First, they said, devaluation in a Latin American context would be inevitably seen as a lurch towards hyper-inflation, so interest rates would have to be lifted to stratospheric levels to prevent wholesale capital flight. Eventually, the Brazilians persuaded Washington that their economy could not withstand this, for two reasons. Others, remembering repeated episodes from Brazil’s economic past, reckoned that the central bank would soon be forced to resort to the printing presses to redeem debt. The prospect of monetisation and hyper-inflation was in fact far more likely than outright debt default, but it was still more than sufficient to eliminate confidence in the exchange-rate regime around which the government’s entire economic strategy had been constructed.When Brazil and the IMF reached agreement on an economic reform programme last November, careful consideration was given to the option of devaluing the real in a controlled way by (say) 25 per cent. The abandonment of the crawling peg for the real was not due to an irrational attack on the currency by foreign speculators, but to the steady withdrawal of funds by both domestic and foreign investors who rightly feared that the public debt position was becoming untenable.
Some, remembering the example of Russia last August, feared default on real-denominated debt, either by the government or the states of the federation. This debacle has been brewing for at least two years, with the repeated failure of the Cardoso government to make the cuts in the fiscal deficit which have been so obviously necessary. While the break-up of the ERM was indeed a boon for Europe’s devaluing currencies, the ignominious collapse of Brazil’s exchange-rate regime last week was not of the same ilk.
Even Brazil’s most important economic neighbours, Argentina and Mexico, were being deemed safe from “contagion”. This optimism is at the very least premature, and could prove decidedly misplaced. LAST NOVEMBER, world share prices surged because Brazil had avoided devaluation. On Friday they surged again – this time because Brazil had devalued. Far from being the source of a global economic disaster, optimists were depicting Brazil as a faraway country of only moderate size, and with few trading links with the rest of the world. Others were arguing that devaluation would be a liberating force for Brazil itself, helping the country to recover from the onset of a deep recession. Comparisons with the beneficial devaluations which occurred in Europe in 1992-93, when the ERM was smashed by market pressures, were rife.
Rivals say the “drip-feed” nature of the deals has enabled them to evade scrutiny by the competition authorities.Cadbury says that as Coca-Cola already controls bottling and distribution of Schweppes brands in the UK, the latest change is a minor development.Competitors had until 29 December to make submissions to the OFT, which is expected to make a decision next month.. In 1996 Cadbury sold its 51 per cent stake in CCSB to Coca-Cola Now the US giant is taking control of the Schweppes brands. It claims that Coca-Cola will be able to use the power of the “must-have” Coca-Cola brand to persuade retailers to stock its other brands as well, potentially excluding other products from retailers’ shelves.Britvic also says that the latest in a series of deals between Cadbury and Coca-Cola amounts to “acquisition by stealth”. They formed a bottling joint venture, Coca-Cola Schweppes Beverages, in 1987. Estimates suggest that Coca-Cola has 40 per cent of the market, Britvic 20 per cent, AG Barr 6 per cent and Virgin 2 per cent.Companies such as Britvic say gaining the Schweppes brands will take Coca-Cola’s share to over 50 per cent, potentially restricting customer choice.
Coca-Cola’s portfolio already includes Coca-Cola, Lilt, Sprite and Fanta.Figures from AC Nielsen show that the UK take-home drinks sector was worth pounds 3.4bn last year. Coca-Cola is already the dominant player and they would be acquiring another major slice of the market. It is the augmentation of a monopoly position.”Robin Barr, chairman of AG Barr, said: “It will substantially increase the clout of the company that is already the leader by some distance That has to be wrong. We hope the OFT will take the same view.”Under the deal, announced in December, Cadbury is selling its non-US soft drinks to Coca-Cola in order to concentrate on its confectionery interests and its US soft drinks business, chiefly Dr Pepper.The brands included in the deal are Schweppes, Dr Pepper, Canada Dry Crush and Oasis, in 120 countries. Submissions have been filed by Britvic, which is part of Bass, Virgin, which controls the Virgin Cola brand, and the Scottish group AG Barr, which produces Irn-Bru. They argue that the deal would give Coca-Cola 50 per cent of the UK soft drinks market and be against consumer interests.
Stephen Davies, managing director of Britvic, said: “We have genuine concerns. SEVERAL OF Britain’s leading soft drinks companies have complained to the Office of Fair Trading that Cadbury Schweppes’s proposed pounds 1bn deal to sell its non-US soft drinks interests to Coca-Cola is anti-competitive.
One of the criticisms of the existing office, which houses about 250, is that its design is inefficient and makes communication difficult.
ICI no longer owns the building after raising more than pounds 100m in 1997 via a sale-and-leaseback with the Prudential.ICI’s head office has steadily shrunk: in the late 1980s a sister building over the road was let out to the intelligence agency MI5 and the next- door building, Nobel House, was let to the Ministry of Agriculture.There is now a gym and squash courts in part of the basement, and the rear of the building has been let to a bank.. Now, however, some senior executives feel that a new head office location would be more in keeping with the new-look ICI. The company has twice considered moving from the imposing building (pictured above) in the past 12 years, but has not found a suitable alternative. “The numbers Trinity brought to the table did not look that appealing,” the spokesman said.. ICI IS reviewing the future of its London headquarters in a move which could eventually see it depart from 9 Millbank, its head office since the company’s foundation 73 years ago, writes Michael Harrison. Trinity, the UK’s largest regional newspaper publisher, blamed the breakdown of talks last week on Mr Montgomery’s insistence that he be given a senior executive role in the new group.Trinity said yesterday that it was unlikely to restart merger talks with Mirror as long as Mr Montgomery “was a part of the merger proposition”.A Trinity spokesman said: “A deal with Mirror Group seems to us very difficult, if not impossible, if it includes Mr Montgomery.” Phillips & Drew Fund Management, Mirror’s largest shareholder, is said strongly to favour a merger with Trinity, even if this means losing the services of the Mirror chief executive.Mirror, however, maintains that Mr Montgomery, like other senior Mirror executives, “was perfectly willing to reorganise management roles”.A Mirror spokesman said disagreements over price lay behind the breakdown, and Mr Montgomery was purely concerned with getting Mirror shareholders a good deal. Many in the City believed Sir Victor was committed to a merger with Trinity and that this had sparked clashes with David Montgomery, the Mirror chief executive, who is said to favour searching for an alternative merger partner.This latest twist in the long-running merger saga at Mirror Group comes amid an escalating war of words between Mirror and Trinity.
