TOKYO (Reuters) – Arrested auto executive Carlos Ghosn improperly received 7.8 million euros ($9 million) in compensation from a joint venture (JV) between Nissan Motor Co (7201.T) and Mitsubishi Motors Corp (7211.T), the companies said on Friday.
FILE PHOTO: Carlos Ghosn, chairman and CEO of the Renault-Nissan-Mitsubishi Alliance, attends the Tomorrow In Motion event on the eve of press day at the Paris Auto Show, in Paris, France, October 1, 2018. REUTERS/Regis Duvignau/File Photo
A joint investigation found that Ghosn, ousted as chairman from both automakers, was compensated by the Netherlands-based JV without any discussion with two other board members, Nissan CEO Hiroto Saikawa and Mitsubishi CEO Osamu Masuko.
Nissan holds a controlling stake in Mitsubishi Motors.
Ghosn, arrested and detained in Tokyo since Nov. 19, has been indicted in Japan on charges of under-reporting his salary for eight years through March 2018, and temporarily transferring personal investment losses to Nissan during the global financial crisis.
Ghosn denies the charges against him. His lawyer, Motonari Otsuru, could not immediately be reached by telephone on Friday.
Reuters reported earlier this week about the alleged improper compensation to Ghosn by the JV and that Nissan was considering filing for damages, citing a source.
Nissan said on Friday that it would consider ways to recover the full amount from Ghosn, and Mitsubishi said it would consider ways to hold him responsible.
The latest allegations are likely to add pressure on the Japanese automakers’ partner Renault (RENA.PA) to cut ties with Ghosn. Unlike Mitsubishi and Nissan, Renault has kept Ghosn as CEO and chairman, but its biggest shareholder, the French government, has been urging it to replace him.
The French automaker holds around 43 percent of Nissan, the biggest partner in the alliance by sales and which in turn holds a non-voting 15 percent stake in Renault. Mitsubishi became the smallest member of the three-way automaking alliance when Nissan in 2016 took a 34 percent stake in the company.
($1 = 0.8780 euros)
Additional reporting by Chang-Ran Kim; Writing by Ritsuko Ando; Editing by Himani Sarkar
TOKYO (Reuters) – Asian stocks gained early on Friday, as hopes for a thaw in the U.S.-China trade conflict fed investor appetites for risk assets.
FILE PHOTO: A man is reflected on an electronic board showing a graph analyzing recent change of Nikkei stock index outside a brokerage in Tokyo, Japan, January 7, 2019. REUTERS/Kim Kyung-Hoon
The Wall Street Journal reported on Thursday that U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30.
U.S. stocks rallied following the report, but pared some of those gains after a Treasury spokesperson told CNBC that Mnuchin had not made any such recommendations. For the day, all three major U.S. indexes were up, led by a surge in industrial stocks. [.N]
Following Wall Street’s lead, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.25 percent. The index has gained nearly 1 percent this week.
Australian stocks rose 0.6 percent, as did South Korea’s KOSPI .KS11 while Japan’s Nikkei .N225 gained 0.7 percent.
“As with 2018, the U.S.-China trade row remains a key market theme in 2019. A slight difference is that there are some signs that the two sides are seeking some sort of a resolution,” said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.
“China seems to be running low on options, while the United States would also want to avoid a prolonged conflict given the negative consequences on its markets and the economy,” Monji said.
Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the latest round of trade talks aimed at resolving the bitter dispute between the world’s two largest economies.
In December, Washington and Beijing agreed to a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.
Indicators released recently have shown signs that the Chinese economy is losing some momentum.
China’s fourth-quarter economic growth, due to be reported on Monday, likely slowed to the weakest pace since the global financial crisis, a Reuters poll showed, as demand faltered at home and abroad.
In currencies, the dollar was mildly supported after U.S. Treasury yields rose amid the improvement in risk appetite in the broader markets.
The greenback was steady at 109.14 yen JPY= after popping up to a two-week high of 109.40 overnight. The dollar has gained about 0.6 percent against the Japanese currency this week.
The euro was little changed at $1.1392 EUR= after dipping slightly overnight. The common currency was on track for a weekly loss of 0.7 percent.
The 10-year Treasury yield US10YT=RR stood at 2.746 percent after going brushing 2.761 percent the previous day, its highest in three weeks.
The pound stood at $1.2984 GBP=D3, hovering close to a two-month peak of $1.3001 scaled overnight on the back of hopes that Britain can avoid a no-deal Brexit.
Prime Minister Theresa May’s Brexit deal suffered a heavy defeat in parliament this week but she survived a subsequent vote of confidence, removing some political uncertainty for now.
U.S. crude oil futures extended gains after rising the previous day on a rebound in Wall Street and news that OPEC sharply curtailed production in December. [O/R]
U.S. crude futures CLc1 added 0.13 percent to $52.14 per barrel. The contracts have gained 1.1 percent this week.
FILE PHOTO: The logo of IndiGo Airlines is pictured on passenger aircraft on the tarmac in Colomiers near Toulouse, France, July 10, 2018. REUTERS/Regis Duvignau
NEW DELHI (Reuters) – India’s air safety watchdog on Thursday directed airlines to make extra checks on their Airbus A320neo aircraft fitted with Pratt & Whitney engines as part of new safety protocols after temporary grounding orders affected the planes last year.
IndiGo, India’s biggest carrier by market share, and its low-cost rival GoAir, which fly the A320neos in the country, were forced to ground the aircraft on several occasions due to issues related to the engines.
The Directorate General of Civil Aviation (DGCA) has ordered that airlines must inspect some parts of the 1100 series engines weekly and train the cabin and cockpit crew to deal with and report any kind of odor, burning smell or smoke.
“Log all the cases detecting odors/smoke in cabin during operation for necessary investigation and rectification,” the DGCA said in its notification, adding that in all such cases the engine would need to be inspected in detail and used only after the defect is resolved.
IndiGo, owned by InterGlobe Aviation (INGL.NS), and GoAir did not immediately respond to a request for comment outside of office hours. Airbus and Pratt & Whitney were not immediately reachable. The new rules, which are effective immediately, were issued days after a meeting between the civil aviation ministry, the regulator, the two airlines, aircraft manufacturer Airbus (AIR.PA) and engine maker Pratt & Whitney, owned by United Technologies (UTX.N) to discuss the issues with the engines.
“During (the) meeting, it was decided to issue directive in addition to the existing measures related to combustion chambers and No. 3 bearing issues for identifying and correcting impending failures of dry face seal,” the DGCA said.
The notification also said there would be restrictions imposed on the operation of A320neo flights to Port Blair – the capital of India’s Andaman and Nicobar islands.
It was not immediately clear whether the regulator planned to restrict all A320neo flights to the islands or only place restrictions on a specific series of the engines that have been found to have issues.
WYOMING, Mich. (Reuters) – Bob Roth makes no bones about his feelings towards U.S. manufacturing.
Toyota trucks are shown on a car carrier for delivery after arriving in the United States in National City, California, U.S. June 27, 2018. REUTERS/Mike Blake
The co-owner and chief executive of RoMan Manufacturing Inc, which makes transformers and glass-molding equipment for automakers and other industries, asks callers on his voicemail: “What have you done today to support U.S. manufacturing?”
His procurement team has been under long-standing orders to source all parts and materials as near as possible to his western Michigan factory, even with President Donald Trump’s tariffs on steel and aluminum.
But with those tariffs dragging into a new year and steel comprising a quarter of RoMan’s fixed costs, Roth says his company has now begun the lengthy process of switching from its U.S. suppliers to an Israeli company for a key component for its products.
It is a strategic decision that RoMan and other auto suppliers have put off since the tariffs kicked in last spring. With tariffs firmly part of the landscape, some are now starting to shift their own supply chain to keep costs in check, according to more than a dozen interviews with U.S. auto suppliers and industry consultants. (U.S. jobs impact of metal tariffs: tmsnrt.rs/2RKvA83)
The choice is stark for most suppliers: absorb the extra cost, pass them on to customers or find ways to slash material costs.
The transformers Roth’s 150 workers at RoMan produce require a magnetized steel core that is now more expensive as tariffs have allowed U.S. steel producers to raise prices. The Israeli supplier has access to cheaper steel and its cores qualify as finished products, so they are not subject to tariffs – making them a cheaper alternative.
“We don’t have the money to buy our way out problems like this,” Roth said of RoMan, which has annual revenue of around $35 million. “In the long run we can’t afford to absorb the extra cost of tariffs.”
Roth says he appreciates the sentiment behind Trump’s push to bring back American manufacturers jobs, but adds tariffs are “the wrong tool” because they hurt U.S. firms.
Trade consulting firm Trade Partnership Worldwide LLC estimated last summer metals tariffs could cost 5,000 jobs in the U.S. auto industry and 400,000 jobs overall – 16 jobs lost for every steel or aluminum worker hired. But so far there is little data available on how tariffs affect businesses such as RoMan because the process of switching suppliers is a long one and many manufacturers have muddled through so far.
Steven Wybo, a managing director at consultancy Conway MacKenzie, said “every single auto supplier we are working with has concerns around tariffs,” and he worries they come at an already challenging time for the sector.
Suppliers are gearing up for a large number of vehicle launches over the next three years, an expensive business, while also bracing for an expected decline in U.S. new vehicle sales. And some in the sector will bear the brunt of restructuring at Ford Motor Co (F.N) General Motors Co (GM.N), which are dropping less-popular sedan models.
Adding tariffs to the mix can require a creative approach.
RoMan, for instance, splits half of a 10 percent tariff with a Chinese customer on transformers subject to retaliatory measures against U.S. manufacturers. RoMan will raise some prices 2 percent this month to partially offset rising copper prices.
Warren, Michigan-based Eckhart Inc – which books about $100 million in annual sales by building robots and automated tools for GM, Volvo and Tesla Inc (TSLA.O) and other automakers – must absorb the tariffs or run the risk of losing out in competitive bids.
So Eckhart has focused on cutting costs, including rolling out a new U.S. purchasing system for raw materials, CEO Andrew Storm said.
“We have to fight for every single dollar of revenue that comes in the door,” Storm said. “So we find ways to eat the extra cost.”
That is why RoMan is seeking alternative suppliers to cut costs – and it takes a long time to ensure a new supplier is financially sound and can consistently hit industry standards. Months into that process, RoMan is only now validating test parts produced by its potential new Israeli supplier.
“You can’t turn your supply chain on a dime,” said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research (CAR).
Dziczek said she gets calls “all the time” from suppliers wondering whether to overhaul their supply chain, and yet worrying that if they do, Trump may reverse policy overnight.
The issue stretches up and down the supply chain for cars. Ford and GM have already warned metals tariffs will cost them $1 billion each in profits, setting in motion a complex dance over who foots the bill.
If automakers have to cover the cost, they typically raise vehicle prices to pass it onto consumers. Just this week, a Toyota Motor Corp (7203.T) executive said industry wide tariffs have increased the average U.S. vehicle price by around $600.
Peter Bible, chief risk officer at tax advisory firm EisnerAmper and former chief accounting officer at GM, said suppliers making parts for less-popular vehicles will have trouble passing on higher costs. Automakers will resist price increases, but will be also be wary of pushing suppliers too hard, Bible said.
Problems at a single supplier can be disastrous, as Ford discovered last May when a fire at a supplier halted production of some highly-profitable pickup trucks.
Some suppliers have adapted quickly to cut costs.
They have cost Gentherm Inc (THRM.O), which makes climate control systems for vehicles and had revenue of close to $1 billion in 2017, a “few million” dollars, according to CEO Phil Eyler.
“We’ve worked really fast to change supplier locations in a couple cases,” he said.
Mark Wakefield, a managing director at consultancy AlixPartners, said suppliers providing more commoditized parts will find adjusting harder.
That’s the case for Grand Rapids, Michigan-based Pridgeon & Clay, which supplies stamped steel and stainless steel parts to automakers, with annual revenue of more than $350 million.
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Third-generation owner Kevin Clay has lost business to low-cost overseas competitors in India who use cheaper tariff-free steel, and whose finished products are not subject to Trump’s U.S. tariffs.
Metal tariffs have shaved 25 percent off Clay’s pre-tax profit. Banks still wary of his sector following the Great Recession are growing reluctant to issue loans, and his company has mothballed some spending plans and cut staff more than usual for this time of year, according to Clay.
“These tariffs have cost me business,” said Clay, who describes himself as a moderate conservative who fervently believes in free trade. “If the aim is to get to a tariff-free world, this is a crappy way to get there.”
Additional reporting by Ben Klayman in Detroit; editing by Joe White and Edward Tobin
SYDNEY (Reuters) – Asian shares crept higher on Thursday as upbeat bank earnings bolstered Wall Street, while an anti-climactic end to the latest chapter in the Brexit saga gave sterling a moment’s peace.
FILE PHOTO: A woman points to an electronic board showing stock prices as she poses in front of the board after the New Year opening ceremony at the Tokyo Stock Exchange (TSE), held to wish for the success of Japan’s stock market, in Tokyo, Japan, January 4, 2019. REUTERS/Kim Kyung-Hoon
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.1 percent, with Australia was ahead by 0.2 percent.
Nikkei futures JNIc1NKc1 pointed to an opening rise of around 0.5 percent for the cash index .N225. E-Mini futures for the S&P 500 ESc1 firmed 0.6 percent.
On Wall Street, strong earnings from Bank of America (BAC.N) and Goldman Sachs (GS.N) eased worries about the earnings outlook. Bank of America shares jumped 7.2 percent and Goldman 9.5 percent. [.N]
The Dow .DJI ended Wednesday with gains of 0.59 percent, while the S&P 500 .SPX added 0.22 percent and the Nasdaq .IXIC 0.15 percent.
Investors in Asia might be less encouraged by a Wall Street Journal report that U.S. federal prosecutors were investigating Huawei Technologies, the world’s largest telecommunications equipment maker, for allegedly stealing trade secrets from U.S. businesses and could soon issue an indictment.
Such a move could inflame tensions between Beijing and Washington and make a trade deal yet harder.
China’s central bank on Wednesday moved to avert a cash crunch in the economy by injecting a record $83 billion into the country’s financial system.
Also looming in the background were concerns the U.S. government shutdown was starting to take a toll on its economy.
White House economic adviser Kevin Hassett said the shutdown shaved 0.13 percent off quarterly economic growth for each week it goes on.
As expected, British Prime Minister Theresa May narrowly won her confidence vote and invited other party leaders for talks to try to break the impasse on a Brexit divorce deal.
An outline for Plan ‘B’ is due by Monday and the market assumes there will have to be an extension of the Article 50 exit date past March 29.
“Nothing has happened in the last 24 hours to dissuade us from the view that we are headed in the direction of an Article 50 delay, a softer Brexit or no Brexit,” said Ray Attrill, head of FX strategy at NAB.
“But it remains too soon to be buying sterling with your ears pinned back,” he added, noting many uncertainties remained.
All of which left the pound firm at $1.2881 GBP=, though still short of Monday’s peak at $1.2929. It fared well on the euro, which hit a seven-week low before steadying at 88.45 pence EURGBP=.
The lessening of Brexit risk pressured the safe-haven yen and helped the U.S. dollar up to 109.10 JPY=. The euro eased back to $1.1394 EUR= while the dollar index nudged up to 96.077 .DXY.
In commodity markets, palladium XPD= hit record highs thanks to increasing demand and lower supply of the metal used in auto catalysts. Spot gold XAU= held steady at $1,293.68 per ounce.
Brent crude LCOc1 futures rose 66 cents to $61.30 a barrel overnight, while U.S. crude CLc1 was last off 7 cents at $52.24.
FILE PHOTO: Sean Rad, CEO of Tinder, is seen during celebrations for Match Group’s IPO at the NASDAQ stock exchange, New York November 20, 2015. REUTERS/Lucas Jackson
(Reuters) – Online dating company Match Group Inc (MTCH.O) and its owner IAC/InterActiveCorp (IAC.O) has filed a lawsuit accusing Sean Rad, a former employee known for co-founding the popular dating service Tinder, of secretly copying company files and other proprietary information.
The lawsuit, filed in state court in Manhattan on Tuesday evening, came six months after Rad and other Tinder co-founders sued IAC, accusing it of undervaluing Tinder to avoid paying them billions of dollars.
Tinder is one of several dating services under the umbrella of Match Group, which is mostly owned by IAC.
The lawsuit claims at least $250 million in damages.
IAC and Match’s complaint alleged that, in violation of an employment agreement, over several years Rad created backups of internal emails, forwarded company emails to a personal email address, and directly copied company files that included “highly sensitive, non-public information concerning his employers’ business strategies and plans.”
Orin Snyder, a lawyer for Los Angeles-based Rad, said in a statement that the lawsuit was “ridiculous” because Rad’s employment contract allowed him back up his email.
“Do IAC and Match really think the jury won’t see right through this desperate act of retaliation?,” Snyder said.
Rad’s lawsuit against IAC and Match, filed in August in state court in Manhattan, alleged the companies deliberately undervalued the Tinder dating app to limit how much money he and other employees could make from exercising stock options. IAC and Match denied the allegations.
Reporting by Jan Wolfe; Editing by Jonathan Oatis and Frances Kerry
DETROIT (Reuters) – Ford Motor Co (F.N) gave a fourth-quarter earnings forecast on Wednesday that was below analysts’ expectations, sending shares down slightly in U.S. premarket trading.
FILE PHOTO: Workers prepare for the Ford Motor Company 2019 reveal at the North American International Auto Show in Detroit, Michigan, U.S., January 14, 2019. REUTERS/Jonathan Ernst
The No. 2 U.S. automaker said it could see improvement in 2019 earnings and revenue as global industry sales remained flat, but did not provide any figures.
“For 2019, we see the potential for year-over-year improvement in company revenue, EBIT and adjusted operating cash flow,” Chief Financial Officer Bob Shanks said in a statement.
“For 2019, we expect to be able to fully fund our business needs, while maintaining cash and liquidity levels at or above our target levels,” he said.
Still, Ford saw headwinds for the year ahead, citing tariffs and high commodity costs, both of which also impacted its 2018 earnings. The details on the outlook were contained in slides just ahead of a presentation by Ford early on Wednesday at a Deutsche Bank conference in conjunction with the 2019 North American International Auto Show in Detroit.
Helping the company will be new product rollouts, including the Ford Ranger pickup truck and Explorer sport utility vehicle, its restructuring initiatives, a recovery in China and the redesign of its money-losing European operations.
Last week, Ford’s larger U.S. rival, General Motors Co (GM.N) said it expected higher profits in 2019, offering an estimated range that was far stronger than Wall Street analysts had forecast.
Ford said it expects 2018 adjusted earnings of $1.30 a share on revenue of $160.3 billion. In October, the Detroit area automaker said it expected to earn in the range of $1.30 to $1.50 per share while analysts were expecting $1.33 per share, Refinitiv IBES data showed.
For the fourth quarter, Ford expects adjusted earnings of 30 cents a share, below the 32 cents analysts were expecting.
On Tuesday, Ford and Germany’s Volkswagen AG (VOWG_p.DE) said they would join forces on commercial vans and pickups and were exploring joint development of electric and self-driving technology in a bid to save the automakers billions of dollars.
Shares of Ford fell 0.6 percent to $8.79 in light premarket trading.
Reporting by Ben Klayman in Detroit, additional reporting by Ankit Ajmera in Bengaluru; editing by Jason Neely and Bernadette Baum
WASHINGTON (Reuters) – General Motors code named its November announcement to cut nearly 15,000 jobs in North America and restructure itself “Turbo,” suggesting a leaner approach for the largest U.S. automaker would “accelerate its transformation.”
A logo of General Motors is pictured at its plant in Silao, in Guanajuato state, Mexico, November 9, 2017. Picture taken November 9, 2017. REUTERS/Edgard Garrido
Wall Street investors cheered the ambition to get smaller and boost profits. But in Washington, the move remains a public relations crisis that threatens to derail a methodical effort by Chief Executive Mary Barra to keep GM in good graces with the White House and other politicians.
President Donald Trump called Barra’s decision “nasty” and said GM had “better” find a product to build at a plant in Ohio, a pivotal state for Trump’s 2020 re-election effort. Representative Debbie Dingell, a Democrat from southeast Michigan and former GM employee, said at the time that GM had become “the most thoroughly disliked company in Washington.”
At the Detroit auto show this week where GM is faces off with politicians from the states most impacted by its job cuts, Dingell told Reuters that “GM is going to work hard to improve relationships.”
Despite the angst in Washington, Barra and her deputies are showing no signs of shifting gears.
“We’re not here to make everybody angry,” GM President Mark Reuss told Reuters this week at the auto show. He said GM’s restructuring is driven by many factors – including the need to offset tariff costs and finance new electric vehicles and battery technology. That requires GM to stop “investing money in things that don’t make money.”
It is a message Barra herself hit hard on Friday during a presentation to investors in New York, where she promised stronger profits and outlined plans for its Cadillac brand to challenge Tesla Inc (TSLA.O).
“We have demonstrated time and again that we are willing to make tough and strategic decisions to not only meet our commitments but to secure the company’s future,” Barra said.
Barra’s charm offensive had proven successful for most of President Donald Trump’s first two years in office. Atop Barra’s list of accomplishments: shielding GM’s profitable Mexican truck production and its $5 billion investment in its Mexican operations announced in 2014 to double capacity in Mexico from punitive trade measures from the Trump administration.
But the new conflict with Washington comes at a critical time for GM, which wants to sell many more electric vehicles and has been lobbying Congress to expand the $7,500 tax credits. It still needs help from regulators to get self-driving cars without steering wheels on U.S. roads.
And GM stands to benefit from the Trump administration’s plan to weaken fuel efficiency standards
“We’ve done this to help you, and I think his disappointment is it seems like they kind of turned their back on him,” White House economic adviser Larry Kudlow told reporters in November, referring to Trump’s reaction.
Kyle Martin, research analyst with Westwood Management in Dallas, which owns GM shares, said GM needs the cash to develop to electric vehicle and autonomous vehicle technology.
“That money has to come from somewhere,” he said.
WORKING WASHINGTON Trump’s election win brought a dire warning from GM executives in a presentation in late 2017 and early 2018 to the company’s board: an end to the North American Free Trade Agreement could cost the automaker billions of dollars in tariffs on GM’s Mexican vehicles. They concluded that the costs would still be less than the billions of dollars and years it would take to shift production to the United States, people briefed on the matter said.
GM argued that while it was building autonomous vehicles and electric vehicles in the United States, it needed to keep generating profits on Mexican-built trucks to fund those operations, people briefed on the talks said.
So Barra made engaging with the White House after Trump’s election a key focus, three people briefed on the matter said.
She went to dinner at the house of Trump’s daughter Ivanka, and spoke on several occasions with Trump himself. Barra hired a former senior Trump aide who handled trade policy issues, Everett Eissenstat, to run GM’s DC office in August.
And she has had numerous talks with U.S. officials, including conversations with U.S. Trade Representative Robert Lighthizer, about the new trade agreement with Mexico and Canada – including a key call in August to address concerns from GM that the new trade deal could have disadvantaged its Mexican operations.
Barra is now counting on those relationships to help her steer through 2019, and mend fences in Washington.
She invited Transportation Secretary Elaine Chao to Michigan to attend a board meeting in June 2017 and take a ride in an self-driving car in Michigan, according to previously unreported government records reviewed by Reuters. Barra also had a previously unreported lunch in April 2017 with Chao at the White House with other officials.
She spent two days last month on Capitol Hill meeting with angry lawmakers and explaining the cuts. In a brief interview with Reuters in December, Barra said she understands “that there’s a lot of emotion and concerns” but emphasized that the actions were about safeguarding the company’s future.
She has her work cut out for her.
Representative Andy Levin, a Michigan Democrat who took office this month, noted the Detroit-Hamtramck plant – one of the facilities losing production – is on a site that GM won approval in the early 1980s to dislocate more than 4,200 people as the state tore down about 1,500 homes and 140 businesses.
“We as a society made a huge sacrifice for GM so they could have a new plant. And 30 years later they are just going to throw it away?” Levin said. “We’re not going to stop and just say, ‘Oh this is a cost of doing business.’”
Reporting by David Shepardson; Additional reporting by Ben Klayman and Joe White; editing by Chris Sanders and Edward Tobin
(Reuters) – McDonald’s Corp (MCD.N) has lost its rights to the trademark “Big Mac” in a European Union case ruling in favor of Ireland-based fast-food chain Supermac’s, according to a decision by European regulators.
The logo of U.S. company McDonald’s is pictured in Rome, Italy August 16, 2018. REUTERS/Max Rossi
The judgment, provided to Reuters by Supermac’s, revoked McDonald’s registration of the trademark, saying that the world’s largest fast-food chain had not proven genuine use of it over the five years prior to the case being lodged in 2017.
The Spain-based EU Intellectual Property Office (EUIPO) did not respond to phone calls and emails requesting comment.
McDonald’s was not immediately available to comment on the decision, which the company can still appeal.
The ruling allows other companies as well as McDonald’s to use the “Big Mac” name in the EU.
Supermac’s said it can now expand in the United Kingdom and Europe. It said it had never had a product called “Big Mac” but that McDonald’s had used the similarity of the two names to block the Irish chain’s expansion.
“Supermac’s are delighted with their victory in the trademark application and in revoking the Big Mac trademark which had been in existence since 1996,” founder Pat McDonagh told Reuters in an email.
“This is a great victory for business in general and stops bigger companies from “trademark bullying” by not allowing them to hoard trademarks without using them.”
McDonald’s, which sells its flagship “Big Mac” burgers internationally, submitted printouts of European websites as evidence, as well as posters, packaging, and affidavits from company representatives attesting to “Big Mac” sales in Europe.
The EUIPO said the affidavits from McDonald’s needed to be supported by other types of evidence, and that the websites and other promotional materials did not provide that support.
From the website printouts “it could not be concluded whether, or how, a purchase could be made or an order could be placed,” the EUIPO said. “Even if the websites provided such an option, there is no information of a single order being placed.”
McDonald’s has historically been “extremely litigious” in the area of trademark law and typically does not lose, said Willajeanne McLean, a law professor at the University of Connecticut.
In 1993, McDonald’s won a court order blocking a dentist in New York from selling services under the name “McDental.”
In 2016, McDonald’s defeated an effort by a Singapore company to register ‘MACCOFFEE’ as an EU trademark.
Reporting by Soundarya J in Bengaluru and Jan Wolfe in Washington; editing by Patrick Graham and Rosalba O’Brien