Major International Business Headlines Brief::: 18 October 2018

Thu Oct 18 09:33:38 CAT 2018

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Major International Business Headlines Brief::: 18 October 2018

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*  Steinhoff says investors to suspend legal battle as firm recovers

*  Nigeria central bank, MTN getting closer to settlement -minister

*  Nigerian Senate backs Eurobond issue, warns of debt overhang

*  South Africa's Old Mutual to sell Nedbank shares

*  Zambia's finance minister says new mining taxes will not hit operations

*  South Africa's retail sales jump as spending on consumer goods rises

*  Nigeria state oil company denies existence of $3.5 bln fuel subsidy fund

*  New South African finance minister to stick close to Feb budget

*  Ghana growth slows sharply to 5.4 pct in second quarter y/y

*  Mediclinic flags drop in H1 core profit, shares dive 19 percent

*  Firms defy pressure over Saudi conference

*  Cypriot budget airline Cobalt has suspended operations

*  US shies away from calling China a currency manipulator

*  Trump moves to quit 144-year-old postal treaty

*  eBay files lawsuit against Amazon over 'seller recruitment'

*  Chinese firm fined $1.3bn for illegal production of rabies vaccine

*  Google unshackles Android-device firms

*  Canada becomes second country to legalise recreational marijuana

 <mailto:info at bulls.co.zw> 

Steinhoff says investors to suspend legal battle as firm recovers

JOHANNESBURG (Reuters) - Steinhoff said on Wednesday investors who are suing the crisis-hit firm had agreed to suspend litigation until next year, allowing the retailer time to focus on its recovery.

The lawsuit brought in the Netherlands was aimed at compensating investors for the more than 14 billion euros ($16 billion) wiped off Steinhoff’s market value since the retailer uncovered accounting irregularities last year.

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Nigeria central bank, MTN getting closer to settlement -minister

LONDON (Reuters) - Nigeria’s central bank and South African telecommunications firm MTN could soon strike a deal in their dispute over the repatriation of $8.1 billion, Nigeria’s information minister said on Wednesday.

The central bank says MTN transferred $8.1 billion of funds out of Nigeria in breach of foreign-exchange regulations. Nigeria, which accounts for a third of the South African company’s annual core profit, is MTN’s biggest market.

“I am sure there will be a settlement and I believe they are getting closer to resolving it,” Information Minister Lai Mohammed told Reuters during a visit to London.

“They are ‘businessmen’ and they are going to resolve it... it is in the interest of all the parties that this matter will be resolved,” he said, declining to give any further details.

MTN’s shares have lost a fifth of their value since the Nigerian central bank ordered the firm and the four banks involved - Standard Chartered PLC, Stanbic IBTC Bank PLC Citibank and Diamond Bank PLC - to bring back the funds on Aug. 29. Governor Godwin Emefiele said earlier this month that the central bank may reduce the amount.

DANGOTE REFINERY ON SCHEDULE

In other news, Mohammed said he expected production at a huge oil refinery being built in Nigeria by Africa’s richest man to start as scheduled around 2020.

Sources with direct knowledge of the matter told Reuters in August that it was unlikely that the 650,000 barrel per day (bpd) refinery would start production before 2022.

Billionaire Aliko Dangote secured more than $4.5 billion in debt financing for the project which has a price tag of up to $14 billion.

“When one looks at the money which has been raised from private funds, banks, it can’t afford to miss the deadline and it’s working (round) the clock to ensure that the refinery becomes operational in 2020 or thereabouts,” Mohammed said.

Asked whether his government might consider privatising part of Nigeria’s state oil firm NNPC, Mohammed said such a step was “not a priority”.

Atiku Abubakar, a former vice president and the main opposition candidate for the February 2019 presidential election, had said he would privatise parts of the state oil company if he was elected head of state.

Nigerian Senate backs Eurobond issue, warns of debt overhang

ABUJA (Reuters) - Nigeria’s upper house of parliament approved a planned $2.786 billion Eurobond issue on Wednesday but advised the government to limit foreign borrowing and instead boost revenues.

Nigeria, which emerged from recession last year, approved a three-year plan in 2016 to borrow more from abroad. It wants 40 percent of its loans to come from offshore to lower borrowing costs and help to fund its record-high budgets.

Lawmakers said the new bond issue will raise foreign borrowing to 32 percent of Nigeria’s total debt from 30 percent at June 2018.

On Wednesday, the government also approved Citigroup, Standard Chartered Bank and local firm FSDH Merchant Bank as financial advisers on the planned bond issue, Finance Minister Zainab Ahmed told reporters.

The Senate said it approved the issuance but warned against accumulating too much foreign debt. “The federal government should do everything possible to reduce or limit its request for more external borrowing and (seek) other means of generating revenue internally,” it said. “This is to avoid a cleverly managed re-conquest of our country through a debt overhang.”

President Muhammadu Buhari, who will seek a second term in a presidential election to be held in February, signed a record 9.12 trillion-naira budget for 2018 into law in June as part of an attempt to foster economic growth.

Lawmakers also approved debt issuance of $82.54 million to refinance the balance of a $500 million matured Eurobond.

Nigerian government officials have met fund managers on a non-deal roadshow in New York held to update bondholders on the country’s growth plan following the recession, an investor presentation seen by Reuters showed.

South Africa's Old Mutual to sell Nedbank shares

JOHANNESBURG (Reuters) - South Africa’s Old Mutual Ltd said on Wednesday it would sell around 5.5 million shares in Nedbank Group Ltd to select institutional investors, following the spin-off of the unit.

Old Mutual, which holds a majority stake in Nedbank, has been dismantling its conglomerate structure, created after a series of acquisitions, since it moved its headquarters and primary listing to London in 1999.

Zambia's finance minister says new mining taxes will not hit operations

LUSAKA (Reuters) - Mining companies operating in Zambia will still be able to meet their operational costs even after the government implements higher taxes, the finance minister said on Wednesday.

“At the proposed taxes we are confident that mining companies will be able to meet their operational costs,” Finance minister Margaret Mwanakatwe told parliament.

South Africa's retail sales jump as spending on consumer goods rises

JOHANNESBURG (Reuters) - South Africa’s retail sales rose in August as household goods, clothing and cosmetics grew, data showed on Wednesday, with recovering consumer spending a sign the economy is climbing out of a recession that has piled pressure on President Cyril Ramaphosa.

Sales rose 2.5 percent year-on-year in August after increasing 1.4 percent in July, the statistics office said. The expansion was much more than the 0.3 growth forecast by a Reuters poll, and was the highest rate of growth since May 2018.

Africa’s most industrialised economy hit a recession in the second quarter, as declines in household expenditure due to record-high fuel prices and higher value-added tax combined with contractions in manufacturing and agriculture to hurt growth.

Trade accounts for 15 percent of gross domestic product, and improved retail spending is crucial to Ramaphosa’s economic revival plan and a promise to create an additional 275,000 jobs a year to ease record-high unemployment. [nS8N1LM023]

“This number is good because it shows consumer spending, which accounts for about 60 percent of GDP is recovering,” said economist at Nedbank Johannes Khosa.

“Although it confirms our view that growth came out of recession in the third quarter, the Treasury won’t read too much into the data because there is a chance of a big reversal next month,” Khosa said.

Next week’s medium term budget by the new finance minister, Tito Mboweni, will be closely watched for details of Ramaphosa’s stimulus plan, although analysts do not except any major policy shifts and rather a focus on maintaining fiscal consolidation that has kept ratings agencies at bay.

Nigeria state oil company denies existence of $3.5 bln fuel subsidy fund

LAGOS (Reuters) - Nigeria’s state oil company on Wednesday denied parliament’s accusation that it had a $3.5 billion fund to surreptitiously subsidise imports of gasoline.

The upper house Senate said on Tuesday it would investigate the fund it said the Nigerian National Petroleum Corporation (NNPC) was using without subjecting the monies for parliamentary scrutiny via the national budget.

NNPC responded with a statement titled “we don’t have $3.5 billion subsidy fund”. It said a $1.05 billion “National Fuel Support Fund” did exist, set up by the company “to ensure stability in the petroleum products supply”.

That fund was jointly managed by a group of bodies that included the NNPC, the central bank and the finance ministry, the statement by NNPC spokesman Ndu Ughamadu said. The fund was “domiciled” in the central bank and “NNPC did not independently spend a dime” of it, it added.

Fuel subsidies are contentious in Africa’s top crude oil producer, which imports most of its gasoline due to underperforming refineries. Prices are kept artificially low at 145 naira ($0.48) per litre.

As fuel prices increase globally, it has become unprofitable for private petrol marketers to import, with the NNPC stepping in to prevent major shortages.

New South African finance minister to stick close to Feb budget

JOHANNESBURG (Reuters) - South Africa’s new finance minister Tito Mboweni will stick closely next week to previous budget forecasts for the coming two fiscal years, with only slight slippages due to poor revenues, economists predicted in a Reuters poll.

The forecast for this fiscal year’s deficit is 0.2 percentage point bigger at 3.8 percent of GDP, the poll showed. Mboweni will tweak next year’s estimate in his budget review on Oct. 24 but reiterate February’s call for a fall to 3.5 percent in 2020/21, the economists predicted.

This time last year, then-Treasury chief Malusi Gigaba painted a shocking picture of a 50.8 billion rand ($3.6 billion) shortfall in revenues for the year ending last March.

He was more hopeful in his February statement although official data showed the economy unexpectedly slipped into recession earlier this year.

“There is very likely to be some slippage amid weaker growth, 30 billion rand more for the public sector wage bill. The question is how significant the slippage will be,” said Hugo Pienaar, economist at the Bureau for Economic Research.

Not much has improved since South Africa inaugurated President Cyril Ramaphosa in February. Two finance ministers have left and economic growth is now forecast at 0.8 percent this year, down from 1.4 percent expected when he took office.

The latest forecast is unchanged from a September poll.

To plug revenue shortfalls, value-added tax (VAT) was raised by Gigaba in February’s budget to 15 percent, a move that has put consumers under significant financial strain. [nL8N1QB3SU]

“With a new Finance Minister (Mboweni) for the second time this year, October’s mini-Budget will be keenly watched, but will likely deliver a similar path to the Budget released at the start of the year,” said Annabel Bishop, chief economist at Investec.

Ramaphosa appointed former central bank governor Mboweni as finance minister on Tuesday, replacing Nhlanhla Nene who admitted to having meetings with the business family at the centre of alleged corruption. [nL8N1WP120]

Economists said the budget review next Wednesday was likely to have been signed off before Mboweni was appointed and will probably expand on Ramaphosa’s reform plans, including re-prioritising 50 billion rand of public spending to boost economic growth and create jobs.

Consumer inflation is predicted to average 4.7 percent this year and 5.4 percent next, while the South African Reserve Bank’s repo rate is expected to be lifted to 25 basis points to 6.75 percent in either January or March.

The repo rate is then expected to be stable for the rest of 2019 and raised to 7.00 percent in 2020.

($1 = 14.1529 rand)

Ghana growth slows sharply to 5.4 pct in second quarter y/y

ACCRA (Reuters) - Ghana’s economic growth slowed sharply to 5.4 percent year-on-year in the second quarter of 2018, compared to around 11 percent in the same period last year, the statistics office said on Wednesday.

The quarter-on-quarter seasonally adjusted growth rate was 1.3 percent, the same as in the first three months of 2018, acting government statistician Baah Wadieh told reporters in Accra.

Wadieh said the latest figures compared with a period of particularly sharp expansion in the oil sector a year earlier.

“Last year alone, the oil sector grew by nearly 200 percent, following the startup of a new oil field and the ramping up of Jubilee (field)” he said. Non-oil growth for the second quarter of this year was 5.0 percent.

Industry grew 11.1 percent from the same quarter a year earlier, followed by agriculture at 4.8 percent and services at 0.5 percent based on recalculated data, Wadieh said.

Ghana’s economy was 24.6 pct bigger last year than estimated prior to an overhaul of how data is calculated, the statistics office said last month.

Mediclinic flags drop in H1 core profit, shares dive 19 percent

JOHANNESBURG (Reuters) - Mediclinic on Wednesday flagged an 8 percent drop in core profit for the first six months of the year, sending its shares tumbling 19 percent.

The private hospital group, which is listed in London and Johannesburg, blamed weaker-than-expected growth in admissions in Switzerland and a slow second quarter in Southern Africa.

Group adjusted core profit, or EBITDA, would fall to 214 million pounds ($282 million) versus 232 million pounds in the same period a year ago.

Mediclinic said it has faced stricter regulations in recent years in Switzerland that have hobbled growth. The firm did not specify the changes introduced under the new regulations.

In May, the company took a $863 million writedown on its Swiss business, which plunged the company into an annual loss of 288 million pounds.

The firm’s Chief Executive, Ronnie van der Merwe, said the regulatory changes in Switzerland had a greater than expected impact on hospital admissions, while in Southern Africa, there were fewer pneumonia and bronchitis cases during the winter.

Van der Merwe said the group expects full year revenue growth in the Middle East to be in the high single-digits from the previously low double-digit guidance range.

Mediclinic’s shares in Johannesburg tumbled 19.78 percent to 71.40 rand at 0941 GMT. In London, where Mediclinic has its main listing, shares fell 19.38 percent.

Founded in 1983 in Stellenbosch, South Africa, Mediclinic has transformed itself from a southern African player to one of the biggest hospital groups in Europe and the Middle East.

($1 = 0.7601 pounds)

Firms defy pressure over Saudi conference

Major companies registered for a business conference in Saudi Arabia next week still plan to attend, despite growing pressure for a boycott.

Senior executives from firms including Goldman Sachs, Pepsi, Thales and EDF are expected to be there, along with US Treasury Secretary Steve Mnuchin.

The event was set to feature 150 speakers from 140 organisations.

But at least 30 delegates have dropped out since the disappearance of Saudi journalist Jamal Khashoggi.

A critic of the government and a columnist for the Washington Post, Mr Khashoggi vanished on 2 October after visiting the Saudi consulate in Istanbul.

Turkish authorities say he was killed in the building by Saudi agents, but Saudi Arabia has dismissed the accusations as "lies".

'Davos of the Desert'

Consultancy firms McKinsey, PWC, Ernst & Young, Deloitte, BCG, Oliver Wyman, and Bain & Company are all sponsors of the event, along with German conglomerate Siemens and research company SWFI.

None responded to questions about whether or not they had plans to withdraw.

Germany consultancy firm Roland Berger, which is also sponsoring the event, said it was reviewing its position.

The BBC understands that Goldman will be sending a small number of attendees.

However a page with a list of confirmed speakers has been removed from the conference's website.

Dubbed the "Davos of the Desert," the three-day event is organised by Saudi Arabia's sovereign wealth fund and is an opportunity for firms to build relationships and secure lucrative contracts in the Kingdom. Politicians and business executives from Europe, North America and Asia were on the attendance list.

'Reviewing decision'

US Secretary of State Mike Pompeo travelled to Riyadh on Tuesday for talks with Saudi Arabia's King Salman and Crown Prince Mohammed bin Salman, who he said "strongly denied" any involvement in the disappearance of Mr. Khashoggi.

But dozens of firms have now shunned the Saudi business event in protest.

At least 30 high-profile speakers have withdrawn so far from organisations including HSBC, Uber and the International Monetary Fund. Sir Richard Branson has also halted talks over a $1bn (£756m) Saudi investment in Virgin space firms.

UK International Trade Minister Liam Fox is "reviewing his decision" over whether to attend, according to a spokesperson for the Department for International Trade.

'Beyond the pale'

Angus MacNeil MP, Chair of the International Trade Select Committee expressed his support for further boycotts.

"The behaviour of Saudi Arabia is utterly beyond the pale," said Mr. MacNeil. "They cannot operate with such savage impunity."

Human rights charity Amnesty International has also said businesses should "think twice" about attending.

Businesses should consider that it might damage their brands to be associated with a country that "bombs civilian targets in Yemen, imprisons human rights defenders and apparently disappears a journalist overseas", said Amnesty's Economic Affairs Programme Director Peter Frankental.

However a spokesperson for the Confederation of British Industry (CBI) said it was up to individual companies to "look at the situation carefully and make their own judgments".

Cypriot budget airline Cobalt has suspended operations

Low-cost airline Cobalt has cancelled all flights from midnight Wednesday according to a statement on its website.

The carrier, which has operated flights in and out of Cyprus since 2016 - including flying UK holiday-makers to the island - has suspended operations.

Local media said Cobalt had failed to reach a deal with a potential new investor.

The Cyprus Mail said the airline's main backer is China's Avic Joy Air.

The airline's statement said future flights would not operate due to "indefinite suspension of Cobalt's operations", and advised passengers not to go to the airport.

They should contact their credit card provider or travel agent instead, it added.

It is not yet clear how many passengers have been affected, but nine flights had been scheduled to arrive and nine to depart from Larnaca airport on Thursday.

Cobalt flew to 23 destinations, including Heathrow, Stansted, Gatwick and Manchester, and had recently added a business class and frequent flyer programme.

Passengers reacted with concern on Twitter.

Cypriot Transport Minister Vassiliki Anastassiadou said the government would pay for tickets to help travellers get back to where they started from, but stressed it would only cover return tickets.

She said telephone numbers would be announced soon to help passengers stranded either in Cyprus or overseas.

The fate of the airline's 200 staff is unclear.

Before 2016, short-haul flights out of Cyprus were dominated by state-controlled Cyprus Airways. But it collapsed, which left room for the new operator.

Danish budget carrier Primera Air ceased trading earlier this month after 14 years of operation.--BBC

US shies away from calling China a currency manipulator

The United States has refrained from labelling China a "currency manipulator" in a move which may help defuse escalating tension over trade between the two countries.

President Donald Trump has previously accused China of keeping its currency weak to make exports more competitive.

Speculation that the US Treasury would make that claim formally this week has not been borne out, however.

China's policies were still of "particular concern" the Treasury said.

Beijing's lack of transparency and the recent weakness of the yuan continued to pose major challenges to achieving "more balanced trade", Treasury Secretary Steven Mnuchin said in a twice-yearly report on the foreign exchange policies of major US trading partners.

However, the Treasury did not find that China was directly intervening to undermine the currency's value.

The yuan fell to its lowest level against the dollar since January 2017 following the report.

President Trump argues the growth in Chinese exports to the US has destroyed American jobs. He has ordered tariffs on more than $250bn of Chinese exports to try to stem the US's growing deficit with China.

On the campaign trail and again this summer, he claimed China was pursuing a deliberate policy of keeping the value of the yuan low. The US dollar has strengthened against the yuan in recent months, prompting speculation that this month's report might contain formal claims of manipulation.

However at meetings of the International Monetary Fund in Bali, Indonesia last week, China's central bank governor Yi Gang said that Beijing would not engage in "competitive devaluation" or use the exchange rate as a "tool to deal with trade frictions".

'Dangerous undercurrents' threaten global economy

The US Treasury report also said it has was keeping India, Japan, Germany, South Korea and Switzerland on a monitoring list for extra scrutiny.--BBC

Trump moves to quit 144-year-old postal treaty

The US has announced plans to withdraw from a 144-year-old postal treaty, which the White House says lets China ship goods at unfairly low prices.

Under the treaty, a UN body sets lower international rates for packages from certain countries, a move originally designed to support poorer nations.

But the US says the discounts put American businesses at a disadvantage.

Officials said they hoped the notice of withdrawal would set the stage to agree a better deal.

"We're looking for a fair system," a senior administration official told reporters. "We do hope that ultimately we achieve a negotiated outcome."

The BBC's Asia business correspondent Karishma Vaswani says the move to pull out of the treaty is aimed at forcing the Chinese to give up the developing nation status they had when they first entered the pact back in 1969.

How does the system currently work?

International mailing rates are governed by the Universal Postal Union (UPU), a unit of the United Nations that traces its roots back to the 1870s.

It subsidises shipments from developing countries while setting higher rates for wealthier nations, including the US.

But the White House said China - a major global exporter - was now the biggest beneficiary of that system.

The US wants changes to the postal treaty to allow countries to set their own rates for parcels weighing under 2kg (4.4lbs). They are already allowed to do so for bigger packages.

The rise of international online shopping has led to a huge increase in the number of small parcels being sent via the postal system.

American firms say it can cost significantly more to post an item within the US than it does to send the same item to the US from China.

What is the US argument?

The bid to overhaul the treaty is part of US President Donald Trump's combative "America First" approach to trade, which has led to tariffs on billions of dollars in goods, attacks on existing trade treaties and criticism of multilateral agreements.

He has frequently singled out China, which exports more goods to the US than any other country.

How China is fighting back in the trade war

The US-China trade war so far

Officials said the discounts strain the finances of the US Postal Service, facilitate the shipment of counterfeit goods and distort pricing within the US, leading to higher fees for domestic companies.

Due to lower rates, foreign packages cost the US about $300m (£228.5m) each year, according to administration estimates.

The process of withdrawing from the treaty takes at least a year and the White House said it would be willing to remain in the UPU if negotiations were successful.

The US Postal Service and companies such as Amazon and FedEx have complained about the discounts for foreign shippers for many years.--BBC

eBay files lawsuit against Amazon over 'seller recruitment'

EBay has filed a lawsuit against Amazon, accusing the US retail giant of using illegal tactics to recruit sellers.

It says Amazon representatives abused eBay's internal email system to contact sellers - a violation of the marketplace's policies.

Amazon declined to comment on the case, which follows a letter from eBay demanding an end to the activity.

It had previously said that it was investigating the claims.

In the lawsuit filed in Santa Clara County, California, eBay says Amazon representatives created eBay accounts to solicit sellers, often sending messages within minutes of setting up their profiles.

The activity dates back to at least 2015 and involved dozens of Amazon representatives, who each sent hundreds of emails, it says.

EBay was alerted to the issue a few weeks ago by a seller and asked Amazon to stop.

'Unscrupulous conduct'

The lawsuit says the messages show Amazon was aware its practices violated eBay's use policies.

It says Amazon's practices "appear to be part of a larger pattern of aggressive, unscrupulous conduct" by the Seattle company.

EBay, which also owns the ticket resale site StubHub, is seeking monetary damages to be awarded at jury trial.

The California company, which launched in 1995, was an online shopping pioneer, developing a platform to connect buyers to sellers.

It now boasts more than 175 million active buyers, with sales of nearly $90bn via the platform last year,

But its lustre has faded amid increased competition, especially as Amazon's dominance lures more merchants to its own platform.

Last year, more than half of the items sold by Amazon came from third-party merchants.

Amazon overall is estimated to account for about half of retail dollars spent online in the US.--BBC

Chinese firm fined $1.3bn for illegal production of rabies vaccine

A Chinese vaccination firm has been fined $1.3bn (£988m) after it was found to have illegally produced the human rabies vaccine.

Changchun Changsheng had blended different batches of vaccine fluid and used expired fluid to produce some of the batches, according to state news agency Xinhua.

The company also falsified production data for the vaccine.

This is not the first major vaccine scandal to hit China.

Changchun Changsheng's pharmaceutical production licence has also been revoked and its illegally produced vaccines have been confiscated.

Some of the company's executives may also face criminal charges.

"This is the most stringent administrative penalty on record," an official at the China Food and Drug Administration told financial news website Caixin.

"The company must be held responsible for its intentional fraud."

'What kind of society am I living in?'

Earlier in July, it was revealed that Changchun Changsheng had falsified production data for its rabies vaccine.

The company was then ordered to halt production and recall its vaccines.

There was then no evidence of harm from the vaccine, but the scandal sparked a huge outcry in China, and thousands took to social media in anger.

"Thousands of mothers around the country are worried. Over 200,000 children could be affected. "What kind of society am I living in?" asked one person on the micro-blogging platform Weibo.

The incident also led to Chinese Premier Li Keqiang ordering a crackdown on the vaccine industry, saying the incident had "crossed a moral line".

This is not the first time substandard vaccines have been produced in China.

In 2016, an illegal vaccine ring which involved hundreds of people was uncovered.

Some $88m worth of vaccines were found to be inadequately refrigerated and were not transported in approved conditions.--BBC

Google unshackles Android-device firms

Google is dropping restrictions it imposed on Android-device-makers, following a clash with the EU.

It is ending a ban on manufacturers having a line-up that includes tablets and phones powered by alternative versions of the operating system to its own as well as ones that feature Google's own apps and Play Store.

It will also allow some of its services to be pre-installed without others.

But Google continues to appeal against a related €4.3bn (£3.8bn) fine.

The European Commission announced the penalty in July, after ruling that the US company had been using Android to illegally "cement its dominant position" in search.

Unbundled apps

Google announced the changes to its policies in a blog.

It said the new licensing arrangements would come into effect on 29 October and apply to devices shipped to the European Economic Area (EEA) - which includes Norway, Iceland, and Liechtenstein in addition to the EU.

Until now, Google insisted that if handset- and tablet-makers pre-installed apps such as YouTube and Google Maps, they also had to pre-load its web browser Chrome and Search apps.

Chrome and Search will no longer be bundled in this way.

Google appeals against €4.3bn Android fine

EU hits Google with giant penalty

Google fined over Shopping service

But one consequence of the move, Google said, was that manufacturers would face a new fee.

"Since the pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android, we will introduce a new paid licensing agreement for smartphones and tablets shipped into the EEA," wrote executive Hiroshi Lockheimer.

"Android will remain free and open-source."

It has not stated how much the new fees will be or whether consumers should expect a significant rise to device prices as a consequence.

'Free to experiment'

The EU's Competition Commissioner, Margrethe Vestager, has previously suggested that Google's restrictions prevented "forked" versions of Android, including Amazon's Fire OS, from having more impact.

Until now, many manufacturers have focused instead on adding their own "skins", which involves making user interface changes to Google's stock version of Android but not deeper alterations to the code that might cause some services to become incompatible.

One industry watcher said he now expected to see more experimentation.

"If, for example, Samsung wanted to do a really pure Samsung device based on a forked version of Android, with a Samsung browser, Samsung Maps and Bixby as the lead voice assistant - but without the parallel Google services - they could," said Ben Wood, from the CCS Insight consultancy.

"The big challenge for phone-makers is to try to replicate the success that Apple has had with monetising its devices after they have been bought, which it has done by selling services such as iCloud storage and Apple Music.

"That's been harder to do for Android licensees as a lot of the revenue from their devices has flowed to Google via things like Search and Maps."-BBC

Canada becomes second country to legalise recreational marijuana

The first recreational cannabis to be legally bought in Canada was purchased at midnight on Wednesday (02:30 GMT) on the eastern island of Newfoundland amid queues of hundreds of people.

Canada has become the second country after Uruguay to legalise possession and use of recreational cannabis.

Medical marijuana has been legal in the country since 2001.

But concerns remain, including about the readiness for police forces to tackle drug impaired driving.

Information has been sent to 15m households about the new laws and there are public awareness campaigns.

As it happened: First day of legal Canadian pot

Who wins and who loses under new law

Ian Power, from the town of St John's began queuing at 20:00 local time so he could "make history". Newfoundland is half an hour ahead of the next province to the west.

"It's been my dream to be the first person to buy the first legal gram of cannabis in Canada, and here I finally am," he said.

Canadian provinces and municipalities have been preparing for months for the end of cannabis prohibition. They are responsible for setting out where cannabis can be bought and consumed.

This has created a patchwork of more or less restrictive legislation across the country.

How ready is Canada for legal cannabis?

There remain unanswered questions on some key issues around how legal cannabis will work in Canada.

A number of analysts are predicting a shortage of recreational marijuana in the first year of legalisation as production and licensing continues to ramp up to meet demand.

And the marketplace itself is still in its infancy.

Ontario, Canada's most populous province, will only begin opening retail stores next spring, though residents will be able to order cannabis online.

British Columbia, one of the provinces with the highest rates of cannabis use, will only have one legal store open on Wednesday.

Canada cannabis legalisation: 'We know the world is watching'

Canada legalises recreational cannabis use

Until retail locations are more widely available, some unlicensed cannabis retailers, which have flourished in the years since the law was first proposed, may stay open.

It is unclear if police will crack down on them immediately, or if they will turn a blind eye.

What's at stake?

Jessica Murphy, BBC News, Vancouver

Legal pot has been an inescapable topic for months in Canada, as governments and companies prepared in earnest for 17 October.

That day is finally here, and Canadians will learn just how much - or how little - the new framework will change the country. But this is not just a domestic affair.

With global trends shifting away from a strict prohibition of cannabis, the world will be watching this national experiment in drug liberalisation.

A measure of success - whether legalisation will be a win for Prime Minister Justin Trudeau ahead of the 2019 federal election - will depend on whether it meets his stated goals: restricting access of the drug to youth - who are among the heaviest users in Canada - reducing the burden of cannabis laws on the justice system, and undercutting the illicit market for the drug.

And if the outcomes are positive, other countries might just be more willing to follow suit.

Why is Canada legalising cannabis?

Legalisation fulfils a 2015 campaign promise by Prime Minister Justin Trudeau, the leader of the governing Liberal Party.

The prime minister has argued that Canada's nearly century-old laws criminalising use of the drug have been ineffective, given that Canadians are still among the world's heaviest users.

Legalising cannabis: What you need to know

The cops joining the marijuana business

He said the new law is designed to keep drugs out of the hands of minors and profits out of the hands of criminals.

The federal government also predicts it will raise $400m a year in tax revenues on the sale of cannabis.

Cannabis possession first became a crime in Canada in 1923 but medical use has been legal since 2001.

What is the situation elsewhere?

Canada follows in the footsteps of Uruguay, which became the first country in the world to legalise the sale of cannabis for recreational use in 2013. A number of US states have also voted to end prohibition.

Medical marijuana is also gaining ground in many European countries. Portugal and the Netherlands have decriminalised the drug.

South Africa's highest court legalised the use of cannabis by adults in private places in September, though the sale of the drug remains a crime.

In April, Zimbabwe became the second country in Africa, after Lesotho, to legalise the use of marijuana for medical purposes.

Reality Check: Has cannabis legalisation in some US states led to more users?

Nine US states have legalised recreational marijuana use while many more allow its use on medical grounds.

What are the new rules around cannabis?

Adults will be able buy cannabis oil, seeds and plants and dried cannabis from licensed producers and retailers and to possess up to 30 grams (one ounce) of dried cannabis in public, or its equivalent.

Edibles, or cannabis-infused foods, will not be immediately available for purchase but will be within a year of the bill coming into force. The delay is meant to give the government time to set out regulations specific to those products.

It will be illegal to possess more than 30 grams in public, grow more than four plants per household and to buy from an unlicensed dealer.

Penalties for some infraction will be severe. Someone caught selling the drug to a minor could be jailed for up to 14 years.

Some critics say the penalties are too harsh and not proportional to similar laws like those around selling alcohol to minors.

What are the concerns?

On Monday, the Canadian Medical Association Journal published an editorial calling legalisation "a national, uncontrolled experiment in which the profits of cannabis producers and tax revenues are squarely pitched against the health of Canadians".

There are also still some legal wrinkles to be worked out.

Canada has brought in new drug impaired driving offences, but doubts remain about the reliability of screening technology and the potential for drugged driving cases to clog up the courts.

Federal statistics indicate that about half of all cannabis users do not believe their driving is impaired after taking marijuana.

On Wednesday, government officials announced they will present legislation intended to fast-track pardon applications of people who have been convicted of possession under 30g (one ounce). There are currently some 500,000 Canadians with existing criminal records for possession.

The change in national drug policy has also created headaches with the US, where the drug remains federally a controlled substance.

On Tuesday, the US Customs Border Protection Agency said border guards will have "broad latitude" to determine who is admissible to the country.

Border guards may ask Canadians if they smoke cannabis, and deny them entry if they believe they intend to do so in the US.

Canada has also been rolling out signs at all airports and border crossings to warn travellers that crossing international borders with the drug remains illegal.--BBC

INVESTORS DIARY 2018

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