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With dealmakers optimistic that global M&A activity will pick up, in this first edition of Briefed In, we explore why proactively mapping out the key regulatory issues around merger control, foreign investment review and foreign subsidies can make or break a deal. Elsewhere, we look at how to build organizational resilience through supply chain diversification and take a deeper look at the implications of the FTC's ban on fake reviews. Our market spotlight is on India's growing appeal in the renewable energy sector.
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Proactivity: Your Roadmap to Deal Success
Navigating Geopolitical Risk: Readiness and Resilience
India Inbound FDI and M&A: Spotlight on Renewable Energy
MARKET SPOTLIGHT
The FTC Strengthens its Stance on Fake Reviews: Your Organization Should Too
75 Years of Baker McKenzie: Destination Chicago
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Regulatory scrutiny poses a critical challenge for dealmaking. Gain practical tips to stay ahead.
Amid geopolitical uncertainty, place risk readiness at the top of your priority list.
As India becomes an attractive destination for M&A and FDI, learn about opportunities and trends on the horizon.
With the FTC's ban on fake reviews underlining the need to protect consumer trust, gather key steps to ensure your due diligence.
Celebrate 75 years of Baker McKenzie by exploring how the firm has created an inclusive space within the legal industry.
A new resource from Baker McKenzie, bringing you actionable advice on doing business globally.
FTC Strengthens its Stance on Fake Reviews: Your Organization Should Too
75 years of Baker McKenzie: Destination Chicago
With dealmakers optimistic that global M&A activity will pick up, in this first edition of Briefed In, we explore why proactively mapping out the key regulatory issues around merger control, foreign investment review and foreign subsidies can make or break a deal. Elsewhere, we look at how to build organizational resilience through supply chain diversification and we take a deeper look at the implications of the FTC's ban on fake reviews. Our market spotlight is on India's growing appeal in the renewable energy sector.
Proactivity: Your Roadmap to dEAL Success
In recent years, many jurisdictions' merger and foreign investment control regimes have been expanded and regulatory authorities have stepped up their efforts of robust enforcement. Mapping out the key regulatory issues can make or break a deal. "With a good understanding of the regulatory jigsaw, a clear regulatory roadmap, and smart transaction planning and implementation, M&A transaction parties will be able to cope with regulatory headwinds and still bring transactions home," says Florian Kästle, Partner, Frankfurt.
Trend Forecast: The Top Three Shifts Shaping the M&A Landscape
Understanding the trajectory of key regulatory issues around merger control, foreign investment review and foreign subsidies is essential to navigate the complexities of M&A transactions.
The regulatory landscape for M&A transactions is undoubtedly complex. By understanding the key regulatory issues and preparing early in the transaction, buyers and sellers can more confidently navigate the challenges of regulatory scrutiny and see their deal through.
Merger Control: Broader Scope, Sharper Scrutiny Traditionally, merger control has focused on horizontal mergers impacting market share. But today, regulatory bodies are casting a wider net, scrutinizing deals that could harm competition more broadly, meaning more deals are being caught in the regulatory web. Key developments include: New theories of harm: Growing demands for broader political and societal considerations in antitrust analysis have led to the increasing examination of non-price factors such as data privacy, innovation, environmental impact, access degradation and self-preferencing. Stricter enforcement in innovative and R&D intensive industries: The technology and healthcare sectors are under heightened scrutiny in efforts to preserve dynamic competition and foster nascent innovation. Strong focus on internal documents: Regulators are increasingly requesting access to internal documents, such as board meeting minutes, to explore the rationale behind a deal. Dealmakers need to be mindful of this.
Foreign Investment Review: From Niche to Norm Foreign investment review (FIR) has become a significant hoop to jump through for many M&A transactions. While the focus of many regimes is on “national security,†they are broadening to include the need to retain emerging technologies and other industrial policy considerations. Key developments include: Sector expansion: FIR regimes have significantly broadened their scope beyond traditional sectors like defense and nuclear energy to include critical infrastructure, healthcare, biotechnology, artificial intelligence and robotics. Enforcement is tightening: Many jurisdictions have introduced mandatory FIR filings, with pre-acquisition clearance becoming a requirement. Authorities are proactively identifying and reviewing unnotified transactions, which can result in fines for non-compliance. Broad scope of reviewable transactions: Many jurisdictions have lowered the thresholds of ownership that trigger FIR. While in previous years FIR was triggered by the acquisition of a majority stake only, in many jurisdictions today FIR starts already with the acquisition of 25%, 10% or, in extreme cases (e.g., investments in cybersecurity companies in Italy) as low as 3%.
Foreign Subsidies Regulation: A New Dimension of Regulatory Risk The European Union’s Foreign Subsidies Regulation (FSR), in effect since October 2023, introduced a new layer of complexity to large, cross-border M&A transactions involving EU companies. Aimed at leveling the playing field, the FSR targets subsidies granted by non-EU governments to companies operating within the EU. The FSR implements a clearance requirement for transactions very similar to EU merger control. Key developments include: Broad definition of foreign subsidies: The FSR includes a wide range of subsidies, such as grants, loans, tax benefits and commercial transactions with public entities, making a wide range of companies subject to review. Extensive information requirements: Companies must provide detailed information about the transaction, business strategy and all foreign subsidies received in the past three years. Unclear standards for review and remedies: The FSR’s criteria for what constitutes market distortion and the types of remedies are not well-defined, adding uncertainty to M&A planning and execution.
Merger Control
Foreign Investment Review
Foreign Subsidies Regulation
Identify Regulatory Issues early on
Communicate Effectively
Stay Realistic
Anticipate Remedies
Conduct a regulatory risk assessment early on to determine if national security and/or antitrust concerns exist. Not having a clear analysis to put forward to a seller could undermine a buyer’s negotiation position.
Anticipate potential regulatory concerns with possible buyers to strengthen your position in negotiations. Work with the buyer to pre-emptively address regulatory concerns and allocate risk in deal documentation.
Maintain an open dialogue with regulators early on and be prepared to explain exactly how the remedy will decisively dispose of any regulatory concerns.
Collaborate with the buyer to identify and communicate the competitive and innovative benefits of the transaction, supported by data, to facilitate regulatory review and minimize delays.
Incorporate potential delays into overall timing and consider the need for interim financial or operational adjustments.
Be upfront about any potential regulatory issues, including past compliance issues or areas that may be especially scrutinized. This builds trust and avoids complications later in the transaction.
Structure the deal to include clauses that allow for deal term adjustments if regulators impose conditions or if certain assets must be divested to achieve approval.
Be prepared for potential regulatory demands, including divestitures, and work closely with the buyer to keep the deal on track.
STAYING AHEAD
FOR BUYERS
FOR SELLERS
Samantha Mobley Partner, London
With increasing concerns over competition, national security and economic sovereignty, authorities worldwide are tightening their grip, making regulatory scrutiny a critical challenge for successful dealmaking. To ensure success in cross-border M&A, buyers and sellers must recognize proactivity as the key to managing regulatory risk. Below we’ve outlined some practical advice and current trends to help navigate this complex landscape from the outset.
Partner, London+44 20791 91956
Samantha Mobley
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NAVIGATING GEOPOLITICAL RISK
Navigating Geopolitical Risk
India Inbound FDI and M&A
The FTC Strengthens Its Stance on Fake Reviews
75 Years of Baker McKenzie
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Florian Kästle
Proactivity: Your Roadmap to Success
India inbound FDA and M&A
The FTC Strengthens its Stance on Fake Reviews
Conduct targeted due diligence early on, particularly in sectors such as technology and healthcare where innovation and market concentration are top concerns.
Anticipate potential regulatory concerns and address these issues during the due diligence phase to strengthen your position in negotiations.
Identify Regulatory Issues
Maintain an open and ongoing dialogue with regulators from the outset to work out potential needs for remedies, divestitures or behavioral commitments.
Identify and communicate the competitive and innovative benefits of the transaction, supported by data, to facilitate regulatory review and minimize delays.
Structure the deal to include clauses that allow for deal term adjustments if regulators impose conditions or if certain assets must be divested for approval.
Be prepared for potential regulatory demands, including divestitures, and be flexible when negotiating these issues to keep the deal on track.
Trend Watch: Key Regulatory Issues
Merger Control: Broader Scope, Sharper Scrutiny Traditionally, merger control has focused on horizontal mergers impacting market share. But today, regulatory bodies are casting a wider net, scrutinizing deals that could harm competition more broadly, meaning more deals are being caught in the regulatory web. Key developments include: New theories of harm: Growing demands for broader political and societal considerations in antitrust analysis, have led to the increasing examination of non-price factors such as data privacy, innovation, environmental impact, access degradation, and self-preferencing. Stricter enforcement in innovative and R&D intensive sectors: The technology and healthcare sectors are under heightened scrutiny in efforts preserve dynamic competition and foster nascent innovation. On occasions where competitors of merging parties actively campaign against proposed deals, arguing that such mergers could create monopolies or stifle innovation, this scrutiny is further intensified. Strong focus on internal documents: Antitrust agencies are increasingly requesting access to internal documents, such as board meeting minutes, to explore the buyer's motivation for a deal.
Foreign Subsidies Regulation: A New Dimension of Regulatory Risk The European Union’s Foreign Subsidies Regulation (FSR), in effect since October 2023, introduced a new layer of complexity to large, cross-border M&A transactions involving EU companies. Aimed at leveling the playing field, the FSR targets subsidies granted by non-EU governments to companies operating within the EU. Key developments include: Broad definition of foreign subsidies: The FSR includes a wide range of subsidies, such as grants, loans, tax benefits and commercial transactions with public entities, making a wide range of companies subject to review. Extensive information requirements: Companies must provide detailed information about the transaction, business strategy and all foreign subsidies received in the past three years. Unclear standards for review and remedies: The FSR’s criteria for what constitutes market distortion, and the types of remedies are not well-defined, adding uncertainty to M&A planning and execution.
Trend watch: Diversifying supply chain operations
In today's ever-changing landscape, geopolitical disruption has become the new normal. Businesses, faced with an increasingly uncertain environment, have had to flex their operations in response and have placed risk readiness at the top of their priority list. We have seen significant change and disruption over the past couple of years, with the recent US election results adding to business uncertainty going forward, heightening the potential risk of sizeable trade tariffs and further tensions with China. Business leaders have a responsibility to their shareholders and stakeholders to think deeply about these pressing issues. Global uncertainty has always been a feature of international dealmaking but not to the extent that we are seeing play out today. Perhaps one of the most important risk mitigation tools is to diversify supply chain operations. A business which reduces its dependency on a single market will be more able to adapt to geopolitical disruptions and any subsequent fallout. The Russian invasion of Ukraine is a prime example. "When you go to a company and essentially tell them to take out and excise what was the 11th largest economy from their manufacturing base, their employee base, supply chains and funds flows — that was one huge undertaking that companies weren't prepared for," explains Sunny Mann, Chair of International Trade and Sanctions Group.
Sunny Mann Chair of International Trade and Sanctions Group
The business that is going to thrive most through the current turbulence is the one that is not overly exposed to any single market. It's also the one that is able to adapt to unexpected turbulence."
As such, it’s little wonder that many organizations are reconsidering their supply chain locations. Some are looking at:
NEARSHORING
INSHORING
FRIENDSHORING
Staying Ahead: Conducting Assessments
To ensure a more diversified supply chain, businesses need to conduct an assessment to help identify which market is best placed to support operations, reduce their risk profile and enhance growth in a market that may be a better match overall. This involves a close review of foreign investment controls, tax regimes, customs and employment regulations to build a picture of that market’s viability. "It's about working out which market out there is going to reduce those costs and allow a successful expansion into new markets," Mann says. Figuring out which legal framework will be complementary –and where there is effective regulation – is a key factor too.
Anne Petterd Partner, Sydney
Businesses may prioritize countries where they launch products based on regulatory certainty. Greater regulatory certainty can provide a faster path to finalizing products for launch even if the regulatory constraints are more onerous.
Key steps to consider in your geopolitical risk assessment
What regulations and incentives are available for new businesses? e.g. India's "Make in India" initiative
Are any treaties in place protecting foreign investments? e.g. the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Do agreements exist that facilitate frictionless trade? e.g. the United States Mexico-Canada Agreement.
Are there any generous tax incentives?
Do you have to factor in punitive customs duties?
Does the market have a common target for anti-dumping tariffs?
Are any tight export controls and sanctions regimes in place?
What is the predictability of operating in the local regulatory environment?
Is there a ready-to-access and reliable judicial system?
Will your IP rights be respected?
What practical issues need to be considered? Issues could include access to labor, raw materials, a strong local infrastructure and manufacturing base and technology capabilities.
Does the market offer benign foreign investment controls? e.g. Singapore has favorable foreign investment policies.
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This level of preparedness is now a must-have for businesses. Companies are also exploring new trading routes that might not have been previously considered, while an emerging trend of bilateral agreements also highlights a quicker-to-market option that businesses are actively encouraging. Supply chain resilience is operational resilience, and healthy supply chains are critical to an organization’s success.
Want to explore new markets and assess your geopolitical risk? Our global international trade compliance team capabilities can help you.
54% of US-based buyers and50% of EU-based buyers plan to source more from suppliers in their home and nearby regions in 2024
64% of global buyers plan to use nearshoring and reshoring as part of a supply chain strategy
42% of organizations plan to pursue a friend shoring supply chain strategy
QIMA data
ECB supply chain risks data
Chair of International Trade and Sanctions Group +44 20791 91397
Sunny Mann
Partner, Sydney +61 28922 5888
Anne Petterd
Are you overly exposed to a single market? What are the potential opportunities in any new market?
PROACTIVITY: YOUR ROADMAP TO SUCCESS
INDIA INBOUND FDA AND M&A
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EVALUATE
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ENSURE
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PRODUCTIVITY: YOUR ROADMAP TO SUCCESS
Partner, London +44 20791 91397
In today's ever-changing landscape, geopolitical disruption has become the new normal. Businesses, faced with an increasingly uncertain environment, have had to flex their operations in response and have placed risk readiness at the top of their priority list. We have seen significant change and disruption over the past couple of years and the recent US election results add to the business uncertainty going forward, including the potential risk of sizeable trade tariffs and further tensions with China. Business leaders have a responsibility to their shareholders and stakeholders to think deeply about these pressing issues. Global uncertainty has always been a feature of international dealmaking but not to the extent that we are seeing play out today. Perhaps one of the most important risk mitigation tools is to diversify supply chain operations. A business which reduces its dependency on a single market will be more able to adapt to geopolitical disruptions and any subsequent fallout. The Russian invasion of Ukraine is a prime example. "When you go to a company and essentially tell them to take out and excise what was the 11th largest economy from their manufacturing base, their employee base, supply chains and funds flows — that was one huge undertaking that companies weren't prepared for," explains Sunny Mann, Partner London.
Sunny Mann Partner, London
Businesses may prioritise countries where they launch products based on regulatory certainty. Greater regulatory certainty can provide a faster path to finalising products for launch even if the regulatory constraints are more onerous.
Staying Ahead: Conducting assessments
What practical issues examples need to be considered? Issues could include access to labor, raw materials, a strong local infrastructure and manufacturing base and technology capabilities.
Evaluate – Are you overly exposed to a single market? What are the potential opportunities in any new market?
This level of preparedness is now a must-have for businesses. Companies are also exploring new trading routes that might not have been previously considered, while an emerging trend of bilateral agreements also highlights a quicker to-market option that businesses are actively encouraging. Supply chain resilience is operational resilience and healthy supply chains are critical to an organization’s success.
India's robust economic growth, burgeoning middle class and strategic position as a technology and innovation hub has made it an attractive destination for foreign investors, particularly in the areas of inbound mergers and acquisitions (M&A) and foreign direct investment (FDI). "There are vast opportunities arising from the ever-increasing business between India and the UK, the Middle East and the US. Keeping in mind all the ongoing developments in the areas of tax legislation and labor law, as well as the relaxation of FDI policies, foreign venture and early-stage growth capital is also flowing into India’s booming start-up community. It is an exciting time to work alongside clients on some of the world’s most complex and innovative deals,†says, Mini Menon vandePol, Head of Asia Pacific Investigations, Compliance & Ethics Group and Global India Practice Head.
Sector Spotlight: Renewable Energy
This shift has led to increased inbound M&A activity in renewable energy, waste management and sustainable agriculture. From 2021 to 2023, energy deals as a share of total M&A deal value in India rapidly increased from 7% to 15% as did inbound private equity (PE) investment into solar and wind energy assets in India, mirroring a focus on PE’s "green asset" allocations. Recent notable deals include Canada Pension Plan Investment Board increasing its stake in solar company ReNew Energy Global, becoming the Nasdaq-listed solar company’s largest shareholder (2023) and Brookfield Renewable Partners committing to a USD1.07 billion investment into Avaada Energy, a leading renewable energy company in India, to expand its solar energy footprint in the region.
Trend Watch: Incentivizing Investment
Tax and labor regulatory shifts
In April 2024, the Indian government expanded the remit of the "angel tax" on primary and secondary share issuances or acquisitions in private (unlisted) Indian companies made above fair market value (FMV).
Sweeping changes to labor laws took place in 2019 and 2020 with four key labor codes implemented, covering wages, occupational safety, health and working conditions, social security and industrial reforms. These codes focus on consolidating, simplifying and modernizing the pre-existing 29 national, state and regional labor laws, in line with International Labor Organization standards.
Priya Shah, Associate, London
These watershed changes, once fully implemented, should reduce the administrative burden of doing business in India through the universalization of the minimum wage, minimum social security benefits and the processes for redundancies and industrial action."
Pre April 2024 “Angel tax†only applicable to such share issuances or acquisitions made by persons resident in India.
Post April 2024 “Angel tax†now also applicable to equity investments by foreign (non-resident) investors into private Indian companies, provided that the investment vehicle satisfies narrowly defined criteria.
Note that currently investors resident in 21 countries, including the US, United Kingdom and France, have received exemption status from this tax provided that their investment vehicle satisfies certain criteria.
Sector-Specific FDI Limits
The general trend of continued FDI policy relaxation includes changes to FDI thresholds across a number of key sectors including insurance, defense, telecoms and oil and gas. There are six key thresholds, each of which reflect how much FDI may be made into a business in a specific sector or sub-sector as a percentage of that business’s total equity capital.
Sector Examples
Up to 100% FDI Limit
Asset reconstruction companies
Biotechnology, Pharmaceuticals
Cival aviation (airports and air transport services)
Construction, Mining (precious stones, minerals, industrial metals)
Defence manuacturing, Electrical machinery and systems
E-commerce, Financial services, Telecom, White label ATMs
Manufacturing and processing of food products
Petroleum and natural gas refining
FDI Limit
Banking (private), Insurance, Private security agencies
74%
51%
49%
26%
20%
Multi-brand retail trading
Broadcasting content services, Pensions, Power exchanges
Print media (i.e. newspapers)
Banking (public)
For a full list of current sector-specific thresholds, please refer to data from Make in India.
*All information pertaining to deals mentioned in the article are available in the public domain. This article is being provided as general information and does not constitute legal advice.
As India continues on its growth trajectory, underpinned by an increasingly liberalized FDI policy and business-friendly regulatory reform, the M&A landscape is expected to evolve, providing opportunity for businesses.Foreign investors will need to navigate this landscape carefully, leveraging India’s strategic advantages while staying abreast of the latest legal and regulatory developments to maximize their investment potential.
Head of Asia Pacific Investigations, Compliance & Ethics Group and Global India Practice Head +85 22846 2562
Mini Menon vandePol
Associate, London +44 20791 91988
Priyah Shah
Partner, London +44 20791 91603
Ash Tiwari
What does a critically endangered bird have to do with India's energy transition?
How will India's policy reforms and regulatory developments shape inbound M&A and FDI?
Ash Tiwari Partner, London
Within this space, competition among foreign investors for solar and wind assets is predicted to continue as rising energy demands, lower production costs and increased capacity targets, supported by favorable government policies, make renewable energy targets valuable additions to the portfolios of the traditional energy giants, PE funds and multinational conglomerates alike."
The Indian government’s commitment to achieving its renewable energy targets, including the ambitious plan announced at COP26 to reach 500GW of renewable energy capacity by 2030, has attracted significant investments from global energy giants.
NAVIGATING GEOPOLITICIAL RISK
THE FTC STRENGTHENS ITS STANCE ON FAKE REVIEWS
Related Resource
THE FTC STRENGTHENS IT'S STANCE ON FAKE REVIEWS
This shift has led to increased inbound M&A activity in renewable energy, waste management, and sustainable agriculture. From 2021 to 2023, energy deals as a share of total M&A deal value in India rapidly increased from 7% to 15% as did inbound private equity (PE) investment into solar and wind energy assets in India, mirroring a focus on PE’s "green asset" allocations. Recent notable deals include Canada Pension Plan Investment Board increasing its stake in solar company ReNew Energy Global, becoming the Nasdaq-listed solar company’s largest shareholder (2023) and Brookfield Renewable Partners committing to a USD1.07 billion investment into Avaada Energy, a leading renewable energy company in India, to expand its solar energy footprint in the region.
The Indian government’s commitment to achieving its renewable energy targets, including the ambitious plan announced at the COP26 to reach 500GW of renewable energy capacity by 2030, has attracted significant investments from global energy giants.
India's robust economic growth, burgeoning middle class, and strategic position as a technology and innovation hub has made it an attractive destination for foreign investors, particularly in the areas of inbound mergers and acquisitions (M&A), and foreign direct investment (FDI). "There are vast opportunities arising from the ever-increasing business between India and the UK, the Middle East and the US. Keeping in mind all the ongoing developments in the areas of tax legislation and labor law, as well as the relaxation of FDI policies, foreign venture and early-stage growth capital is also flowing into India’s booming start-up community. It is an exciting time to work alongside clients on some of the world’s most complex and innovative deals,†says, Mini Menon vandePol, Head of Asia Pacific Investigations, Compliance & Ethics Group and Global India Practice Head.
Sweeping changes to labor laws took place in 2019 and 2020 with four key labor codes were implemented, covering wages, occupational safety, health and working conditions, social security and industrial reforms. These codes focus on consolidating, simplifying and modernizing the pre-existing 29 national, state and regional labor laws, in line with International Labor Organization standards.
While not necessarily accounted for on the balance sheet, trust is a valuable asset businesses need to protect. This is especially true for consumer-facing organizations where the cost of breaking consumer trust can even outweigh potential enforcement penalties.
The Federal Trade Commission (FTC) Tackles Fake Reviews and Testimonials Head On
In the United States, the FTC has recognized a rise in fake reviews and testimonials as a critical consumer issue, addressing it in a recent ban. This final rule "prohibits selling or purchasing fake consumer reviews or testimonials, buying positive or negative consumer reviews, certain insiders creating consumer reviews or testimonials without clearly disclosing their relationships, creating a company-controlled review website that falsely purports to provide independent reviews, certain review suppression practices, and selling or purchasing fake indicators of social media influence." While seemingly broad in scope, the reality is that this new rule is not a significant departure from the FTC’s existing stance on false advertising but instead makes it easier to enforce and seek penalties from bad actors. "These practices would likely always have been considered deceptive," says Rebecca B. Lederhouse, Counsel, Chicago.
Audit how they solicit their product and service reviews and testimonials
This development also raises the stakes for organizations to establish thorough governance processes and scrutiny not only around what they publish online but on the third parties they collaborate with. Organizations should take care to:
Rebecca B. Lederhouse Counsel, Chicago
If it isn't possible to audit all of your reviews before they are posted, at the minimum you need a robust process for checking a good percentage of what goes out and ensure you have the right terms to allow you to terminate any contracts with anyone who has a history of non-compliance with these rules."
1.
Review how they market and manage reviews and testimonials
2.
Subject reviews and testimonials to scrutiny
3.
Include the necessary contract terms when engaging with third parties
4.
Engage the help of specialist counsel where necessary
5.
Conduct due diligence around intermediary agencies they use to process reviews
6.
Even prior to this rule, the Federal Trade Commission has already made it clear that companies are responsible for the actions of the of the social media influencers that they hire as well as any intermediary agencies that they use to process their reviews."
Regulation Spotlight
The US isn’t the only jurisdiction taking action to protect consumers from fake reviews. In the EU and UK, the onus is on businesses to demonstrate “reasonable and proportionate†action to ensure the legitimacy of their published reviews, and in Singapore, fake reviews are a current enforcement priority, according to the Competition and Consumer Commission of Singapore (CCCS).
In 2020, the EU's the Omnibus Directive imposed an obligation on traders to justify the reasonable and proportionate steps taken to ensure the reviews on their site are genuine.
The Digital Markets, Competition and Consumers Bill added publishing consumer reviews without reasonable and proportionate action to verify that they are they are not false or misleading to its list of unfair commercial practices.
The CCCS issued a warning to a furniture retailer for publishing fake five-star product reviews on its website.
United Kingdom
Singapore
EU
Trend Watch: The rise of the Influencer
Social media influencer marketing has emerged as an organic and cost-effective alternative to traditional advertising. But deceptive advertising can still occur through undisclosed paid endorsements and the manipulation of metrics to inflate influence, putting it under the scope of the FTC’s latest ban. Legal liability aside, association alone can negatively affect an organization’s reputation if the influencer has engaged or is engaging in deceptive behavior. Before collaborating with an influencer, organizations should manage risk through proper due diligence and oversight. They should:
So You Think You Want To... Work With a Social Media Influencer? Learn more about leveraging social media influencers while protecting your reputation
ensure value alignment between the influencer and organization
investigate whether the influencer has been involved in controversies or instances of non-compliance
set contract terms outlining legal requirements (such as clearly identifying sponsored content)
continuously monitor the influencer campaign for compliance
The FTC ban is a stark reminder that the integrity of online reviews is inextricably linked to the credibility of businesses. Organizations must closely watch how they secure and solicit online reviews. Beyond protecting consumers, it is about preserving their business's long-term success. "If your consumers lose confidence and trust in what you are posting or what you're having posted on your behalf, then it can be as big or a bigger problem than having the FTC come after you. All you've got is your reputation," Lederhouse concludes.
Katia Boneva-Desmicht Global Chair, Consumer Goods & Retail, Paris
One certain way to erode consumer trust is through deceptive advertising tactics. While previously this might have taken the form of a billboard or television ad, fake and AI-generated online reviews are plaguing today’s digital marketplace. At the same time, consumers are increasingly relying on these online reviews to make informed decisions.Â
Global Chair, Consumer Goods & Retail, Paris+33 14417 6465
Katia Boneva-Desmicht
Counsel, Chicago +13 12861 8949
Rebecca B. Lederhouse
75 YEARS OF BAKER MCKENZIE
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One certain way to erode this trust is through deceptive advertising tactics. While previously this might have taken the form of a billboard or television ad, fake and AI-generated online reviews are plaguing today’s digital marketplace. At the same time, consumers are increasingly relying on these online reviews to make informed decisions.Â
Partner, Paris+33 14417 6465
For 75 years, Baker McKenzie has helped clients navigate the complexities of an ever-changing world. But before there was Baker McKenzie, Russell Baker and John McKenzie shared a taxi ride home by chance – planting the seeds for what would later become the world's leading global law firm. Alexandra Daniels and John McKenzie, both Partners in Chicago, share a taxi ride around the city and reflect on how the firm has created an inclusive space for those who might have felt excluded from the legal industry.
For 75 years Baker McKenzie has helped clients navigate the complexities of an ever changing world. But before there was Baker McKenzie, Russell Baker and John McKenzie shared a taxi ride home by chance – planting the seeds for what would later become the world's leading global law firm. Alexandra Daniels, Partner, Chicago and John McKenzie, Senior Counsel, Chicago share a taxi ride around Chicago and reflect on how the Firm has created an inclusive space for people who might otherwise have felt excluded from the legal industry.
