Microsoft kauft Linkedin: Die Bedingungen von Microsoft für die Europäische Kommission

Es ist fast sechs Monaten in denen das Microsoft das Unternehmen LinkedIn für 26,2 Milliarden dollar kaufen wirde. LinkedIn ist bislang der gröβte Zukauf in der Geschichte des Microsoft.

Linkedin ist das gröβte berufliche Netzwerk der Welt. Im deutschsprachigen Ländern, wie Deutschland, Österreich und die Schweiz, ist Xing das gröβte Berufnetzwerk mit über zehn Millionen Mitglieder und LinkedIn folgt ihm mit circa acht millionen Mitglieder. Seit letzten Jahren, setzt LinkedIn Datenanalyse zur Hilfe bei der Personalsuche. Microsoft wurde gegründete im Redmond, Amerika, mit ihre Software Microsoft Windows und MS Office ist das gröβte Anbieter der Softwarelösungen der Welt. Microsoft hat eine starke Position auf dem Markt für PC-Betriebssysteme (Windows) und Produktivitätssoftware (MS-Office).

Als das Unternehmen Microsoft seine wunsch das Linkendin zu kaufen im Publikum gesagt hat, haben sich seine konkurrente zum beispiel Salesforce bei der Kommission beklagt und darum gebeten sehr genau zu prüfen. Zum schluss hatte die Europäische Kommission Ihren segen erteilt. Für diese Segen von der Euopaïschen Kommission, hat Microsoft verschiedene Zugeständnisse gegeben.

Die Europaïsche Kommission hat bedacht dass Microsoft LinkedIn auf allen Windows-PCs vorinstallieren würde und LinkedIn in Microsoft integriert. Sie befürchtete auch, dass Microsoft die Nutzerdatenbank von Microsoft und LinkedIn, miteinander aneinanderfügen könnte.

Das erste Zugeständnis besteht darin, dass Microsoft sich verflichetet, keine LinkedIn in ihren Office-Anwendungen zu realizieren. Microsoft stellte die Kommission sicher dass die PC-Hersteller und PC-Händler nicht gezwungen sind, Linkedin auf Windows zu installieren und die Nutzer werden die Möglichtkeit haben Linkedin auf Windows zu entfernen.

Das zweite Zugeständnis besteht darin, dass die konkurrierenden Anbietern von Karrierenetzwerken die Interoberabilität mit den Produkten aus dem MS-Office-Paket im derzeitigen stand halten werden.

Das dritte Zugeständnis besteht darin, dass die konkurrierenden Anbietern von Karrierenetzwerk auf ,MS Graph’ zugreifen. MS Graph ist ein softwareentwickler-Portal, der Information zb Kontaktdaten, Kalenderinformation, E-mails des Nutzers enthält. Mit der Zustimmung des Nutzers können die konkurrierenden Anbietern von Karriernetzwerk diese informationen nutzen, um mehrere Mitglieder zu bekommen.

Die Bedingungen gelten im EWR für fünf Jahren. Microsoft wird mit dem Zugeständnissen von der Kommission bald einem Treuhänder übertragen, der das Microsoft überwachen wird. 

Apple E-book Cartel Case in EU and USA

In 2007, Amazon launched Kindle and announced '$9.99' as the price at which readers could read their favourite books, whether a recent launch or evergreen classics. It was a temptation readers could not resist and Amazon soon emerged as the dominant player in the e-books market with a 90% market share. Other players such as Barnes & Nobles's Nook had to sell below average cost to remain competive and stay in the market. Amazon's emergence as the dominant player meant it could dictate terms to the publishers. In the language of competition law, it provided Amazon with a dominant position in the e-books market.

Initially the e-books market used the traditional model that pre-existed with the printed books wherein, the publisher sets the wholesale price and then the retailer decides the selling price. The Kindle used this traditional model to set the famous $9.99 price point. Under this model, The publisher has the choice to decide how much profit or loss it wants to make on a given title and once it sells the book to the retailer, the latter sets the final price.

I-pad's introduction in early 2010 set to change all this. As was later shown by the Antitrust authorities, the best selling biography of Late Steve Jobs contained alluding reference to the change it sought. The icon successfully managed to bring together the five major publishers in the industry and suggested that the model be transformed to the 'agency' one from the then existing traditional model.

Agency model, simply put, means that the publisher sets the retail price and the retailer thereby losses his freedom to set the final price as he now gets only a fixed percentage of the price(thirty percent for the retailer in the present case). The offer was tempting for the publishers as it could re-shift the axis of power back to them from Amazon, as the latter had become stronger due to its 90% plus capture in the e-book market. As for Apple, that first roped in these publishers into shifting the industry gear to Agency model, the excitement was the opportunity to capture the fast growing e-book market and create a market for i-Pad. For the publishers and Apple the cartel was a win-win situation. The results are there to be seen. From its launch in 2009 till 2012, Apple quickly gained a market share of 10% of the US market(one of the most important e-book market in the world) and this is expected to reach 25% in next two to three years. It is noteworthy to mention that at present the market has three main competitiors in the US e-book: Amazon's Kindle, Barnes and Noble's Nook and Apple's iPad.

Apple's and the top five publishers cartel to raise the e-book prices and shift to the Agency model invited competition law concerns on both sides of the Atlantic. Kindly note at the outset that in the US Antitrust and in the EU & India, it is referred to as Competition Law and thus, the terms are used interchangeably.

In the US, the Antitrust authorities alleged that Apple and the six larget publishers of the US violated Section 1 of the Sherman Act, thereby restraining competition in the sale of e-books as they agreed to shift gears to the Agency model, whereby the publisher would set the price and thus, end the $9.99 dominance created by Amazon. Why was this a point of concern for the Antitrust authorities? As the objective of competition law is to protect consumers and not competition, thus any action that violates the interest of consumers is a concern for Antitrust/ Competition authorities. As the Agency model sought to increase prices, it meant that consumers would be forced to pay a higher price, thereby harming the interests of the Consumer and reducing the Consumer surplus; thus making it an anti-trust concern. Moreover, the publisher also sought to slow down the migration from print to e-version and by raising the prices of e-books, they sought to achieve this objective. The action visibly has direct impacts on both the static competition (by increasing prices) as also dynamic competition(by slowing the migration to e-books).

In the EU, Apple along with Hachette, HarperCollins, Holtzbrinck and Simon & Schuster had settled last December(2012) with the Commission, at the outbreak of the controversy. Penguin, from the Pearson group of UK soon followed suit with a proposed list of settlement in April 2013. As per the proposal, Penguin proposed to end the contract for Agency agreement and not enter into any such Most Favoured Nation clause for the next five years. Further, if Penguin enters into any new agency agreement, the retailers will be free to set the retail price for the next two years, provided that the total amount of discount provided by the retailer is not greater then the total amount of commission that the retailer obtains from the publisher. The Commision has invited public consultations on its website as on 19^th April 2013 and as per the procedure, interested parties are invited to submit their comments on the proposed settlement within one month.

In the US, the five defendants publishing companies viz Hachette, HarperCollins, Macmillan, Penguin and Simon and Schuster had earlier settled the charges and only Apple decided to go ahead with a legal trial in the US. It is important to note that Random House was not mentioned as a defendant in the law suit, since, considering the evidence available it was found that Random was coerced to participate in the cartel. Earlier when it had refused to participate, Apple prevented Random House's e-book application from appearing on Apple's App Store. It was only when the House contracted with Apple on Jan 18, 2011, that it was allowed to present its e-applications on i-store. Hence, Random's role in the controversy was a forced one as opposed to a voluntary act.

Like its move in EU, in the US too, HarperCollins, Simon & Schuster and Hachette settled with the government at the beginning of the investigation. Penguin, Macmillian and Apple chose to fight charges; however, evenutally Penguin fell out considering its proposed merger with Random House. Macmillian followed suit and settled in February'13. As per the settlement, the publishers undertook not to impose any restrictions on promotions and discounts by e-book retailers. The settled defendants also promised not to enter into any such new agreements until December 2014. Further, any new proposed e-book ventures must be notified to the Government in advance and further, any similar most-favoured-nation clause that was entered earlier along with Apple is prohibited for the next five years.Apple, on the other hand adopted and sticks to its strategy to go for a full-blown trial. It is interesting to see how Apple's strategy in US differs from that in the EU, notwithstanding the fact that the subject matter of the controversy remains same. This could perhaps be attribtuted to the different legal and economic principles followed across the Atlantic. As part of the government filing before the commencement of the procedings on 3^rd June 2013 in the district court of New York, the US Department of Justice, has submitted an email from Mr Jobs to Mr Murdoch at Harper Collins, that incited the later to be a part of the proposed cartel. The e-mail makes an interesting reading. For instance Mr Job argues, “Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.” This email is significant in augmenting Apple's role as from one of the participants in the cartel to one of a “ringmaster”. Subsequent circumstantial evidence substantiate the Apple's alleged role. Just two days following the (in)famous email, the News Corporation owned Harper Collins signed the agreement to adopt the new pricing model. Apple, in the meanwhile maintains its claim of promoting innovation and competition in the market.

As the curtains fall and trial begins in NY DC in June, it would be interesting to follow the developments and see if the two sides of the Atlantic choose to converge or diverge in their opinion on Apple. If its another GE-Honeywell divergence or Oracle/PeopleSoft unwitting convergence, only the court can tell. And this time the ball is in the US Courts.

PS: Both GE/Honeywell and Oracle/PeopleSoft were Merger cases; but the present is a cartel case and thus, within the meaning of Article 101 TFEU and Section 1 Sherman Act. 

What women want: Reservation or Egalitarianism?

A call for reserving one-third of the seats for women in Parliament is not unique to India alone. Similar demands have been made and laws passed to that effect in Europe. Viviane Reding, the EU’s Justice Commissioner hopes to have 30% women on European Boards by 2015 and 40% by 2020. French Law requires 40% seats to be reserved on the Board by 2017 for women.  Norway has a quota since 2006. Similar quotas are expected to come across all EU countries soon as European Parliament has passed a directive to that effect.  With this sudden wave of quotas in Boards and Parliament, an economic and socio-legal analysis of their effect becomes important.

It is rather true that women are grossly underrepresented in legislatures and boards of companies. This under-representation on grounds of equity and a call for a more egalitarian society calls for reservation. From an economic perspective, the question arises if it is efficient. More importantly, from an egalitarian lens too (the goal that the legislation seeks to promote), is it good for women themselves in the long run.

 The emerging power of women in the workforce is a recent phenomenon. Earlier more confined to the safe precincts of home or traditionally occupied in women-friendly jobs such as a teachers, nurses and doctors; women found it convenient to synchronize their work-life balance in these traditional women-oriented set-ups & professions. Even today, it is not uncommon in a typical household(an Indiand home for sure!), to expect the women to perform all household chores and work at the same time. So to create the work-family life balance (though one often wonders why it is more emphatically expected of  women alone), women resort to the safer havens of un-ambitious, steady professions.

With changing attitudes, more liberal families and parental support; the outlook has begun to drift. And women are taking increasingly challenging and time-demanding professions. A male-dominated structure of the corporate set-up & legal profession makes it difficult and extra long for women to attain the same stature and pay levels. It is often a common complaint and is a proven fact that women are under-paid, under-promoted and are struck somewhere in the middle of the ladder. Reservations are an oft-suggested panacea for the problem. But the question emerges if it is the best available remedy? There are two important problems that arise with this. Women, who will make their way to the top; even with a little help of reservation or even on their own merits completely, will be seen as incompetent figure-heads who simply got an important promotion or board stature, by virtue of being women.

An important aspect of leadership is the respect and acceptance that one has because of their merits, competence or charisma. With reservation, this opportunity to gain acceptance is lost at once for women. Secondly, from an economic perspective, it might be inefficient. Often just to fill up the posts, in-competent people (women in the present instance); might be promoted to important positions. This affects the efficiency, the productivity and bottom line of the company. At the Board level, important strategic decisions need to be taken. A lack of exposure, an inexperience in the corporate grinding and the missing struggle, which competent people have to go through to earn their positions will get reflected in such reserved representation. This will affect the stakeholder and shareholder fortunes. Moreover, some competent people, who would have otherwise occupied the positions will miss it just because they are from the wrong gender, male gender in case of a reservation loving society. Exactly the same way, as competent women almost always lost it, just because they were women;  apprehensively and undesirably now it will indeed be a case of reverse-discrimination.

No matter how skewed is the representation, a catapulation to the top should be based on meritocracy. Reservations will tilt the shift towards mediocracy. Economically speaking, it is inefficient for the company, the parliament, as the case may be and certainly for the society as a whole.

The problem however is that in the present backdrop, without any legal or social mechanism, the meritocracy based competition will be meaningless. The question then arises is if reservation is not a solution, then what is. A good solution perhaps is to create a boardroom conducive to women. Simply put, this means a gender-neutral corporate world. Look at the corporate world. The language derived from the military is sexist and alpha-male. How we talk about competition, predatory pricing and shareholder wealth clearly reflects; that this definitely is not a women’s world. A women’s world would focus more on the stakeholders’, be more feminine with an approach to sustainability rather than the bottom-line. And that is indeed desirable in the present context with increased focus on sustainability as a means to attain the goal of triple bottom line: the people, the planet and the profits.

Secondly, on a more social front; there needs to be a change in the mental set-up, the outlook and the perceptions.  On a personal front, a women undoubtedly(and in a sense pleasantly) has more responsibilities towards the family. She is a mother, a wife, a daughter. All the roles are demanding. Motherhood perhaps is the most taxing in terms of time that a women has to talk off from her career life to give birth to her baby and through all his/ her childhood years and thereafter. Except for certain periods, when a women really needs to take a leave to bring a new life to the world; most women desire to work with flexible working hours with increased commitment to work once the child starts growing up. On a professional front, such special needs of women deserve particular attention; considering that a women delivers not just a child; but by bringing a well-groomed individual; she contributes a value ‘human resource’ to the society. Moreover, it is a well proven fact that well-educated, working and independent women bring up their children well. This then is a women’s special contribution that deserves special social recognition in the form of mother-friendly laws to help her create a work-life balance. For single mothers, this can be even more demanding. And for mothers bringing up a child with her partner; she needs greater cooperation from him. The point is some women might want to get back to work immediately or after some time after giving birth to a child; depending on individual case and personal preferences. In such a case, the laws should enable either of the parents (and not just the mother), to take time off from work without any prejudice to their future career prospects. Socially, there needs to be an acceptance of this ‘feminity’(as opposed to feminism) and ‘family life’, a celebration of the same instead of creating hiccups for a mother to get back to work.  

An imprisoned 'talented' women duty-bound in the traditional stereotypes will only lead to an imbalanced society; society with women making it to top through reservation or a society without sufficient opportunity to help women create sufficient work-life harmony are all dangerous trends leading to an imbalanced society. 

‘Antitrust’ and ‘IPR’: A tumultuous tie

Patents, according to Shapiro confer partial property rights. These rights are an important incentive for a company to invest in Research and Development as it gives the desired assurance to reap benefits from these investments once a socially beneficial product or service is produced. Intellectual Property(hereinafter referred to as ‘IP’),  also has a prominent public good characteristic as the information so generated is of great social relevance. However, these partial property rights can be a source of expected monopoly power ex-ante. Informational asymmetries thus, exist at the time when IP rights are awarded to the moment when Competition Law(in some jurisdictions referred to as the ‘Antitrust’ Law; the term will there be used interchangeably in our discussion) steps in. Thus, there are these tender opportune moments when IP rights become a source of monopoly power and thereby create a dynamic interaction between two important domains of Law: the IP and Competition Law.

An interesting case throwing light on this dynamic interaction is the ‘Inter-operability of servers’ as emerged in the case of Microsoft. The case is interesting for two reasons. First, the kind of protection offered that is the software in case of Microsoft has been protected through both patents and copyrights. Secondly, the almost simultaneous treatment of the issue of abuse of dominant position across two important jurisdictions of the US and EU.

Interoperability of servers is one of the attractive and challenging domains where law and economics dynamically interact. Microsoft was tried across both sides of the Atlantic: the USA and the EU. The diverging approach has been succinctly summed by John Vickers when he states, ‘When contemplating Competition Law and Policy, many economists I suspect, are somewhere in the Atlantic Ocean’. Notwithstanding, the similarity in the legal principles across two jurisdictions, Microsoft was confronted with two different treatments on either side. Whereas the US approach is often criticized to be too lenient, the EU attitude was called to be too strict.

In the US, the Federal Trade Commission started its inquiry in the early 1990’s trying to investigate if Microsoft’s pricing policies thwarted competition. The Justice Department meanwhile in the year 1997 charged Microsoft with trying to leverage its dominant position in the operating system market, through Windows,  by bundling its Windows OS with the Internet Explorer. Through this bundling, it was alleged that Microsoft threatened to wipe its competitor and the then lead player in the web browser market, the Netscape Navigator. 

Meanwhile, in the Europe, in its September 15, 1998 letter, Sun Microsystems requested Microsoft to ‘provide complete information’ that would aid Sun make its operating system compatible with Window’s operating system. Microsoft’s refusal to cooperate prompted Sun Microsystems to complain to the European Commission (hereinafter referred to as Commission). The Commission carried its investigation against Microsoft as regards two issues: First, if the refusal to supply information to the Sun Microsystems was an abuse of dominant position by Microsoft. And secondly, whether the tying of the products, its windows operating system with the Windows media player was again an abuse. The common thread in both the cases was the Commission’s finding that ‘Windows’ was the dominant PC(‘client’) Operating System(hereinafter referred to as ‘OS’)  with a market share of 90% and thereby, was a defacto standard for client OS.

In the US, the dispute ended in a settlement with namesake punishment for the Microsoft; whereas in the Europe, the Commission concluded an abuse of dominant position by Microsoft. Microsoft went on appeal in the Court of First Instance which was annulled by the Court and the company finally decided not to pursue the case further. In the EU, heavy fines were imposed on Microsoft. The software giant was also required to have a version of Windows without the Windows Media Player. According to the decision, Microsoft could not charge more for the unbundled version then for the bundled version; however, Microsoft is not required to charge less for the unbundled version then for the bundled version. To this, the Microsoft complied by offering a ‘Windows N’ which is without the media player. As for the second important issue of ‘interoperability’, Commission required Microsoft to license the protocol at a reasonable and non-discriminatory royalty. Initially, Microsoft refused to comply with the last demand; however, when the Court of First Instance rejected its appeal, Microsoft agreed to license the protocol at three different terms.

Commission’s insistence to make Microsoft license its protocol reflects the partial nature of these property rights. If exclusivity is the incentive to innovate; then the exclusivity in certain cases can be taken away as a rationale to uphold an innovative environment. As the Commission in its decision argued that disclosure of information would increase the rivals incentive to innovate; while at the same time not reducing the incentives for Microsoft. In other words, there is a need for an economics based approach in the enforcement of Antitrust Law. Article 82 was eventually replaced by the Article 102 of the Treaty for European Union. 

Poverty of International Law in ‘Unsustainable’ Supply Chains

With increased incidence of human & environmental rights violation, by outsourced activities either directly or through their suppliers, the value chain management of manufacturing companies particularly transnational enterprises has come under a scanner. Global reach of multinational enterprises creates global impacts and visibility of their activities to a larger audience. Increased visibility led to greater protests worldwide in case of violations. To shield from the continued criticism, companies increasingly adopt the United Nations’ Global Compact principles. Over 5000 companies across 130 companies are signatory to the principles. The principles encompass the important domains of Human Rights, Labour, Environment and anti-corruption. Inspired from the Universal Declaration of Human Rights, ILO’s Declaration of Fundamental Principles and Rights at Work, Rio Declaration on Environment and Development and the United Nations Convention against Corruption ; these principles are voluntary in nature and very importantly cover the important ills that plague the supply chain relationships.


Notwithstanding the wide adoption of these principles, unabated violations continue. Electronics industry is highly criticized for its laxity in supply chain audits and thereby, obliquely permitting these violations. From Microsoft to Apple, Dell to Hewlett Packard the problem subsists. Increased public scrutiny of Apple due to its media trial and its subsequent tightening of supply chain regulations is anticipated to bring a positive ripple affect across the industry. These are impacts driven by media campaigns and consumer awareness. There is also a need for a more stringent legal backdrop to ensure innovation-loving consumers do not unwittingly find themselves hold another Nike shoe or Apple i-pad with a pang of remorse.

The United Nations Human Rights Council in 2008 adopted the United Nations Protect, Respect, Remedy Framework wherein it categorically laid down that the business everywhere has the responsibility of protecting human rights. But such an occasional communication from the global organizations, without any corresponding acceptance of the same in legal jurisdiction is meaningless. The guiding light notwithstanding its toothlessness, is laudatory, considering the beacon of light it provides to companies that aspire for sustainability. The responsibility to respect is believed to a baseline activity. Companies should therefore, take responsibility for activities that visibly have a direct impact such as the production process; product or services that the company provides; labour and employment practices; provision of security for personnel and assets and company’s lobbying and other political activities. To ensure this the company must conduct a due diligence of its activities. The report further stipulates a Human Rights management framework which shall consist of four elements: First, a statement of policy. This statement can be integrated into the company charter or it can be a stand-alone policy. Second, it should have a framework for assessing the impact of its activities on human rights. Third, the human rights policies should be integrated with the companies objectives and integrated into the companies policies and Finally, there should be a tracking system to observe if policies have been implemented successfully and reporting of the same to ensure accountability in operations. The 2008 framework with these four steps, provides a broad outline skeleton for a human rights management framework.

Like the United Nations Global Compact laws, other significant international standards for corporate responsibility on human rights are the OECD Guidelines for MNEs(2000), the ILO Tripartite Declaration of Principles concerning MNE & Social Policy(2000) and the IFC Performance Standards on Social & Environmental Sustainability(2006). However, all of these, like the Global Compact itself are good and provide a framework for corporate responsibility but none of them is legally binding.

From a somewhat cynical perspective, councils meet and announce a guiding principle; but without a strict enforcement mechanism there is nothing forcing the company from violating or ignoring a violation of the same. In other words, such resolutions are at best toothless tigers. It may be interesting to note that the Universal Declaration of Human Rights were codified into International Law through two 1966 treaties that is the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights and are collectively referred to as the Bill of Rights. With more Corporate flutter globally, it may likewise be relevant to consider codification of a global accepted level of responsibility for Multinationals such as the UN Global Compact Principles, into International Law. The point is even though these principles derive form International Law, they are themselves not International Law and the time such as present is an important moment to give them the same level of explicit recognition.

Copyright: Of Expressions, not Ideas!

It is often questioned why there is no copyright on ideas. Governed by the Copyright Act, 1957, The copyright law protects the creators of literary, dramatic, musical and artistic works & producers of cinematographs films and sound recordings. However, this protection is awarded to the works and a mere idea is not protected under the Act. It is the expression of that idea that is protected. Imagine the typical Bollywood, boy meets girl folklore. The idea has been successfully produced and re-produced in the glorious hundred years of Indian cinema- the same idea, the same underlying theme, but each time(presumably) a different presentation, a different script, a different expression. If the first idea of Laila-Manjnu or Heer-Ranjha was protected, we would never had the opportunity to watch those endless romantic movies!

Thus, there is an economic logic that drives this underlying reasoning of the Copyright Act in India(as any other IP protection Act for that matter). And the economic rationale is if the fist individual who claims an ownership of the idea is given such an exclusive right, then we provide him with a rent-seeking opportunity merely on the basis to be the first one to have an idea.  

Innovation & IP Protection: The 'I' Factor

New information generated has a public goods character that is it is of benefit to the public at large and once common knowledge, it can be widely used. To generate this new information, the Government has to create some incentives. These incentives are in the form of IP protection. The valuation of a asset at the time when these rights are granted to the moment when they create a monopoly position varies tremendously. At the time of granting IP protection, a legal monopoly is generated that is the exclusive right to benefit from the invention and aspire for rent-seeking behaviour. But the extent to which this power generates monopoly power ex-post is referred to as the economic monopoly. This depends upon a number of factor. Most significant amongst others being the innovativeness of the invention that are there closely available and cheaper substitutes available for the product. Availability of closely available substitutes devoids the product of its potential rent seeking behavior. Secondly, as IP enables pricing above the marginal cost of producing a good, it attracts entry of competitors.
Thus, for an IP protection to lead to Significant Market Power(SMP) and thereby, a case for antitrust intervention, the innovativeness of the product and consequently its monopoly power ex-ante become a critical factor. 

Valuation of IP assets in M&As: Recipe to compatible match-making

One of the sine qua non for a successful merger is performance of adequate due diligence and asset valuations. In asset valuations, valuation of IP assets is critical for ensuring a successful transaction outcome. This is particularly true for IP-rich companies. However, valuation of IP assets is often relegated to the backdrop vis-à-vis other valuations. The second important challenge encountered is globalization of deals. Understanding the target’s regulatory environment and cultural attitude towards IP protection becomes critical for a competent valuation. This difference emerges even more strikingly as companies come from different backdrops such as EU and Emerging Economies. Thus, IP rich companies face the twin challenge of valuation of assets and internationalization of deals which often means stepping into unchartered territories.

When transactions are IP rich, a strategic due diligence process benefits from IP intelligence and IP valuation to facilitate target identification, ranking, deal pricing, structuring, setting reserves, prioritizing later-stage “traditional” due diligence tasks and compliance with post deal financing reporting requirement.  When taken in the nascent stage, such a due diligence enables an indepth comprehension of the strategic fit, risks, value extraction; an appreciation of the target’s core and non-core IP assets. Eventually all this can facilitate post-deal IP integration and enhance the probability of realizing full value of transaction.

From the Antitrust perspective too a true determination of the value of IP portfolio is important as it determines the monopoly power ex-ante.

The general practice has so far been to make an estimate and put this lump sum value in the goodwill of the company's balance sheets. Infact even in a developed market like Europe, a recent survey indicates that only 12% of the companies involved an independent third party evaluator to value their assets.

As for the methods to evaluate, there are various valuation methods available: Cost-based, market-based, option based , income-based etc. However, valuation of IP assets is easier said then done, as the traditional methods of valuation such as market based or cost based fail to capture the full value. Another method of valuation is estimates based on past and future economic profits. Which of the models amongst these or an adaptation of them or a hybrid of one or more model best suits the valuation, depends on the particular facts and circumstances of each company as also the information available.

Nothwithstanding the challenges encountered in valuation and the difficulties faced, it is still a fruitful and worthwhile exercise as it helps the company realize the true value of its assets apart from getting a positive market response reflected in its market valuation. 

La Tomatina in Bangalore: To beat or to eat?

 Bangalore’s Palace Grounds will soon be a witness to the first ever Indian tomato festival, the Indian equivalent of the Spanish La Tomatina. Great fun throwing tomatoes, wonderful sunny afternoon in tangy red! That is only if, one has a guilt free conscious.

Look at the numbers to realize from how many hands we snatch the only meal, they possibly could have had; every time we throw a tomato to get a tingling sensation.

Officially speaking, the Tendulakar committee’s report, estimates some 37% of the population below the poverty line in India. The committee calculated the poor, based on their expenditure on food, health & education. The Arjun Sengupta report had gone on to put this number at 77% of the population living on less then Rs 20( less then one third of Euro) a day. Even the World Bank statistics have put this number at around 42%. Huge variations in numbers notwithstanding, one thing is unanimous. We are home to 1/3^rd of the world’s poor.

Now put these heart wrenching numbers in the backdrop of gloomy clouds of food crisis looming large on the horizons of the India growth story. The prices of onions, putting a mouthful of tears in the eyes of consumers is an everyday story in Indian households. Globally speaking too, food riots in Algeria, wheat prices touching the skies in UK, Mexicans speculatively buying corn to keep Tortilla prices under control, are headlines not too distant from the past.


India, officially speaking, has an over 18% food inflation every year and globally speaking, the UN Food & Agricultural Organization sees it unprecedented and all time high, on a global scale.

At this opportune moment, a plush tomato festival in the midst of this hunger and poverty in the heart of Corporate India! On one hand, the emerging corporate & IT hub talks about its Corporate Social Responsibilities and on other throws tomatoes on the face of CSR! Pretty inspiring ain’t it!?

Hungry mouths to be fed and empty hands to serve, are definitely not the inspiring backdrop for a conscious soul to throw tomatoes and have the feel good factor. As conscious citizens and the future of India Shinning, when we should be saving every bite of food and save every bit in our plates, throwing tomatoes with such careless abandon is undoubtedly, moral turpitude at best. It is not cool, but symbolic of a cold heart, blindly trying to ape the west and a culture that existed in a certain cultural context, for a certain reason. Let us not blindly ape, lest we be  relegated to the mental IQ & levels of our ancestors, the Apes.

India, Bharat, Hindustan: Catching the spirit of India

On this independence, it is interesting to look back at the last 63 years and contemplate what all these years have meant to us?

What is this Nation State called India? What is that makes it the oldest living and continuous civilization? And what’s in a name? Is it India, is it Hindustan or is it Bharat?

What is that thread that runs continuously through this five thousand year old civilization? Is it religion? Is it language?  Is it culture? Or is it simply a mixture of Cricket, Hinglish & Bollywood!!

With twenty-three constitutionally recognized national languages and over 600+ different dialects, we are indeed multilingual with Hindi & English as the two most widely used languages. The thread of Indianness then has to go beyond a mere linguistic one.

A surface area of over 3.2 million square kilometers, India on the world map, looks not like a piece of land, but a mother stretching her arms from her 15,000 km long borders shared with Pakistan & Afghanistan in the west to Bhutan, Nepal, Bangladesh China and Myanmar in the east. The Nation State is carved like a feminine figure elegantly placed in the tropical south Asia, with the three water bodies The Arabian Sea, The Indian Ocean and The Bay of Bengal washing her feet. There is indeed something about this Nation that it never ceases to exist. As Iqbal, very famously put it: ‘Kuch baat hai ke haansti mitt thi nahi hamari, saadiyon se raha hai dushman dooren zaman hamara.’ There is something about us, that we have a continuous existence and identity notwithstanding relentless foreign occupation and enemies.

India is famously referred to as the cradle of civilization with the famous Indus Valley Civilization dating as far back to 2400 BC. Though deeply argued, Aryans are controversially referred to as the first invaders from central Asia who imposed their Vedic system and language Sanskrit. It was a golden age with women enjoying equal status as men and making an equal participation in business affairs and politics. The concept of Pardha(system of Veil, an evil which later developed in mid-eighteenth century) was unheard of and marriages were consensual and not forced.

The Golden age of the Gupta Empire and the Maurayans, particularly the Ashoka is famously known as the age of Gold in the Indian history. It is said that people were prosperous and far removed from the avarices and evils of greed and hunger of present life. No one was poor. Literally speaking, India had rivers not of water, but flowing with milk!

The next important conquest with visible architectural influences was the Sultanant of Delhi and the conquest by Turcs, Afghans and the 12^th century conquest by Mohammad of Ghori.

In the south of India, the medieval kingdom of Vijayanagara, had significant impact on art, culture and prosperity of the times. Comprising of modern Karnataka, Kerala, Tamil Nadu, Andhra Pradesh and parts of Maharashtra, it was a period of development and golden age for the southern belt.

Babar’s legendary victory in the Battle of Panipat in 1526 established the great Mughal empire ruled by Babur, Humayun, Akbar, Jehangir, Shah Jahan and Aurangzeb.

The advent of the British with the East India Company in the 16^th century led to the downfall of the Mughal Empire and the British either directly or through 500+ small and large princely states ruled the Indian subcontinent at the time of her independence on 15^th August 1947. When the Indian Independence Act was giving way to the independent India, the then and the last viceroy and first Governor General Lord Mountbatten, had a choice to either admit or refuse admission to the Indian Union by the princely states based on the request made by them. After a long elaborate process, we eventually had a geographically defined territory of what physically exists as the modern day India. The frontiers of land of this great Nation has been defined and re-defined many a times. What constitutes the present day Pakistan and Afghanistan in the west to Nepal, Bhutan, Bangladesh and parts of Mayanmar was once a part of ancient India or Bharat, as it was earlier known. Then there has to be something beyond territorial limitation that we call India!

Religiously speaking, India is like a garland around the Divine’s neck with almost all religions making their religious presence in this secular nation. Even the constitution has special provision for the free practice of religion and development of religion as fundamental right under Article 25. The religious diversity can be gauzed from the fact that India has a woman President(even the most developed nation like USA is still to have a women President) Ms Pratibha Devi Patil, a Christian Defense Minister Mr A.K. Anthony, a Muslim vice-President M. Hamid Ansari, a Sikh Prime Minister Shri Manmohan Singh and a Hindu finance Minister Shri Pranab Mukherjee. That is secularism not just in words but in practice. Secularism being the uniting fabric and religious diversity a matter of Indian pride, religion is again not the driving force that unites this Nation State.

In the opinion of the author, beyond the materialistic and worldly notions of Nation States, there exists a progressive concept of Nation State. A progressive Nation of accepting each other as fellow countrymen, a progressive march towards development and a progressive march of freedom of liberty, thought and expression.

The ageless, timeless, priceless noble prize winning spiritual classic by Rabindra DA perhaps captures this ‘Spirit’, ‘the Soul’ of India, ‘Where the mind is without fear and the head is held high. Where knowledge is free, where the world has not been broken up into fragments by narrow domestic walls. Into that Heaven of Freedom my Father, let my country awake!’

Our ancestors havc dedicated their lives to keep this spirit alive and it is a very hard-earned freedom that we got on 15^th August 1947. It was more then freedom from a foreign empire. It was symbolic of breaking away from all the evils of the past that had crypted into this 5000 year old civilization. It was a promise of a dream, that retaining our rich cultural vast, we will be re-born as a new India, secular and spiritual, progressive in outlook, one in spirit and democratic in approach.

On this independence day, lets re-visit and re-discover the spirit called India!

Happy Independence Day! Swantantra Diwas mubarak ho!!

The City Beautiful Chandigarh: Lessons for the City Capital and City Commercial!

 Thanks to huge infrastructural bottlenecks, a drive can be quite stressful anywhere across the country. Ruminating cows, needless overtaking, screeching horns and a startling wannabe teens cricket team in the middle of the street is not all too surprising. Delhi, Mumbai, Bangalore, Kolkatta; the reservoirs of modern India, the story is everywhere the same. Or so did I thought! Until I visited the City Beautiful. A drive down the Le Coubusier designed capital city, Chandigarh, left me overwhelmed.

Chandigarh, derives its name from Chandi Devi, whose temple is situated in the adjacent Panchkula district. Also, ‘Chandi ki Var’ a ballad poem by Guru Gobind Singh, the first Guru of the Sikhs gives Chandigarh, the word ‘Chandi’ in her name. And the word Chandi in Hindi also means silver! The word Chandigarh is a conjugation of two words, ‘Chandi’ and ‘Garh’, and literally means the fortress of Devi Chandi. And the fortress of the Divine, it indeed is! With its well-manicured lawns, sprawling green, expansive multi-laned roads and huge omnipresent road-side Ashokas, Deodars and Euclyptus, the city retains its spacious heavenly aura with materialist modern day amenities present in abundance. The affluence of the city can be gauged from the presence of international brands, huge malls, multiplexes and not to forget the exhorbitant land rates! Just an acre of land I was told, can cost upto 6-8 crores! Whopping, unreal and of course, unaffordable! After all, it is an expensive affair living in the fortress of the Divine, more so when taxed by mortals like us!

Chandigarh is a new city with historic roots. After the sad partition of India in 1947, the  province of Punjab needed a new capital. Temporarily, Shimla was decided as the capital of undivided Punjab. But the need for new center was strongly felt by the then Prime Minister of India, Pandit Jawaharlal Nehru. Envisioning the concept of Chandigarh, he famously said to the architects that with Chandigarh, India will present to the world a new city that will symbolize the constitutional aspiration of a new India liberated from the archaic traditions and past. In short, the dream was to make Chandigarh an architectural expression of the confidence and reposte of the new emerging India.

The initial architectural plan was made by Albert Mayer, an associate of Mathew Novicki. Unfortunately due to his death in a road accident, the great architect had to be replaced by the legendary Swiss architect Le Corbusier who along with his team of Maxwell Fry, Jane B Drew, Pierre Jeanneret and the young promising Indian team of M.N. Sharma, U.E. Chowdhary and Aditya Prakash laid the plan for the new capital of Punjab in 1951.

With a  human development index of .86 and a population of around 100,000 and the highest per capita income in India, Chandigarh the capital of Punjab and Haryana, is one of the most well laid out cities in the country. The city that was initially designed to home some 500,000 habitants has today over double the population and is one of the highly densely populated city with 7900 habitants per square kilometers. Yet, the signs of infrastructural fabric withering away is far from visible!

With the symbol of an open hand, the city of Le Corbusier, continues to welcome government offices, people & corporations alike with her open arms. The capital of Punjab & Haryana and itself a Union Territory, it holds some15 medium to large Industrial units, has over 2500 small scale industries. The Chandigarh IT Park hosts the best names in the IT sector and continues to retain top spot as the ‘Emerging Outsourcing & IT Services Destinations worldwide.’

 Chandigarh also apparently has the largest number of per capita vehicles and yet is consistently rated as the cleanest city in the country.

So what is it in its architecture that despite her burgeoning population, increasing office and bureaucratic presence, Chandigarh continues to remain clean, green and spacious. Perhaps the reason resonates in the policy making and planning that was subsequently followed by development.

Ambitiously dreamt by India’s first PM, Pandit Nehru and painstakingly envisioned by Le Corbusier, the city is divided in sixty sectors of 800 by 1200 each covering a total area of 114 km square. The highly sophisticated 7 lane system of circulation in the city, successfully mitigates the menace of traffic and preserves the habitant zones from the nuisance of traffic. Interestingly, city has no sector  numbered 13. Seems like even the scientific designers had a touch of superstition! Each sector is well equipped with public amenities, cultural centres and green spaces and there are habitation zones for the rich and for the middle class bourgeoise alike. Interestingly the central sector number 17 situated at the heart of the city iis the principal centres of commerce, restaurant and bars. The infrastructural burden on sector 17 is supported by ancillary commercial centres in sector 35. Also all the other sectors have their fair share of everyday malls, magazines, daily necessities and schools.

Compare this with the 'planned' unplanned development in India’s unarguably very important cities: Delhi & Mumbai. Delhi with a population of around twenty million habitants, 1500 km square and a population density of around 12,000 per kilometer square is an infrastructural nightmare. Mumbai, the commercial capital and significant contributor to GDP and an average per capita income of over $ 1000, is an even more gory story. Millions of homeless sleeping on the streets, living painful lives at the mercy of police, gangs and mafia, it indeed is a deplorable and grim picture of an emerging economy. Is unplanned development, unmitigated migration and policy failure the genus of these modern day soulless jungles of concrete?

Does this development and infrastructural layout in the City Beautiful have any lessons for the Commercial and Political capital of India?

From Retailing to E-tailing

With a population of 1.2 billion and a continued population growth rate of 1.41% and a consistent GDP growth rate hovering around 8%, India is a big market with strong fundamentals. Over 63.6% of this population is in the 15-64 year age group. India definitely is the future of the world. But this numbers come with small footnotes. India is still a developing country and over 60% of its population still lives in villages.

Gandhi, aptly said, ‘The true India is to be found not in its few cities, but in its seven hundred thousand villages. If the villages perish, India will perish too.’ This simple yet strikingly emphatic statement by the Father of the Nation holds a million dollar mantra for policy-makers at the Capital to the Market-eyeing companies at the Commercial capital alike.

The message for marketers is unpretentiously austere. Creating innovative channels of communication to reach out to these masses. Could the buzz word internet hold the key? India is world’s second largest & fastest growing telecommunications industry with over 852 million mobile phone subscribers. Amongst these over 214 million users access internet. Could this mean a huge market gaining momentum for online shopping & how the marketers need to adapt to this changed market space- from real to virtual!

Online portals like Letsbuy, Flipkart, Fashion And You, Yehbhi and Snapdeal have seen positive investments to the tune of $5 million to $ 20 million from funds like Tiger Capital, Indo-US Venture Partners, Helion Venture Partners, Sequoia Capital and Accel India. Tasting success online away from their traditional brick and mortar retailing, even players like Shoppers Stop and Future Group are eyeing e-tailing.

The E-tailing model has many an advantages that are unique to its virtual presence. The first is definitely the reach of the medium to small towns and villages and other hitherto inaccessible terrains. Even in tier I towns like Mumbai and Delhi, where the real estate rentals have touched strastopheric levels, the e-tailing is seen as a great respite by sellers. And most importantly if well-positioned, e-tailing can be positioned as cool and more in sync with today’s e-generation. The economy of online operations is another great advantage as there is little inventory pile-up or real estate costs to hold inventories or open stores. Yebhi.com, for instance, has advantageously used these cost advantages to offer ‘flexible return policy’ to its customers. For foreign investors too, it could be an interesting way to understand the market before it makes a physical entry into the same.

Advantages notwithstanding, e-tailing model is a tight-rope which involves immense creativity and out of the box thinking. As the website virtually becomes your online store, reaching out globally to different markets, in the opinion of the author, homenigesation  with differentiation becomes extremely important. In other words mac-donaldisation of the site! Marketers must understand India is a culturally diverse, linguistically rich and geographically disperse nation. An adaptation of the site suited to these cultural sensibilities with an option to access in multiple Indian language can be a strong value add and differentiator.

Corporate Social Responsibility for India Inc

What does CSR mean for a developing economy? In other words, is the level and manner of CSR initiative by a Company influenced by the level of development in the economy. The recent survey by the ASSOCHAM Research Bureau substantiates the belief that yes, the level of development does influence the kind of CSR initiatives pursued. CSR or Corporate Social Responsibility connotes a more philanthrophic flavour. According to the survey, the major theme areas pursued by the India Inc., during the first quarter of 2010-11 are Community Welfare, Education, Environment, Health Care and Rural Development. Community welfare would mean being responsible and accountable for the development of the immediate community in which the Corporation is functioning through facilitating education, healthcare and projects that help in eradicating unemployment. It also often takes the form of Philanthropy that is providing monetary assistance to the NGO's active in the areas or co-ordinating with them to work towards development of the community.

The most actively engaged sectors are FMCG, Chemical and IT/ ITES. And amongst the 28 States and 7 union territories, Maharashtra followed by a distant Gujarat and Delhi/ National Capital Region received maximum attention for CSR initiatives.

The three interesting aspects clearly highlighted by the survey are that: 1. When it comes to the kind of CSR intiatives, Community Welfare is the most preferred form of Socially Responsible engagement with the society. 2. The most actively engaged sectors are the ones that are most influenced by the environment in which they operate such as FMCG, Chemicals and IT/ ITES. These sectors need constant interaction with their immediate environment for procurement, material and human resources. In the case of Chemicals sector particularly, the affluents and wastes discharged have received immense local criticism. In case of FMCG, such as Coca Cola, excessive use of locally available natural resouces such as ground water, led to the depletion of water table which pushed the giant Corporation to the footsteps of Court. And finally, Maharashtra, the most industrialized, receives the most prolific CSR intervention.

With these observations, one is left wondering if CSR is still in its nascent stages in resource scarce, energy hungry, burgeoning India. Is it a seed that will take its time to bloom or will the first mover who visualizes its strength, capture the heartshare of Philanthropic India to gain mindspace.

Punishment to punish or to reform

What is the role of law, criminal law more particularly. There are many theories that try to answer it. The punitive theory or the retributive theory of justice; the deterrent or preventive theory and the reformative or corrective theory all come out with different rationales for punishment or the lack of it. The recent re-arrest of the octageunarian Montana's notorious killer Frank Dryman raises some difficult questions. In a cold and snowy day in 1951 Dryman hitch hiked from Shelby by cafe owner Clarence Pellet and suddenly pulled out a gun and threw Clarence from out of his own car. Coldbloddedly he shot Pellet six times in the back. He avoided the hangman's noose, a relic of frontier justice. Decades later, the accussed a reformed human now was caught and sent back to gallows on charge of breaking the law by running away while on parole. Traced down in a Bollywood style by the The problem raises the dilemma if Frank should be punished for breaking the court's order and not completing his prison sentence then.

Criminal Jurists have different theories justifying each of their standpoints and each of them convincing enough their viewpoint.

Life for life, eye for eye, tooth for tooth and foot for foot is the essence of retributive theory of justice.The theory suggests that punishment if appropriate is a morally acceptable response to crime. It brings that psychological solace of revenge to the aggrieved party, its near ones and society. Also referred to as the punitive model of justice, it seeks to punish rather then focus on the reform of the accused.

The restorative theory instead of focussing on the abstract principles of law, justice and ethics; focusses on the needs of both the parties - the accused and the victim. It endeavours to encourage offenders to repair the harm done by them by apologizing, returning stolen money or for example doing community service'. It involves fostering a dialogue between the accused and victim and reaching a consensus wherein the ends of justice are met in a practical manner. Though this might be a good manner of resolving petty crimes such as theft or breaking traffic rules, as is increasingly been done in the developed countries; restorative model can not be acceptable for resolving henious crimes such as murder, rape or genocide which are a crime against society. The restorative theory is based on the principle of corrective theory. This is because the whole purpose of punishment is to reform the individual. Individuals turn to crime due to inadequacies in society and once they are provided the right set of environment and an opportunity to integrate into the society, they tend to reform and become better human beings. Reform, Rehabilitate, Re-educate and reintegration are the four R's of the restorative theory.

Accroding to the deterrent theory, the punishment is permissible so far as it deters further performance of a greater criminal act. The underlying principle is to set the punishment as an example such that it deters the accused and other like-minded individuals from committing a similar or more heinous crime. When such a punishment is set as a precedent, it sets an example for the society to abide by the law.

Frank not only cold-blodeedly killed the person who gave him a hitch, but also evaded from the eyes of law for four long decades before he was traced by victim's grand-son. In such a reckless case, the issue becomes not just one of punishing the individual who committed a cold-blodded murder; but also of meeting the ends of justice by appropriately punishing him for committing contempt of justice. Letting a person go free on humanitarian grounds of his being an octagenarian would be justified only if Frank sincerely repent for his wrong deeds. Any thoughts on the sensitive issue that touches us all as members of the society?

BP learns the hard way the economics of CSR

Corporate Social Responsibility is not just about being a socially responsible citizen. It has tangible market implications too. The recent oil spill disaster one of its worst in the history, has pulled down BP's shares more then 40% on widespread concerns amongst investors that it may not be able to survive the disaster. Recent decision by BP to award its shareholders with liberal bonus notwithstanding no strong reief measures going to the effected residents in the Gulf, caused great concern. The Congress in the US was pulled up for action and the Obama Government was put to the litmus test with the ensuing disaster. BP on its front , which is one of the biggest players in the industry, now faces a struggle for survival and its future hinges on legilative and regulatory decisions going forward. The tremors of aftereffects can be felt across the entire oil industry. There is a six month moratorium on deep water offshore drilling followed by a call for more stringent safety regulations. Other possible implications may include search for alternative sources of energy and more legislative intervention on environmental aspects at a global level. The call for CSR resonantes not only with ethics but revenues too.

Sony: A Future Unseen?

With losses over $450 million for the current financial year and CEO salary cheque of $ 4.5 million plus 500,000 stock options, is the Sony shine losing its sheen? Compare this with a total payment of 957 million to its 23 Directors by the competitor Panasonic for 2010 and the comparison seems one of giant versus dwarf! Important concerns have raised on Sony's ethical stand and Corporate Governance compliances. Sony is also apparently losing the market share to its investors. In this gloomy scenario, the Sony investors are compelled to ask what is the silver lining in this dark cloud. Loses for the current year notwithstanding, Sony is expected to earn a profit of 160 billion yen for the coming year. Sony presently makes Bravia TVs, Valo PCs and PS game consols. Its future success greatly depends on the success of is 3D TV and Motion controlled gaming consoles. Sony still has a good brand equity and is synonymous with quality in the minds of its customers. The future for Sony now depends on its strategy. According to industry experts, Sony's ability to transform its present vertical structure into horizontal business as successfully accomplished by Apple; by leveraging from its strong brand power will determine the directions of the wind.  

Executive Compensation: How much is too much?

One of the biggest dilemmas of Corporate Governance has been the Executive Packages. With Top Management and CEOs of Multinational receiving multi-million packages even when companies are in doldrums, the debate seems to hold an everlasting tenor. Sony CEO Howard Stringer's $ 4.5 Million plus package has renewed the global debate on Executive Compensation. The CEO received close to 410 million yen in fixed and performance related pay and options worth 500,000 shares(to be exercisable only in case the Sony shares rise). The announcement of whopping package comes at a time when Sony lost almost $ 450 million in last financial year and over $ 12 billion were washed off its market cap in the last three months.


Worldwide, CG Codes and Listing Requirements have tried to keep a check on the reckless payments to Executives especially in times when the global economy is down and the company is burdened with mounting losses.

Compensation Committee or Remuneration Committee was thought to be the panacea of the ill called unjustified Executive Remuneration. First recommended by the Cadbury Commission in 1992, the Committee was expected to rationally and fairly decide the compensation of executives, its constituent components and the manner of distribution. The Committee endeavors not just rewarding the well performing executives, but also recruiting, developing, retaining and mentoring the top talent. A well pronounced recommendation, the concept of Compensation Committee was quickly endorsed by other exchanges across the world. The Canadian guidelines embraced the initiative in 1994.

In India though there is no mandatory requirement of Independent Committees for deciding Executive Remuneration, however, the need for same was emphasized by the Government Committee on Corporate Excellence that released its report in 2000. The proposed Companies Bill, 2009 incorporates the recommendation made in 2000 report and earlier in SEBI(Kumar Mangalam Birla Committee) report to statutorily have committees for listed companies and other categories of companies to be specified in the Bill.

Inclusion of a majority of independent directors was an important step in ensuring independence and transparency in the working of the Committee. In the US, the New York Stock Exchange mandatorily required the listed companies to have a compensation committee consisting of Independent Directors. The NASDAQ listing requirements likewise mandated for independent directors led compensation committees or the independent directors on board fulfilling the requirements of independence.

Back in Japan, according to the latest CG listing requirements, Japanese companies have to reveal the pay to its executives in case it exceeds Yen 100,000,000 or $ 1.1 million. Sony's revelation of its CEO pay comes in the wake of this mandatory requirement. According to a nationwide survey by PWC, only 1.4% of Directors and 8.3% CEOs at listed companies in Japan are paid more then 100 M yen annually. So, that simply put implies that numbers receiving close to million dollar packages but less then the magic number of $ 1.1 million may raise the total figures much higher.

High Executive pay has often been justified on account of Managerial talent and paucity of such talent specially at the top levels. Reasons cited by the External Director for paying Howard more then $ 4.5 million plus stocks go even a step further. He suggested that the CEO needs to be paid keeping in consideration the Global pay levels; companies total revenue of over seven trillion yen(notwithstanding losses 40.8 billion yen), the number of employees at Sony and last but not the least the degree of complexity of business at Sony.

The reasons seem plausible specially when they come from great intellectual minds, but the ever encompassing question is how much if ever is too much and what should be done to cap this corporate greed for exorbitant pays, fat bonuses, stock options and endless perks.

Drowning Dollars in Adventorous Waters

Under the International Conventions, maritime search and rescue operations are a no cost agreement. This is based on the basic premise of Human Rights that human life is most important and invaluable. But the US teenager Abby Sunderland's US$ 94,500 worth of rescue operations in the uncharted Indian Ocean island by Australia has sparked off worldwide debates if a teenager's adventorous sports is worth the tax payers hard earned money.

International Convention for the Safety of Life at Sea, an International Maritime Safety Treaty(SOLAS), first adopted in 1914  is the most prominent of international treaties relating to safety of merchant hips. The first version of the treaty was passed in 1914 passed in response to the sinking of Titanic. It prescribed the number of lifeboats and other emergency equipments along with other safety procedures including continuous radio watches. The treaty underwent periodic amendments in 1929, 1948, 1960 and 1974. However by the time the amendments came into force, it was always late since the accepting minimum number of threshold countries with requisite tonnage limits required to give notice to the IMO, took painfully long. Consequently the 1974 version with all previous amendments included was adopted. The important breakthrough in the 1974 procedure was the simplified procedure for amending the treaty including the 'tacit acceptance' procedure wherein there is a default incorporation of amendments unless and until there is an objection filed by certain threshold of countries meeting the tonnage or number criteria. Prior to this a minimum of two-thirds of member countries were required to accep the amendments for incorporation.

Australia rightfully saved the teenager's life. But the all encompassing question is: Was it morally acceptable and ethically correct on the part of the 16 year old to chart out all alone and were her parents justified in letting their child who is yet to attain the legally adult age, sail on her own in those difficult waters. The trip was not even insured, which means that Australia's benevolent act is at best one of charity. In times of emergency one can not spark the adventure versus taxpayer's money debate; but when the storm subsides and we can sit back and think calmly, is it not time to define a legal indictment and punishment to discourage the amateur in future from taking up such risky sports.

Broadband: Broadening networks to bridge the divide

Broadband is the way to the future. With over 113 million subscribers and the numbers still galloping, China is the largest broadband market in the world.Even the technology driven, home to Silicon Valley, the United States of America, trails behind China with 87 million users. China had only 93.5 million users last year and with in a period of four quarters she added another 20 million users to her subscriber base making her the largest and fastest growing market in the world. Not only this, China, India, Vietnam and Phillippines are the world's High growth potential broadband markets, making Asia the biggest user of Broadband in the world. Last year alone, out of the total new connections,over 53% of the new broadband lines were added in the Asia-Pacific region and the mainland China contributed to over 90% of these total new connections. With India's emerging competitiveness in the IT industry, does this mean a growing area of opportunity for the Indian IT leaders. Should India climb the pyramid to provide more value-added services and focus on developing more technological capabilities. India's ability to tap this emerging market would be greatly determined by the policy-makers successfully meeting the legal and regulatory hiccups enabling the same.

Broadband and related services are here to stay in the Asia-Pacific region. With vast majority of populations still living in rural hinterlands and poor infrastructure, internet remains the best possible way to connect the people. Institutional and regulatory hiccups thwart the growth of this high potential market with difficult barriers to build data centres, lay cables and get licenses, according to analysts at Accenture. Present IT infrastructure too needs upgradation with new applications in mobiles and smartphones, internet enabled TVs and online gaming platforms like Xbox 360 slowing the network and acting like Bandwidth hogs.

Internet is undoubtedly a great connecting factor and with Information as power in the 21st century, connecting the rural areas through stronger bandwidths could well be Asia and particularly ChIndia's panacea to connect its lost crowd in the rural areas. This might as well be the key to 'sustainable growth'. In India, ITC's 'e-Choupal' initiative is one such interesting case study wherein the ITC connected the rural farmers through the power of Internet technology.

The Federal Compromise

The Federal Compromise

As the new Flemish Alliance of Bart De Wever comes to power in Brussels, every one is asking the same question- is the Belge Compromise finally coming to an end?


The Belgian Compromise bought together two radically different societies together... the thrifty centre-right Dutch-speaking north and the welfare-addicted French-speaking socialist south.

Bart, the future leader in his agenda does not outrightly knell the death of Belgium. In his promises, what he proposes is kind of federation with two separate sovereign states Wallonia and Flanders that would have a common face on foreign policy and defence front. And the call for increased sovereginity is not special to Belgium alone. All around the globe,uncomfortable compromises putting together people with different and difficult backgrounds have often asked for greater decentralization of powers, increased sovereignity and more federalism. The only Nation State where its members seem to be comfortably happy is the United States which is one of the closest forms of federalism in the present times. On a regional level, European Union that bought together knitted together uneasily fitting with a difficult history 27 Nation States together in the shades of the common denominator Euro was successful because it promised to leverage from the competencies of different economies and bring together a common political outlook on broader policy matters, without compromising on individual sovereignity. Of course to clarify on the outset, it is just a Union and has nothing to do with the concept of being a Nation State. But it draws from a theme. Is it an age for smaller Nation States to come together leveraging from each others economies to grow financially stout. Is it an age of increased decentralisation of powers and greater federalism for larger countries like India and China. Do smaller constituencies with different regional interests and ethnic backgrounds demand more personalised attention. Does this mean in the future world would mean coming together collectively at a global level and simultaneously more effective governance at a regional level. From Belgium to India to the African states to the United States this is an opportune time to reconsider Governments, form of federalism and the manner in which her subjects are governed. And with it a related thought if IT can help re-define this new wave of governing by the Government.