Business News Weekly Roundup, June 12 2015

US GDP second-quarter growth estimates likely to improve

April saw US business inventories posting their largest gain since May 2014 the Commerce Department announced on June 11 (Reuters reports). The figure of 0.4% was well in excess of the estimated 0.2%, and is likely to result in economists revising their second-quarter GDP growth estimates for the US. This follows a more modest March in which GDP growth only stood at 0.1%.

First quarter estimates from the government initially suggested a 0.7% contraction, but retail figures, construction spending, trade and wholesale inventory, healthcare spending  and wholesale inventory came in at higher than expected levels may mean that no contraction occurred. Retail inventories excluding autos rose 0.6% in April, while business sales increased by 0.6% for the second consecutive month.

European Commission to investigate Amazon ebook monopoly

As part of ramped-up scrutiny of American technology companies, the European Commission has launched an inquiry to Amazon’s dominance of the ebook market, reports The Guardian. The inquiry will look into whether Amazon’s deals with publishers prevent fair competition from other players in the market. Contracts with these publishers may prevent them offering better deals to Amazon’s competitors; on occasion, Amazon asks that details of such deals are disclosed. Amazon has pledged to cooperate and has stated that its deal with publishers are well within the confines of the law.

Amazon recently altered its tax structures so that sales were no longer channeled through Luxembourg, taking advantage of the small state’s low levels of taxation. However it still faces questions from the European Commission’s competition department over a ‘sweetheart’ tax deal it secured in Luxembourg – so favorable that it may qualify as illegal state aid. Google also faces scrutiny over its dominance of the search market. Barack Obama recently warned that ‘protectionism’ in Europe could be a deterrent to US tech companies looking to move into the continent.

Marsh & McLennan CEO warns on dangers of British EU exit

London’s status as the world’s joint capital of finance with New York could be put at risk if the UK chooses to leave the EU, Marsh & McLennan chief executive Dan Glaser has warned, reports The Independent.  “I absolutely think it would be a big mistake economically, politically and strategically for the UK to leave the EU,” he commented while on a trip to the UK to pick up the BritishAmerican Business Corporate Citizenship Award. Incumbent UK prime minister David Cameron promised a referendum on the UK’s membership of the EU as part of his successful reelection campaign in May. It is thought that it could take place as soon as next year. Marsh & McLennan Companies is a professional services firm, based in New York. It currently hires around 7,000 people in the UK.

Meanwhile in Japan…

The Japan Times reports that a Tokyo District Court has ruled that adultery carried out for business purposes is within the confines of the law. The ruling comes from a compensation case made by the wife of a man having an affair with the hostess of a nightclub. It is not uncommon for such affairs to take place in Japan to ensure repeat custom (makura eigyo – pillow sales tactic). However, while in the past, the third party has been required to pay out, in this instance the court ruled that because it was carried out for business purposes, it was legitimate. The ruling, however, does not mean that action cannot be taken against the husband. The hostess in question, it should be noted, denied anything took place between the two.