ONS Edition 34

Article: How Cross-Border M&A May Be Impacted by Trump Administration Tax Reform. (McDermott Will & Emery, 27th December 2024)

Article Summary: Within his first one hundred days in office, the incoming administration of President Trump intends to do all in its power to prolong the expiring tax provisions of the Taxation and Customs Act (TCJA). The disagreements that have arisen among Republicans in Congress have, however, brought up issues over the speed with which these provisions may be extended. House Ways and Means Committee Chair Jason Smith argues for a single package to be introduced in 2025, but Senate Republican leaders want two separate reconciliation bills to be introduced the following year. The first bill would handle border policy, while the second bill would address tax issues. It is possible that extending the provisions of the Tax Cuts and Jobs Act beyond the year 2025 would have a substantial impact on cross-border mergers and acquisitions by preserving the existing tax incentives and regulatory environment that shape these deals. Tariffs of between 10% and 20% on all imports, between 60% and 100% on imports from China, and between 100% and 200% on select imports from Mexico are among the tariffs that have been proposed by the Republican government of President Donald Trump. By raising the price of imported products, decreasing the attractiveness of foreign acquisitions, and perhaps leading to retaliatory tariffs from nations that are impacted, these taxes have the potential to have a significant influence on cross-border mergers and acquisitions. With the goal of achieving a rate of 20% for corporations and a rate of 15% for items produced in the United States, the incoming administration of President Trump is proposing to reduce corporate tax rates even more. The intellectual property buying program that Trump has suggested places an emphasis on stronger enforcement and greater fines for IP infractions. This might make enterprises in the United States more appealing targets for cross-border mergers and acquisitions. The heightened trade tensions and enforcement actions, on the other hand, may potentially create a climate that is unclear for investment. The future of Pillar Two, which seeks to enforce a worldwide minimum tax on businesses with typical gross sales that are more than 750 million euros, is still unknown. The anticipated disalignment may continue to make international mergers and acquisitions activities more difficult.

Article: AI and Employee Data Protection in the European Union: 8 Key Takeaways for Multinational Businesses. (Fisher Price, December 31st, 2024)

Article Summary: Artificial intelligence (AI) is revolutionizing the workplace by automating tasks and optimizing processes. However, it also raises significant legal issues, particularly regarding employee data protection. The European Union has strict data privacy laws that can impact AI use in employment-related decisions. Employers must understand the EU AI Act, which regulates AI systems in high-risk areas. The GDPR Data Protection Compliance requires employers to ensure AI systems comply with key principles, including transparency and data minimization. Human Oversight Requirement Article 22 states that AI should assist human decision-making in critical employment processes like hiring and terminations. Discrimination risks are also a concern, as organizations need to actively monitor and mitigate biases in AI algorithms to prevent discrimination. AI can aid HR efforts in various ways, such as recruiting, workforce management, performance tools, and retention and engagement programs. However, there are critical risks associated with using AI for workplace-related tasks. These include discriminatory decisions, the "black box" phenomenon, and data protection risks. Legal and practical considerations for AI use include handling employee data, processing it in accordance with GDPR requirements, and ensuring transparency and consent. The EU AI Act regulates AI systems used in high-risk areas, distinguishing between low, high, or unacceptable risk. Companies violating the law can face fines of up to 35 million euros or 7% of the previous year's global turnover. Mistakes when using AI tools are common, as employees are generally responsible for the results. Secret use of AI can lead to liability risks, such as breach of contract or potential discrimination. To minimize these risks, organizations should create clear guidelines for AI use, including setting parameters, training employees, and ensuring proper functioning through regular audits and tests. Data protection challenges arise when using AI in the workplace, particularly regarding processing personal data. Key problem areas include the legal basis for processing personal data, feeding AI systems with training data, automated decision-making, data protection impact assessment, big data analytics, and cloud storage. The EU-U.S. data protection framework was adopted in 2023, allowing personal data to be transferred from the EU to participating companies certified according to the EU-U.S. Data Privacy Framework. To ensure responsible use of AI in the workplace, organizations should select specific AI providers, restrict use, label AI-generated content, create guidelines for information sharing, address potential misuse, protect trade secrets, comply with data protection regulations, and designate a contact person for all questions regarding AI use. In conclusion, organizations should develop policies that align with legal requirements and focus on the responsible use of AI while safeguarding employee rights.

Article: New Congress, More Scrutiny? Preparing for Congressional Oversight and Investigations. (Pillsbury Winthrop Shaw Pittman LLP, 2nd January 2025)

Article Summary: Because of the full dominance of the Republican Party and the presence of President-elect Trump in the White House, organizations and NGOs should prepare themselves for an increase in the number of investigations conducted by the Congress as the 119th Congress starts. The identification of waste in federal spending, the misuse of government resources, the examination of companies with ties to China, technological practices, the supervision of financial services, and environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI) policies are anticipated to be the primary focuses of oversight activities. To successfully interact with Congress and react to investigatory requests, which may involve demands for documents or testimony, organizations need to conduct vulnerability assessments, increase compliance, and build a strategic plan. It is a strong weapon that enables parliamentarians to examine concerns across a wide range of subjects, provided that the inquiries may possibly connect to legislative action. Congressional oversight is a formidable instrument. In both the House of Representatives and the Senate, the ability to exercise oversight is decentralized and distributed among several committees, each of which has its own jurisdiction and set of objectives. To carry out their investigations, committees have a significant amount of authority, which allows them to do things like conduct hearings, gather records, take testimony, and issue directive requests or subpoenas to force the production of evidence. It is possible for Congress to adjust its investigations to shifting priorities and concerns because to the supervision system that is both flexible and comprehensive. However, this structure also creates an atmosphere that is hard and unexpected for individuals who are being investigated. Attorneys who represent organizations that are subject to congressional supervision should build a working relationship with congressional overseers that is based on good faith and be receptive to their requests and concerns while maintaining the prerogatives, rights, and interests of the institutions they represent. The leaders of the Republican Party have indicated that the upcoming Congress will concentrate on several different topics, such as higher education, China, technology companies, financial services, diversity, equity, and governance (DEI) policies, and federal spending and government resources. Another area that will be prioritized is China. There is a possibility that these regions may be investigated for claimed instances of waste, fraud, and abuse, in addition to the use of Uighur labour that is coerced. Additionally, it is anticipated that technology corporations would be examined for the claimed repression of conservative perspectives, procedures regarding data security, and the influence of foreign nations. Financial services will be studied to set the groundwork for legislative action to remove rules and supervisory activity that were implemented under the Biden administration. These laws and activities are believed to have restricted the ability of the bitcoin and guns businesses to access banking services. Assessing risks and increasing compliance are two of the activities that businesses should take to be ready for inquiries by the legislative branch. It is possible to predict future areas of examination by monitoring the goals and trends of the legislative body. This allows for the customization of internal audits and preparations appropriately. The receivers of funding and contractors should have a complete understanding of all commitments and adhere to them to reduce the likelihood of termination and claw back. To adequately prepare for congressional investigations, it is not enough to just be reactive; rather, it is necessary to cultivate strong ties with important committees and members of Congress who are concerned about their industry and organization. It is possible to manage the process, defend interests, and react effectively by enlisting the assistance of specialists who are familiar with the political dynamics, public policy concerns, processes, and legal issues associated with congressional supervision. Companies and their executives may face difficulties as well as opportunities when it comes to dealing with investigations conducted by Congress. Businesses have the ability to present themselves as problem-solvers, work together with Congress to find solutions to difficulties, and even influence legislation in ways that are beneficial to their sector if they take a proactive approach. The Government Law Strategies and Government Investigations and White-Collar Defense teams of Pillsbury can assist in mitigating risks and seizing opportunities that are provided by congressional investigations.

Article: FTC Keeps Sights on Data Brokers that Sell Sensitive Location Sites. (Sheppard Mullin Richter & Hampton LLP, 20th December 2024)

Article Summary: The complaints that were lodged against Gravy Analytics and Mobile Walla over the way they handled the sensitive location information of customers have been resolved by the Federal Trade Commission. The Federal Trade Commission (FTC) said that Gravy Analytics had engaged in the illegal tracking and sale of exact location information on millions of customers, which might have resulted in consumers suffering damage. Mobile Walla was unable to gain permission from customers directly, even though it built audience segments based on trips to health facilities and places of worship. The two businesses came to an agreement that they would no longer sell sensitive location information, extract sensitive locations from their respective data sets, and establish supplier evaluation systems to verify customer permission.