Intel loses EU fine challenge

BY Matt Atkins

US chipmaker Intel has failed to overturn a $1.44bn fine handed down by EU antitrust regulators five years ago.

In its 2009 decision, the European Commission found Intel guilty of giving rebates to selected PC manufacturers in return for buying their processor chips over those produced by rival Advanced Micro Devices (AMD). Intel is also said to have paid German retail chain Media Saturn Holding to exclusively stock computers powered by Intel chips. "The Commission demonstrated to the requisite legal standard that Intel attempted to conceal the anti-competitive nature of its practices and implemented a long term comprehensive strategy to foreclose AMD from the strategically most important sales channels," the court said.

Judges at the Luxembourg-based General Court backed the Commission's decision, saying the EU watchdog’s approach had not been heavy-handed, despite being the highest single antitrust penalty the authorities in Brussels have levied on a single company. The fine is equal to 4.15 percent of Intel's 2008 turnover, against a possible maximum of 10 percent. "The General Court considers that none of the arguments raised by Intel supports the conclusion that the fine imposed is disproportionate,” said judges. “On the contrary, it must be considered that fine is appropriate in the light of the facts of the case."

European regulators have emerged as some of the world’s staunchest enforcers of antitrust laws, particularly in the technology sector, stepping up their pursuit of violators in the late 2000s. The Intel ruling may be an early signal that global authorities are gearing up to pursue errant technology firms.

Intel contests that it has committed no wrongdoing, that its rebates and discounts were legal and a common way of rewarding companies for purchasing its products in large quantities. Going forward, the firm can take its case further to the Court of Justice of the European Union.

Press Release: Antitrust: Commission welcomes General Court judgment upholding its decision against Intel

Expansion expected in Healthcare BPO

BY Matt Atkins

According to a new report published by MarketsandMarkets, the global healthcare business process outsourcing (BPO) market is expected to see rapid growth in the next five years, doubling in size by 2018. Presently valued at an estimated $92.3bn, the market is poised to grow at a CAGR of 10.8 percent to reach approximately $188.9bn before the decade is out.

BPO is the contracting of specific business tasks such as payroll to third party services. Usually, BPO is implemented as a means of outsourcing  tasks that a company requires but does not depend upon to maintain its position in the marketplace.

The healthcare BPO market is spread across the payer, provider and pharmaceutical sectors, of which pharmaceuticals has the largest share, accounting for close to 80 percent of the market in 2013. Cost reduction is the main driver for outsourcing business functions which include HR services, finance and accounts, claims processing, medical billing and contract research. Healthcare reforms introduced by the Obama administration are also driving the market.

Healthcare BPO is divided into source and destination geographies. The US accounts for the largest share of the market, followed by Europe. The most preferred destination is India, which has the advantage of a high number of healthcare professionals, affordable cost of living, a large patient pool, and decreased time and costs for recruitment.

Overall, the healthcare BPO market is highly fragmented with many small players competing for their share, particularly in India and China, where many entrepreneurs have entered the market. The major players include Accenture, GeBBS Healthcare, Omega Healthcare, Parexel and Boehringer Ingelheim.

In recent years, the market has come under scrutiny by regulatory bodies, and regulatory change in key regions such as the US and Europe is expected to result in increased requirements for payer and provider outsourcing services.

Press Release: Healthcare BPO Market worth $188,856.5 Million by 2018

Embrace the cloud to stay competitive, says PwC

BY Matt Atkins

According to a new PwC report, modern day financial institutions face increasing demands on two fronts: the need to consolidate their data centres and increase business agility.

After the burst of M&A activity which followed the 2008 financial collapse, organisations have been left with an overlapping mix of data centre assets which must now be consolidated into a more cohesive whole. In addition, in a continually changing business environment, institutions are feeling the pressure to innovate and embrace new technology.

In light of these challenges, says the report, CIOs are increasingly turning to cloud technology to transform their technology infrastructure and deliver consistent service to their global customers. Of the respondents to PwC's survey, 71 percent said they would invest more in cloud technology – up 18 percent on the previous year. The adoption of private clouds offers institutions a chance to address their data consolidation needs, in turn boosting IT agility, according to PwC.

Embracing cloud technology offers numerous rewards. Using the cloud, leading institutions are able to: adapt more rapidly when entering new markets; improve IT services to business units, enabling units to better serve their customers; and improve the consistency of service to customers worldwide, resulting in greater customer satisfaction and loyalty. The cloud also allows institutions to cope with the changing demands of software development lifecycles and technology change programs.

Security concerns remain a major consideration in cloud adoption. By its very nature, the cloud forces IT services to pay closer attention to potential risks in the strategic planning and implementation of data centres. However, while 46 percent of respondents reported their organisation uses cloud services, only 18 percent of financial organisations included provisions for the cloud in their security profile.

Moving to the cloud is a complex process, says PwC, and cloud strategy should be developed with the input of top management across the company. But when an institution strategically implements a private cloud solution, it can help the overall objectives of the organisation, as well as its IT goals.

Report: FS viewpoint: Clouds in the Forecast

Tech M&A on the rise

The technology deal market has displayed tremendous performance over recent years. In terms of total transaction size, the M&A market as a whole increased 4.1 percent in 2012-213 – but the technology M&A sub-sector increased 30.5 percent during the same period. Technology deals overtook the energy, mining and utilities sector for the first time since 2006 and accounted for 23 percent of global M&A activity in 2013. Increasingly, technology firms are using M&A to move into new areas and transactions are being driven by growing demands for reliable and secure mobile infrastructure.

FW spoke to Susan Blanco at Houlihan Lokey, Nick Abrahams, at Norton Rose Fulbright Australia and James Klein at Penningtons Manches LLP about M&A in the tech sector.

TalkingPoint: M&A in the tech sector: outlook for 2014

PE hungry for energy assets

The energy sector is a key target for private equity (PE) , which has proved a major source of investment since the economic downturn. Almost half of executives expect to invest in energy during the next year, with a particular interest in oil and gas assets. North America remains a key region, although other geographies are expected to benefit from private investment. East and West Africa, and Latin America have befitted as the emerging markets have developed, and unconventional exploration is boosting opportunities in Europe and Asia.

FW spoke to Stefanie Fleischmann at Beowulf Energy LLC, Andy Brogan at EY and Douglas Nordlinger at Skadden, Arps, Slate, Meagher & Flom LLP about opportunities for PE presented by the energy sector.

TalkingPoint: Private equity in the energy sector