Niilo Mustonen - niilo.mustonen@pohjoisranta.fi Matti Niemi - matti.niemi@pohjoisranta.fi

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May 2012 Edition 12

The Government of Finland is completing anambitious review of its digital communications agenda. In an attempt to free a market under heavy regulatory burden, the Government wants toconsolidate 10 individual acts and over 450 paragraphsof legislation. The aim is to make the Finnish digitalcommunications market more attractive for new business opportunities.

One of the most contentious issues concerns theallocation frequency bands for mobile networks andother digital transmissions, such as TV-broadcasts.The government wants to raise upwards of €100Mfrom auctioning of fourth generation mobile internetbands, due to start early 2013.

The new policy might also change the Finnish TVmarket fundamentally. In 2016, a “superyear” when all existing TV distribution permits are up forrenewal, the Government may choose to also auctionthe TV permits instead of a qualitative criterionbased competition done in the previous years. TheGovernment’s planned changes might make the

Finnish market more attractive for new players – or on the other hand, much harder to compete in forthe existing companies.

Some parties of the government are after theadditional resources from a successful auction, whereas others believe open competition would riskdomestic TV channels. The playing field was changedrecently by coding into law the operations of theFinnish public TV broadcaster YLE, including its financing by a mandatory tax for households.

The digital communications agenda offers many possibilities for ICT, broadcast and media companies.A new TV channel FOX, owned by Robert Murdoch’sNews Corporation through the film studio 20thCentury Fox, opened recently in Finland, with ambitious plans for the future.

Russia: A new President

Following his election victory, Vladimir Putin assumedthe Presidential office once again on May 7th.Following Putin’s inauguration, his predecessor DimitryMedvedev was appointed as the new Prime Ministerand there is growing expectation of a significantMinisterial reshuffle and far-reaching personnel changes within government.

These changes will mostly affect the positions and activities of state companies and companies of strategic markets with a particular focus on the naturalresources sector. The promises made during the election will be scrutinised and held to account

because of the considerable social pressure that now exists for monopolies, state companies and the big private players.

Because of the uncertainty around public policy in the short term and the changing media landscape,organisations need to assess quickly the reputationalchallenges facing them and put in place a robust communications plan.

WelcomeThis is the latest edition of “Hot Issues” from Burson-Marsteller’s Global Public Affairs Practice. Every month,“Hot Issues” focuses on new forthcoming legislative or policy issues that will impact business from aroundour global network of 150 offices in Latin America, Asia-Pacific, Europe, Middle East, Africa and North America.

The public policy dynamics in each country, let alone a particular region can be very different, demonstratedby the different experts we utilize in the countries where we operate. Conversely, there are similarities andyou can see this in some of the issues we have picked out.

Hot Issues are designed to give you a flavour of our global perspective and should any of the items raise particular interest with you, please contact the designated person listed with that issue.

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Finland: Reform of digital communications agenda brings new business opportunities

Ksenia Trifonova - Trifonova@m-p.ru

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ContactSylwia Staszak - Sylwia.Staszak@bm.com

In recent months, the National Labor Relations Boardhas adopted several sweeping new rules that expandthe rights of labor unions under the National LaborRelations Act. One of the most controversial of thesemeasures is the so- called “Quickie” Election Rule, set to take effect after a district court denied the motionfor injunction filed by U.S. Chamber of Commerce. In addition to significantly decreasing the length of the campaign process, the Rule limits an employer'sopportunities to communicate with employees overissues of union representation before a vote is taken.Unions argue that reducing the time to hold an election limits the ability of managers to intimidateworkers. Employers counter that these changes effectively expedite the union election process while depriving employees of the ability to make a fully informed decision.

Under the NLRA, a labor union must petition the NLRBto hold an election, which historically took place anaverage of 56 days after the petition was filed andaccepted. The Quickie Election Rule shortens this pro-cess by imposing several technical and proceduralchanges. First, Hearing Officers will have the discretionto deny a request for pre- election hearings and maylimit the issues that can be raised, including whethercertain employees are eligible voters. Aside from limiting an employer’s right to challenge certainaspects of the election before it is conducted, the change will increase the possibility that employerswill need to bring post-election challenges due to votereligibility issues. Second, a party will no longer havethe right to file for review of a regional director’s decision and direction of the election. Finally, the Boardwill have discretion to hear and decide any appeals to

U.S.: Controversial “Quickie” Union ElectionRule Moving Forward

Brussels: the rise of food taxesOver the past months, different food-related taxeshave been pioneered in Austria, Denmark, Finland,France and Hungary, as well as in Switzerland. Italy, the UK and Ireland are also considering theintroduction of similar measures, with an impactassessment on a tax on sugar-sweetened drinks tobe presented to the Irish Health Minister in Octoberthis year, which will probably influence whetherother countries undertake similar measures or not.

While health advocates draw an analogy with tobacco taxes and argue that these measures can represent an effective tool to fight obesity bydecreasing the consumption of fatty foods, the food industry remains vehemently opposed to any such fiscal measures. Industry claims that they are regressive, do not lead to the desired health results,and have a negative business impact, and perceivesthem simply as an easy source of additional budgetin a time of fiscal austerity.

Food taxes are currently not subject to harmonisationat the EU level, as fiscal policy remains a competenceof Member States. However, the European Commissionhas recently recognised the growing momentum onthe topic and admitted that if a “critical mass” ofMember States were to introduce targeted fiscalmeasures there could be a case for EU harmonisationof food taxes. There is no doubt that even if there is

not yet a case for harmonisation, there is a big risk of a “domino effect” to introduce similar measures,not only in other EU Member States but also in othercontinents, which traditionally look at Europe as an example to follow. Some activities have beenundertaken in Australia, for example, where a leadingpublic health group has been calling on the federalgovernment to tax junk food and use the revenues to subsidise healthy foods.

While some fundamental questions are still to beanswered - i.e. the scientific grounds for such measures, the impact (if any) of such measures onconsumer choice, the impact of such measures onspecific food sectors, and who should bear the cost oftaxation - the reality is that some sectors of the foodindustry are already exposed to these measures incertain parts of Europe, bearing the additional costsand risking losing customers. If the process is notstopped and relevant arguments against food taxmeasures presented now, there is a significant riskthat food taxes will become a natural part of nationaltaxation systems in Europe, with other regions following soon after.

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the election process, whether they concern pre- or post-election issues, essentially denying employers the rightto contest aspects of the election, regardless of timing.

The cumulative effect of these changes will be to giveunions a tremendous advantage over employers in the organizing process. Unions will have months torepresent their side of the issue without employersbeing given formal notice that an organizing drive isunderway and without the assurance that there will be a sufficient window of time to discuss unionizing.Furthermore, unfair labor practice charges dealing withunion misconduct will only be dealt with after the election has taken place and even then, contestedissues will no longer be automatically reviewed.

Because of its unprecedented curtailment of employerrights, the new Rule has met substantial opposition,particularly from industry groups, such as the NationalAssociation of Manufacturers, and the pro- businessRight. Following its adoption, The U.S. Chamber ofCommerce and the Coalition for a DemocraticWorkplace filed a lawsuit in the Federal District Courtfor the District of Columbia challenging the Rule. OnApril 28th, the Court refused to delay implementation

based on violations of the first (free speech) and fifth(due process) amendments, and the NLRA, which mandates that employees be given the “fullestfreedom” in exercising their rights. The legal battle,however, is ongoing; despite the initial ruling, the Courtis expected to issue a formal decision on the merits by May 15th, before any election under the new rulewould be scheduled.

Given that implementation of the rule will likely takeplace in the absence of a court ruling to overturn thelaw, employers must address the effects the changeswill have on their businesses. An employer will haveto both campaign and prepare for what amounts to a trial at the same time, possibly in fewer thantwo weeks. Small businesses will be particularly burdened because the average small business owner does not have the resources to employ laborconsultants and in-house counsel. The Rule alsohighlights the importance of consistent, proactivelabor relations and communications policies.

ContactWade Gates - wade.gates@bm.com

The Environmental Protection Agency issued nationallimits on air emissions from hydraulic fracturing forthe first time on April 25th. These regulations are thelatest development in the ongoing public discoursesurrounding the method, its economic potential, and environmental effects. While the environmentalconcerns are diverse, the rules address only theimpact hydraulic fracturing has on air quality.

The regulations, which were issued in response to aUS District Court decision requiring the agency toreview air toxins and the natural gas industry, call forcompanies to use "green completions," a technologythat captures the released gas and fumes in tanksand transports them via pipelines to be sold as fuel.Because the methane and benzene released prior to a well’s production are believed to contribute togreenhouse gas emissions, the EPA estimates thatthe new rules will cause a 95% reduction in harmfulemissions from the more than 11,000 new wells each year.

The standards represent the willingness of the EPAand the Obama Administration to address the

inevitable natural gas boom in a measured and cautious manner. The only federal law that regulatedhydraulic fracturing air emissions was nearly thirteenyears old and covered only natural gas processingplants. In contrast, the new rule applies to wells, storage tanks, compressor stations, and pipelines aswell as bringing an estimated 1.1 million wells thatare already producing oil and gas under regulation.

Companies will be given two years to comply with the new rules, which were already widely implemented by state laws and adopted by industryas best practices. Despite this attempt to balanceenvironmental and economic interests, the EPA has faced criticism from both environmental andindustry groups. Environmental groups argue thatthe regulations are far too lenient and criticize thedecision to delay full implementation until 2015.Industry groups, on the other hand, claim that therule is redundant and its reporting requirementsimpose costs that outweigh its benefits.

The implications of the new rules may go beyond the U.S. borders; foreign nations that are in the early

U.S.: Environmental Protection Agency Issues First Ever Rules to Regulate Hydraulic Fracturing

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Hong Kong: Tightening of Rules Governing IPO SponsorshipHong Kong’s Securities and Futures Commission (SFC),the city’s financial market watchdog, plans to launch apublic consultation on proposals to tighten rules forfinancial institutions sponsoring initial public offerings(IPOs) in Hong Kong. The SFC plans to strengthen existing guidelines covering the conduct of listingunderwriters and add new rules on how sponsorsshould conduct their due diligence on the companiesbeing listed. Under the new plan, sponsors could beheld liable for criminal or civil charges if the listing prospectuses are found to be inaccurate or incomplete.

Analysts say that the proposed initiative will exposeinvestment banks and even their employees to legalcases and fines if a deal is challenged, and will likely make listing in Hong Kong more expensive for companies because of the need for more due diligence. The move by the SFC is widely seen as aresponse to a string of scandals in the Hong Kongstock market that involved listed Chinese companiesputting misleading information into the listing prospectuses or engaging in fraudulent accountingpractices. These scandals have led to concerns thatregulators and sponsors have not properly vetted alllisting materials. Industry observers say that theseevents have eroded investors’ confidence in HongKong’s stock market. The SFC believes that holdingsponsors legally liable will push financial institutionsto be more careful in verifying information on the listing prospectuses, thus helping to solidify HongKong’s position as a major international financial center.

The local media, investors, and lawmakers are generally supportive of tougher rules by the SFC, assome believe Hong Kong is already lagging behindSingapore and the United States in terms of holdings

sponsors liable for criminal or civil offences if it isfound that they included misleading information innew share listings. However, international investmentbanks are opposed to a tightened regime as some analysts argue that compared to many other countries, Hong Kong already has strict vetting rulesfor new stock listings, including a requirement thatboth the Hong Kong Stock Exchange and the SFC mustapprove the listing. Some foreign banks have eventhreatened to leave Hong Kong if penalties institutedby the SFC are too harsh. Legal experts also say thatthe new proposal may affect the business of big US and European investment banks as they may nolonger be willing to take on certain transactions toavoid risk. Such a move by those banks is expected to benefit smaller Chinese banks who are seen aswilling to pick up that business.

No details are available as to how listing rules wouldbe changed and under what conditions sponsorswould be held viable. Those details are expected to be decided after the planned public consultationwhich is projected to commence in May. Since theimposition of any legal liability would require revisionsto the Securities and Futures Ordinance and othercompany laws in Hong Kong, it is thought that changes in those laws would not be submitted toHong Kong’s Legislative Council for debate and voting until after a new legislature group is elected in September of this year.

phases of addressing natural gas drilling issues maybe looking to the U.S. for guidance. Last summer, theEuropean Parliament’s Committee on Environment,Public Health and Food Safety issued a report thatcalled for “consideration to be given to developing anew directive at European level regulating all issuesin this area comprehensively.” Furthermore, the New York Times has reported that more than 30countries, including China, India and Pakistan, are now considering the legalization of hydraulicfracturing and developing countries could face

greater risks if the drilling method is used before adequate regulations are in place.

As state and federal governments in the UnitedStates continue to wrestle with this issue, it will beimportant to monitor the debate closely.

David Vermillion – David.Vermillion@bm.com

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Ian McCabe – Ian.mccabe@bm.comEvelyn Kusnawirianto – Evelyn.kusnawirianto@bm.com

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Malaysia: Proposals to liberalizethe Legal Sector

Singapore: Major Review of Employment Act

The Malaysian government has announced plans toliberalize the country’s legal sector to allow foreignlaw firms to operate in Malaysia. Under a proposedamendment to the Legal Profession Bill, foreign lawfirms will be allowed to practice in Malaysia via aninternational partnership or qualified foreign law firmlicense. If passed, foreign lawyers could also be hiredby local legal firms under certain conditions.

There is currently no structure whereby foreign lawfirms may be licensed to practice in Malaysia. Theycan only operate as minority partners to local lawfirms, with their stake limited to a maximum of 30percent. This proposal expands a limited plan initiatedin 2009 to liberalize the legal industry by allowing up to five law firms to set up offices in Malaysia, butonly to advise clients on Islamic finance matters. If the amended Bill is approved, a five-man selectioncommittee, co-chaired by the Attorney-General andpresident of the Malaysian Bar Council, will be set up,and foreign law firms that want to set up offices inMalaysia or enter into a partnership with a local firmwill be licensed by the committee. These firms willhave to pay the Bar Council a license fee. Any unlicensed foreign law firm practicing in Malaysiawould incur a maximum fine of RM 100,000.

The proposal to liberalize the legal profession to allowforeign firms is widely viewed as part of the country’seffort to solidify its position as an international Islamicfinance hub and concurrent efforts to expand theexpertise of the legal industry. The liberalization of thelegal market, long advocated by the country’s CentralBank, Bank Negara Malaysia, will be a complement tothe Bank’s efforts to liberalize banking regulations

since the launch of the Malaysia International IslamicFinancial Center initiative in 2006. Analysts believethat good legal service comparable to that provided inmore developed countries can help Malaysia attractmore foreign investors. However, the Malaysian BarCouncil has been opposed to the idea of introducingforeign law firms as “stand-alone” firms for fear ofhurting the development of local practitioners.Industry groups such as the UK Law Society have longlobbied for the liberalization of the legal sector inMalaysia, and international law firms like Norton &Rose LLP, Clifford Chance, and Allen & Overy have welcomed liberalization, although some have saidthere may not be a good business case to open an office in Malaysia if it would be restricted to Islamicfinance matters.

The details as to the areas these foreign law firmswould be allowed to practice is still to be specified butindustry observers believe that they will be restrictedto Islamic finance, corporate practice matters, andinternational arbitration, while issues related to localMalaysian law will be restricted to local lawyers.Whether the Bill will be passed will largely depend onthe result of the next general election and whether theMalaysian government will remain pro-liberalization.In any case, the success or failure of this Bill will have a knock-on effect not only on the legal professional,but also on the finance and other professions that are calling for increased liberalization.

On April 17, Singapore’s Ministry of Manpower (MOM)announced it would review the country’s EmploymentAct this year in a move that could spell higher costsand stricter labor rules for Singapore’s employers. At the same time, the Ministry said it would intensifyefforts to ensure that current labor laws are followed.

The Ministry identified an increase in the number of professionals, managers and executives (PMEs) inSingapore and a growing reliance on outsourcing andcontract workers as two trends driving the review. TheAct, as it currently stands, provides limited protectionto these categories of employees. If implemented,

ContactEvelyn Kusnawirianto - Evelyn.kusnawirianto@bm.com Joycelyn Lee - - Joycelyn.lee@bm.com

the Act is expected to cover a larger share ofSingapore’s working population, possibly up to 60% of the total workforce.

Although the MOM has not stated how the law mightchange, comments by activists in Singapore’s labormovement provide an indication of the amendmentsto come. There have been calls by labor groups toextend the Employment Act to increase the coverageof PMEs to go beyond just salary protection for juniormanagers and executives, and include minimumrequirements such as universal provision of annualand medical leave. Two groups that may benefit fromincreased protection include independent contractors(freelancers) and contract or part-time employees. Ascontractors are forming a growing share of Singapore’soverall workforce, benefits may be extended to them.At the same time, protection for employees who currently fall under the Act could be strengthened inareas such as government-mandated medical benefitsand minimum levels of health insurance.

These developments are consistent with growingunease in Singapore about a widening gap betweenthe higher and lower income groups. Last year’s election result, where the ruling People’s Action Partyreceived the lowest share since Singapore’s indepen-

dence in 1965, was a telling indicator of the concernsof the new generation of voters. Recently, there havebeen public debates about a “wage revolution,” and some have called for increases for low-wageworkers and a wage freeze for top income earners to narrow the income gap. The Singapore NationalEmployers Federation, however, has warned againstradical changes to the labor law as this may create disincentives for companies to attract or retain seniortalent and it might be a disincentive for multinationalcompanies considering an investment in Singapore.Such investments account for about 40% ofSingapore’s GDP.

The MOM has started accepting comments as part of the review, and a formal stakeholder consultationprocess will be launched in the second half of the year.The MOM is expected to work closely with labor andemployer groups to ensure that the interests ofboth groups are taken into account as it considersfuture changes.

As a prerequisite for the implementation of the Free Trade Agreement (FTA) with the United States,Colombia issued the 201st Law of 2012, to protect intellectual property rights on the internet. This Lawhas been called “Lleras Law 2.0”, in reference to thepresenting Interior Minister - Germán Vargas Lleras,and it being the second version of the legislation seeking to regulate liability for copyright breaches and the related rights on the internet.

The new regulation implemented the commitmentsmade in the FTA on intellectual property rights; one of the hot topics in the bilateral negotiation of thetrade agreement. It restricts free access to copyright-protected digital music files, audio, video and editorialcontent. Furthermore, it clarifies that the reproductionof these types of files will be free and fully allowedwhen authorised by the author or the property rightsholder. It also extends protection against copying andselling of illegal content to digital media.

Aligning with the U.S. requirement for the ‘screenquota’, this Act decreased, from 50 to 30 percent,

the locally produced content to be broadcast in prime time.

For television channels and programme makers thislaw is a legal instrument to control who can reproducetheir content. On the other hand, it opens new business possibilities for importing foreign shows and programmes and playing them in prime time, subject to legally buying the rights.

The adoption of Lleras Law 2.0 has caused controversy,as detractors allege it violates freedom of informationrights. One of the most controversial sections is number 13, which prohibits the re-transmission ofsignals over the internet without authorisation from the owner. Critics argue that this prohibition is evidence that lawmakers are not clear on digitalconvergence.

Colombia: Law on information rights on the internet

Joy Albert – Joy.albert@bm.com Evelyn Kusnawirianto – Evelyn.kusnawirianto@bm.com

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Miguel Angel Herrera – miguel.herrera@bm.com

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The January edition of Hot Issues highlighted theGeneral Law on Climate Change (GLCC) initiativewhich was approved by the Mexican Senate and sentto the House of Representatives to continue its legis-lative process. This initiative sought to promote thetransition towards a competitive, sustainable andlow carbon emission economy. However, chances for its approval were low, mainly because the privatesector argued that such a law would harm thecompetitiveness of the Mexican industry. Although environmentalists have complained thatthe initiative is “wishy-washy”, on April 12th, after along lobbying process with the private sector, theGLCC was approved by the House of Representativesand sent back to the Senate for its final review.

There are several key elements that must be considered, now that the GLCC is almost a reality.Firstly, it establishes the goal of reducing the country’sgreenhouse gas emissions, against the baseline, by 30 percent. Secondly, it sets a reduction of 50 percentof emissions by 2050 relative to levels in 2000. Thirdly,it creates the National Registry of Emissions, which isan instrument for individuals and corporations toregister their annual direct and indirect emissions ofgreenhouse gases. Finally, the GLCC empowers theInter-ministerial Commission on Climate Change,which will establish an emissions trading system, allowing some participants to have more emissionsand urging others to reduce them.

These developments represent a new challenge for all companies because, gradually, they will be forced toadapt production processes in order to contribute tothe mitigation of climate change. Depending on theapproach of each company, these challenges can be aproblem or an opportunity. If the decision is to remainopposed to this emerging policy, costs will be high and the problems imminent as climate change hasreached the international, national and local arenasand the environment has been gaining importancewith public policy creation.

The transition to clean energies and alternative processes of production is a reality and, sooner orlater, companies will have to be part of this process.Adapting and evolving within this new environmentwill require refreshed and strong communications andpublic affairs capabilities. Companies will also have tostrengthen their network with the Mexican public sector in order to be informed, and also trained, aboutthe steps needed to be taken during this transitionprocess.

The LXI Legislature ends shortly, so we will soon knowwhether the GLCC will be approved or not.

Mexico: General Law on Climate Change -A New Challenge for Companies

Lucas Silva Wood – lucas.silva@bm.com

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