on Tuesday and Wednesday this week will likely center on whether to move by 25 or 50 basis points.   

However, a rate cut of any size would be the Fed’s first since March 2020, when it slashed rates to near-zero in order to support the US economy through the Covid-19 pandemic.  

The Fed started hiking rates in 2022 in response to a surge in inflation, fueled largely by a post-pandemic supply crunch and the war in Ukraine.   

It has held its key lending rate at a two-decade high of between 5.25 and 5.50 percent for the past 14 months, waiting for economic conditions to improve.   

Now, with inflation falling, the labor market cooling, and the US economy still growing, policymakers have decided that conditions are ripe for a cut.   

Policymakers are left with a choice: making a small 25 basis point cut to ease into things, or a more aggressive cut of 50 basis points, which would be helpful for the labor market but could also risk reigniting inflation.   

“I think that in advance of the November meeting, there’s not quite enough data to say we’re in jeopardy on the employment side,” said Modestino, who was previously a senior economist at the Federal Reserve Bank of Boston.    

Analysts see the smaller cut as a safe bet.   

“We expect the Fed to cut by 25bp [basis points],” economists at Bank of America wrote in a recent note to clients.   

“The Fed likes predictability,” Modestino from Northeastern said. “It’s good for markets, good for consumers, good for workers.”   

“So a 25 basis point cut now, followed up by another 25 basis point cut in November after the next round of economic data, offers a somewhat smoother glide path for the economy,” she added.    

How many cuts?  

While analysts overwhelmingly expect the Fed to start cutting in September, there is less clarity about what comes next.   

Economists at some banks, including Goldman Sachs, expect cuts totaling 75 basis points over the last three meetings of the year, while others see more aggressive cuts, like economists at Citi, who have 125 basis points of easing as their base case.   

“The continued softening of the labor market is likely to provoke larger-sized cuts if not at this FOMC meeting then in November and December,” the Citi economists wrote in a recent note to clients, referring to the rate-setting Federal Open Market Committee (FOMC).   

The Fed will shed some light on the issue on Wednesday, when it publishes the updated economic forecasts of its 19-member FOMC — including their rate cut expectations.  

In June, FOMC members sharply reduced the number of cuts they had penciled in for this year from a median of three down to just one amid a small uptick in inflation.     

But as inflation has fallen and the labor market has weakened, expectations of more cuts have grown.  

Traders also see a greater-than 99 percent chance of at least four more cuts in 2025, which would bring the Fed’s key lending rate down to between 3.5 and 3.75 percent — 175 basis points below current levels. 
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BEIJING — China’s economy softened in August, extending a slowdown in industrial activity and real estate prices as Beijing faces pressure to ramp up spending to stimulate demand.

Data published by the National Bureau of Statistics Saturday showed weakening activity across industrial production, retail sales and real estate this month compared to July.

“We should be aware that the adverse impacts arising from the changes in the external environment are increasing,” said Liu Aihua, the bureau’s chief economist in a news conference.

Liu said that demand remained insufficient at home, and the sustained economic recovery still confronts multiple difficulties and challenges.

China has been grappling with a lagging economy post-COVID, with weak consumer demand, persistent deflationary pressures and a contraction in factory activity.

Chinese leaders have ramped up investment in manufacturing to rev up an economy that stalled during the pandemic and is still growing slower than hoped.

Beijing also has to deal with increasing pressure to implement large-scale stimulus measures to boost economic growth.

While industrial production rose by 4.5% in August compared to a year ago, it declined from July’s 5.1% growth, according to the bureau’s data released.

Retail sales grew 2.1% from the same time last year, slower than the 2.7% increase last month.

Fixed asset investment rose by 3.4% from January to August, down from 3.6% in the first seven months.

Meanwhile, investment in real estate declined by 10.2% from January to August, compared to last year.

The figures released Saturday come after trade data for August saw imports grow just 0.5% compared to a year ago.

The consumer price index rose 0.6% in August, missing forecasts according to data released Monday. Officials attributed the higher CPI to an increase in food prices due to bad weather.

But the core CPI, which excludes food and energy prices, rose by just 0.3% in August, the slowest in over three years.
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Washington — The White House said on Thursday it is acting on Democratic lawmakers’ demands to close what they see as a legal loophole that allows manufacturers — most from China — to dodge tariffs on low-priced goods and flood the U.S. with illegal and unsafe products.

The Biden administration is targeting the “de minimis” exemption, which allows parcels valued at less than $800 to enter the U.S. duty free. More than 1 billion such parcels entered the U.S. in fiscal 2023, U.S Customs and Border Protection said.

White House officials attribute the more than fivefold increase from several years ago to the growth of Chinese e-commerce platforms such as Shein and Temu, and administration officials name-checked both of those popular fast-fashion retailers in a briefing with journalists on Thursday.

Daleep Singh, deputy national security adviser for international economics, said these moves to close the loophole would have a big effect on Chinese apparel, and “will drastically reduce the number of shipments entering through the de minimis exemption.”

This would likely hamper Americans’ ability to score items like an $8 T-shirt – available in a range of colors – that features a gunslinging, pants-wearing cartoon cowboy duck who proclaims, “you just yee’d your last haw.” Or a $6 crop top that reads, in English, LIVE LAUGH LOBOTOMY. Or an $8 bra made of two fuzzy, dead-eyed cat faces shorn of their noses, mouths, whiskers and facial expressions, strung together and tied halter-style around the neck. Or an $8 item that can only be described as a business-formal bra, as it is made entirely of ties. It is available in a patchwork of leopard-, zebra- and tiger-print ties, presumably for a formal office that is animal themed.

Singh added that the administration also seeks to tighten information collection requirements and consumer safety standards – and block products that don’t make the cut. And further, he said, the White House is calling on Congress to pass a law this year to “comprehensively reform the de minimis exemption.”

In a Wednesday letter, 126 House Democrats urged the president to use his executive authority, saying they could not act “amid interminable stagnation in Congress that has precluded legislation from passing.”

“While lawmakers would rather see the de minimis issue dealt with legislatively, the Democrats on the call said their patience was wearing thin,” the letter read. “Despite the fact that the concept of de minimis reform has engendered broad bipartisan support, politicking has precluded a concrete resolution.”

Congresswoman Rosa DeLauro of Connecticut, one of the initiative’s leaders, expressed concerns over fast fashion’s documented use of forced labor to make their cut-rate clothing. Rights group Amnesty International has reported that Shein, in particular, upholds “questionable labor and human rights standards.”

Shein’s model, the group says, leans on subcontracting the making of garments, which leaves no room for transparency or accountability for worker conditions, and gives workers no right to unionize or assemble.

Navtej Dhillon, deputy director of the National Economic Council, also said the moves address concerns over fentanyl shipments and for declining U.S. industry.

“Some foreign companies are attempting to use this pathway to ship illegal and dangerous products for our health, avoid our health and safety and consumer protection laws, and evade tariffs to undermine American manufacturers,” he said. “Textile and apparel manufacturing supports tens of thousands of jobs in key states like Georgia and North Carolina. These American workers and manufacturers deserve to compete on a level playing field.”

The congressional group pushing the administration cited approval from law enforcement and industry groups.

“The de minimis loophole is severely exacerbating our nation’s opioid crisis,” said Bill Johnson, executive director of the National Association of Police Organizations. “Closing it would help staunch the flow of fentanyl and other narcotics coming across our borders and help safeguard the lives of our children, families, and friends.”

And Kim Glas, president and CEO of the National Council of Textile Organizations, said the industry group “strongly supports closing the de minimis loophole,” noting the closure of 18 textile plants in the U.S. in the past year.

“De minimis is a free trade agreement for the world at the expense of U.S. manufacturers, retailers, and consumers,” she said in a statement. “Shockingly, it has now become a black market for dangerous products facilitating fentanyl, precursors and pill presses. De minimis is destruction.”

Shein said last year that they support “responsible reform” of the policy but did not give precise recommendations.

“The de minimis exemption needs a complete makeover to create a level playing field for all retailers,” SHEIN Executive Vice Chairman Donald Tang said in a statement. “At the same time, American consumers deserve to know that the products they purchase are authentic and ethically produced. We believe de minimis reform can and should achieve both.”
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