Hi guys,
This week's articles:
@Alice Manners - Heathrow Expansion.
@Jiraiya - Amazon's cashless go supermarket.
@Curtley Bale - CVC's intention to buy a stake in the Six Nations tournament.
@Rachel S - Blackstone agreeing to buy IQ Student Accommodation.
Heathrow expansion ruling - @Alice Manners
The Story
On Thursday the Court of Appeal held that the proposed expansion of Heathrow Airport under the ‘Airports National Policy Statement’ is unlawful as it does not take into account the Government’s commitment to the Paris Agreement on climate change.
The ruling does not mean that there will be no third runway, but that the Secretary of State for Transport should have considered the development’s compliance with the Paris Agreement.
The current Transport Secretary has said they will not be appealing the decision, but Heathrow Airport have said that they will appeal to the Supreme Court as an interested party. The Department for Transport could now withdraw the plans or resubmit the application, ensuring the Policy Statement explains how the expansion would comply with the Paris Agreement.
Impact on Businesses and Law Firms
The case could have far reaching implications. It is certainly a warning that the UK needs to put the Paris Agreement at the forefront of policymaking and comply with its commitment to make significant reductions in emissions. Future regulation and cases surrounding infrastructure may be decided with the same emphasis on climate change commitments.
The ruling could also inspire challenges to other similar projects, with possible challenges to HS2 already in the pipeline. This will provide work for many law firms - seven firms, including Freshfields, BCLP and Eversheds are on Heathrow’s legal panel. Climate litigation is increasing significantly, and climate compliance is likely to be at the forefront of businesses, and law firms’ considerations.
The ruling is a significant obstacle to the development, which hundreds of businesses are set to be involved in. Supporters of the third runway argue the ruling risks losing both jobs and trade, particularly as the UK negotiates post-Brexit, and businesses may be disappointed that there will be a delay to them gaining the benefits of a world-leading airport.
CVC finalise stake in Six Nations competition in a plan to reshape world rugby - @Curtley Bale
The Story
Luxembourg-based private equity firm CVC is close to finalising a deal worth £300m to gain a 14% stake in the Six Nations competition. This comes months after the initial enquiry was made in September 2019. CVC began their interest in world rugby with a 27% stake in the English Premiership rugby competition in 2018. Since then, the private equity firm has made its intentions clear that they wish to commercialise the sport and grow its global audience.
Impact on Businesses and Law Firms
CVC has committed to changing the traditional method of buying out an organisation before selling it for a profit. They see world sport as a “massive area” for development. Their share in the Six Nations reflects this commitment but also helps them access the global rugby market. As such, they have since been in negotiations with governing bodies from New Zealand and South Africa regarding the development of new competitions.
The biggest potential change could come in the form of a TV rights package deal. It has been rumoured that CVC is investigating whether they could gain all the rights to world rugby and combine it in one single package. Alternatively, there are rumours to sell the package rights to streaming companies such as Amazon. This would totally revolutionise the way rugby is delivered to customers. Currently, the Six Nations is exclusive to terrestrial TV. It will be necessary to balance up removing the delivery of coverage in this traditional way against the wider audience a streaming service may reach.
Law firms will be involved in advising CVC in terms of their initial investment in the Six Nations as well as the prospective TV rights. Magic Circle heavyweights Freshfields advised CVC’s first investment in English rugby in 2018. The private equity firm will likely require advice when it comes to acquiring broadcasting rights and entering the market with a potential streaming service.
Amazon Go Supermarket—a shop(lifting) experience? - @Jiraiya
The Story
The Amazon Go Supermarket in Seattle is the e-commerce giant's latest attempt to disrupt the retail industry.
Through deep-learning algorithms, facial recognition and machine learning, customers in this supermarket will have a cash- and cashier-free experience as customers can simply bag and go after scanning their IDs when entering. No more waiting at the tills or self-service machines.
Compared to its predecessor, the Amazon Go convenience stores, the brand new supermarket requires more sophisticated technologies to deliver a natural consumer experience due to a wider variety of unpackaged items.
Despite teething problems like accurately weighing fruits and vegetables, putting back a product in its original place if they do not want to be charged for it, it has only been 2 years since the release of the Amazon Go technology. Imagine what can happen in another two years.
Impact on Businesses and Law Firms
The E-commerce giant's entry into the retail industry is proof that even in a post-digital age, a digital business strategy still requires a physical presence to diversify its income channels.
The speculation is that Amazon would not open stores in England to test the water, due to the UK grocery market being characterised by low-growth and cut-throat price competition. Since Amazon has already registered the trademark of Amazon Go, a more probable course will be to “licence” out the technology to Sainsbury and Tesco which simply do not possess the technological prowess to materialise such change themselves.
To law firms, this breakthrough raises numerous exciting legal questions and opportunities. Data privacy is top on the chart. As Amazon’s technology tracks and analyses customers’ preference when they browse the store, supported by its online customers' data, it can produce more tailored recommendations. Lawyers could find themselves drafting terms and conditions for customers entering the supermarket that comply with the Data Protection Act.
Blackstone to buy UK student accommodation - @Rachel S
The Story
Private equity firm Blackstone has agreed to buy UK-based student accommodation group, IQ from Goldman Sachs and Wellcome Trust. Valued at £4.7 billion, this will be the UK’s largest private real estate transaction ever. Blackstone plans to refurbish and expand some of IQ’s sites and build new properties, signalling optimism for the UK’s purpose-built student accommodation market which is valued at more than £50 billion.
This comes days after Blackstone committed to invest in UK infrastructure from a $14 billion Saudi-backed fund. Blackstone’s Global Head of Infrastructure, Sean Klimczak described their approach to the UK as “bullish” viewing the UK as “undervalued” and a “significant opportunity.”
More broadly, UK real estate has seen a so called ‘Boris Bounce’ with the Conservative government victory halting fears of infrastructure nationalisation under a Labour government. Student accommodation is particular area of undersupply with world-renowned higher education establishments and the government’s plans to increase the number of international students in the country by a third.
Impact on Businesses and Law Firms
As an investment, student accommodation is no longer being seeing as an alternative asset class. Typically predictable returns and projected growth in demand may see continued real estate investment and property developers will pursue new developments in an attempt to meet this demand.
Kirkland & Ellis are advising Blackstone with a specialist from Gowling WLG’s real estate team. Jones Day is leading IQ with Simpson Thatcher & Bartlett advising on finance. Lawyers will play a part in fund formation, negotiating deal terms, due diligence, organising financing, tax structuring and clearing regulatory hurdles. For future development, real estate lawyers will be involved with obtaining planning permission, land registry, reviewing third-party rights, environmental issues and drafting lease agreements. Faced with high competition for deals, lawyers will be needed to maximise efficiency and navigate increasing government regulation in the sector.
This week's articles:
@Alice Manners - Heathrow Expansion.
@Jiraiya - Amazon's cashless go supermarket.
@Curtley Bale - CVC's intention to buy a stake in the Six Nations tournament.
@Rachel S - Blackstone agreeing to buy IQ Student Accommodation.
Heathrow expansion ruling - @Alice Manners
The Story
On Thursday the Court of Appeal held that the proposed expansion of Heathrow Airport under the ‘Airports National Policy Statement’ is unlawful as it does not take into account the Government’s commitment to the Paris Agreement on climate change.
The ruling does not mean that there will be no third runway, but that the Secretary of State for Transport should have considered the development’s compliance with the Paris Agreement.
The current Transport Secretary has said they will not be appealing the decision, but Heathrow Airport have said that they will appeal to the Supreme Court as an interested party. The Department for Transport could now withdraw the plans or resubmit the application, ensuring the Policy Statement explains how the expansion would comply with the Paris Agreement.
Impact on Businesses and Law Firms
The case could have far reaching implications. It is certainly a warning that the UK needs to put the Paris Agreement at the forefront of policymaking and comply with its commitment to make significant reductions in emissions. Future regulation and cases surrounding infrastructure may be decided with the same emphasis on climate change commitments.
The ruling could also inspire challenges to other similar projects, with possible challenges to HS2 already in the pipeline. This will provide work for many law firms - seven firms, including Freshfields, BCLP and Eversheds are on Heathrow’s legal panel. Climate litigation is increasing significantly, and climate compliance is likely to be at the forefront of businesses, and law firms’ considerations.
The ruling is a significant obstacle to the development, which hundreds of businesses are set to be involved in. Supporters of the third runway argue the ruling risks losing both jobs and trade, particularly as the UK negotiates post-Brexit, and businesses may be disappointed that there will be a delay to them gaining the benefits of a world-leading airport.
CVC finalise stake in Six Nations competition in a plan to reshape world rugby - @Curtley Bale
The Story
Luxembourg-based private equity firm CVC is close to finalising a deal worth £300m to gain a 14% stake in the Six Nations competition. This comes months after the initial enquiry was made in September 2019. CVC began their interest in world rugby with a 27% stake in the English Premiership rugby competition in 2018. Since then, the private equity firm has made its intentions clear that they wish to commercialise the sport and grow its global audience.
Impact on Businesses and Law Firms
CVC has committed to changing the traditional method of buying out an organisation before selling it for a profit. They see world sport as a “massive area” for development. Their share in the Six Nations reflects this commitment but also helps them access the global rugby market. As such, they have since been in negotiations with governing bodies from New Zealand and South Africa regarding the development of new competitions.
The biggest potential change could come in the form of a TV rights package deal. It has been rumoured that CVC is investigating whether they could gain all the rights to world rugby and combine it in one single package. Alternatively, there are rumours to sell the package rights to streaming companies such as Amazon. This would totally revolutionise the way rugby is delivered to customers. Currently, the Six Nations is exclusive to terrestrial TV. It will be necessary to balance up removing the delivery of coverage in this traditional way against the wider audience a streaming service may reach.
Law firms will be involved in advising CVC in terms of their initial investment in the Six Nations as well as the prospective TV rights. Magic Circle heavyweights Freshfields advised CVC’s first investment in English rugby in 2018. The private equity firm will likely require advice when it comes to acquiring broadcasting rights and entering the market with a potential streaming service.
Amazon Go Supermarket—a shop(lifting) experience? - @Jiraiya
The Story
The Amazon Go Supermarket in Seattle is the e-commerce giant's latest attempt to disrupt the retail industry.
Through deep-learning algorithms, facial recognition and machine learning, customers in this supermarket will have a cash- and cashier-free experience as customers can simply bag and go after scanning their IDs when entering. No more waiting at the tills or self-service machines.
Compared to its predecessor, the Amazon Go convenience stores, the brand new supermarket requires more sophisticated technologies to deliver a natural consumer experience due to a wider variety of unpackaged items.
Despite teething problems like accurately weighing fruits and vegetables, putting back a product in its original place if they do not want to be charged for it, it has only been 2 years since the release of the Amazon Go technology. Imagine what can happen in another two years.
Impact on Businesses and Law Firms
The E-commerce giant's entry into the retail industry is proof that even in a post-digital age, a digital business strategy still requires a physical presence to diversify its income channels.
The speculation is that Amazon would not open stores in England to test the water, due to the UK grocery market being characterised by low-growth and cut-throat price competition. Since Amazon has already registered the trademark of Amazon Go, a more probable course will be to “licence” out the technology to Sainsbury and Tesco which simply do not possess the technological prowess to materialise such change themselves.
To law firms, this breakthrough raises numerous exciting legal questions and opportunities. Data privacy is top on the chart. As Amazon’s technology tracks and analyses customers’ preference when they browse the store, supported by its online customers' data, it can produce more tailored recommendations. Lawyers could find themselves drafting terms and conditions for customers entering the supermarket that comply with the Data Protection Act.
Blackstone to buy UK student accommodation - @Rachel S
The Story
Private equity firm Blackstone has agreed to buy UK-based student accommodation group, IQ from Goldman Sachs and Wellcome Trust. Valued at £4.7 billion, this will be the UK’s largest private real estate transaction ever. Blackstone plans to refurbish and expand some of IQ’s sites and build new properties, signalling optimism for the UK’s purpose-built student accommodation market which is valued at more than £50 billion.
This comes days after Blackstone committed to invest in UK infrastructure from a $14 billion Saudi-backed fund. Blackstone’s Global Head of Infrastructure, Sean Klimczak described their approach to the UK as “bullish” viewing the UK as “undervalued” and a “significant opportunity.”
More broadly, UK real estate has seen a so called ‘Boris Bounce’ with the Conservative government victory halting fears of infrastructure nationalisation under a Labour government. Student accommodation is particular area of undersupply with world-renowned higher education establishments and the government’s plans to increase the number of international students in the country by a third.
Impact on Businesses and Law Firms
As an investment, student accommodation is no longer being seeing as an alternative asset class. Typically predictable returns and projected growth in demand may see continued real estate investment and property developers will pursue new developments in an attempt to meet this demand.
Kirkland & Ellis are advising Blackstone with a specialist from Gowling WLG’s real estate team. Jones Day is leading IQ with Simpson Thatcher & Bartlett advising on finance. Lawyers will play a part in fund formation, negotiating deal terms, due diligence, organising financing, tax structuring and clearing regulatory hurdles. For future development, real estate lawyers will be involved with obtaining planning permission, land registry, reviewing third-party rights, environmental issues and drafting lease agreements. Faced with high competition for deals, lawyers will be needed to maximise efficiency and navigate increasing government regulation in the sector.
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