Today’s post reacts to the news that BMW, the famous German auto-manufacturer, has been raided by the European Commission’s (EC) antitrust division as part of an investigation into collusion between the largest German auto-manufacturers. In this post, the focus will be on the details of the investigation, as far as we can know at this very early stage, and then on contextualising that against the larger picture for auto-manufacturers. Ultimately, although operating in opposition to the supposed ideals of the marketplace i.e. private and independent business, the reality of the situation is that in this particular industry collusion is rife, and arguably necessary – depending upon one’s position. The EC raided BMW’s Munich offices last week in the latest development of an investigation into collusion between the largest German auto-manufacturers. The investigation, which began earlier this year, is based upon the allegations that ‘ Volkswagen, Audi, BMW, and Daimler has for year...

Although Australia has weathered the supposedly global storm after the Financial Crisis (a number of countries, of course, were simply not as affected by the Crisis like their Western colleagues), with consistently positive results being reported by their largest banks (until recently), and solid economic fundamentals in place to protect them from external shocks, the Australian Government is pressing ahead with plans to reform the banking system in the Country and, in today’s post, these reforms will be the focus. We discussed the situation in Australia only recently here in Financial Regulation Matters in relation to the Credit Rating Agencies taking aim at Australian banks, so it is clear that the Australian banking system is currently experiencing a very challenging time. In that sense, the proposed reforms, which are currently at the consultative stage, are the epitome of that changing environment, but the question for us today is whether the reforms can make a difference, ...

This short post today looks at the news that the rating oligopoly – the three largest agencies; Standard & Poor’s, Moody’s, and Fitch Ratings – has took aim at the Banking sector in Australia. The noises coming from Australia in response are the same noises we hear again and again when the rating agencies turn their collective focus towards a specific sector or a specific region, namely that the ratings downgrade will ‘ do little to alter [the] costs of funding ’. Yet, there is a much bigger issue, and that is that the cost of borrowing is not the most important aspect, rather the biggest issue is the safety net that the agencies and institutions recognise as being the new norm – taxpayer assistance. In this post, we will look at the current situation in Australia but we will also move back to look at the pattern that keeps emerging: a sector does not perform as ‘experts’ predict that it should, rating agencies collectively smell blood in the water and drop credit ratings, whi...