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1. Identify a multinational company (MNC) operating in Australia. Provide a brief description of the company including the following:

    • The industry the company operates in
    • Number of staff in Australia
    • Number of staff globally
    • Location of global headquarters

2. Identify any legislative regulatory framework/s affecting the MNC you have identified operating in Australia and discuss why and how it affects the company. For example, multinational corporations, like local companies, are subject to 30 per cent corporate tax.

3. Identify any treaties, conventions or agreements that have impacted on the products or services that your chosen MNC provides in Australia. How does it impact the provision of these products and services?

Legal Regulatory Framework

Bayer is the world's largest chemical and pharmaceutical concern, which includes three subgroups with its headquarters in Germany. In 2016, Bayer had 115,200 employees worldwide and more than 10,000 employees in Australia. Bayer has a wide range of products to support the health needs of millions of families around the world at different stages of life.  These products include Australia's #1 pregnant women's multivitamin Elevit, Menevit Men's Philharmonic ii, and other leading brands including Berocca Performance Multivitamins, Bepanthen Scarlett, Bepanthen Xin wound antibacterial ointment, Bepanthen baby diaper cream, Canesten Kenny Ting lotion, Demazin children cough oral liquid and children's cold oral solution, Penta-vite children's multivitamins and Iberogast to quickly relieve stomach upset. Since its inception in 1863, Bayer has been a world-leading life technology company and has been investing heavily in R&D innovation to continue to deliver innovative, healthy products of superior quality. However, the ever-changing socio and economic conditions do not always guarantee that Bayer will enjoy the vast market without any hindrance. Although Bayer company has already established its subsidiary or branch in Australia, it is always important to always evaluate the feasibility of market so as to ensure that the economic, political and social factors risks do not affect the operations and performance of the company. This need calls for an evaluation of legal aspects in Australia that may positively or negatively affects Bayer’s future endeavors. The goal of the paper is therefore to determine the legislative regulatory framework that may influence the operations of Bayer in Australia. The paper will also determine and evaluate the treaties, conventions or agreement that have impacted on the operations and performance of Bayer in Australia.

One of the legal regulatory area where Bayer is likely to face some obstacles concerns licensing of some of its products. Australia is a law abiding country and hence when it comes to licensing, Australia is very strict. Bayer’s products are being improved on a continuous basis. Bayer, being a pharmaceutical company, needs to comply with many licensing requirements and its operation depends on its ability to assure that its products are safe. There are many cases to proof that Bayer might face some challenges as far as licensing of its new products is concerned.  For example, in order to be licensed to deal with genetically modified products, Bayer must have enough proof that the products are safe and must comply with all regulatory bodies including FAO. Recently, the company was violently attacked on the stock market, following the sentence inflicted on the United States to the seed giant Monsanto, which the pharmaceutical group has just bought at a high price, at the risk of a cascade of troubles court. Following the attack, the Bayer stock plummeted by over 12% at the Frankfurt Stock Exchange, 81.79 euros, and saw more than 11 billion euros of its capitalization go up in smoke. The attack followed the move taken by San Francisco court, which forced Monsanto to pay $ 289 million in compensation for failing to warn of the dangerousness of its glyphosate herbicide, which causes cancer by American gardener Dewayne Johnson. Australians are very sensitive to their health and there are many regulatory bodies designed to safeguard the health of Australians. This means that Bayer ought to be very careful to ensure that her products are safe, failure to which, the company may not get license to operate effectively.

Tax Laws Amendments

Another legal regulatory that is likely to affect the operations of Bayer in one way or another is the tax laws amendments. Currently Australia revised its corporate tax to 30% or 27.5% (companies with annual turnover below AUD 2 million). Taxable imports and supplies by non-residents are subject to the GST. Non-residents are required to register with the GST if their annual turnover resulting from intra-Australian sales is greater than AUD 75,000 (AUD 150,000 for charities). Since July 1, 2017, non-residents offering digital services are required to register with the GST if they meet one of the following conditions: the buyer is an Australian resident, the product is made in Australia, the sale is through a locally managed business in Australia, the sale is for the purchase of an asset that is related to Australia. It is not mandatory to appoint an Australian tax representative,. Australia is also planning to adopt stricter measures to ensure that foreign companies do not evade tax.

For a long time, the Foreign Investment Review Board has often reviewed the tax implications of a foreign investment plan when it violates national interests. In addition to the impact of investment on tax compliance, the scope of the investigation is also the impact of investment on national security, competition, economic and social, and the characteristics of investors. This content is specified in Australia's Foreign Investment Policy. Now, as the Foreign Investment Review Board has included new tax compliance conditions in the approval process, the inspection process has also added new steps. Transfer pricing and anti-tax avoidance measures are now the focus of attention, and investors must inform the Australian Taxation Office of the possibility of applying transfer pricing or anti-tax avoidance measures.

These changes have been brewing for some time, and the government is trying to fill the loopholes in the taxation, showing that it is working to solve the national interest problems brought by taxation of multinational corporations. The expected effect of these conditions is to ensure that foreign investors comply with Australian tax laws. The Foreign Investment Review Board and the Inland Revenue Department work very closely together in areas such as residential land acquisitions, foreign investment review committee filing fees and agricultural land registration are now accepted by the tax bureau. And some multinational companies' investment plans for acquiring shares and new companies in Australia have been subject to tax-related conditions. The press conference of the Finance Minister today largely confirmed this new initiative.

Some of the conditions that may be added only require foreign investors to comply with the law, while others may require additional measures by foreign investors e.g. comply with Australian tax laws, provide documents or information required by the Australian Taxation Office, tell the Australian Taxation Office whether a transaction is subject to transfer pricing and anti-tax avoidance regulations, adhere to the Australian Taxation Office in good faith, submit an annual report on investor tax compliance to the Foreign Investment Review Board and when approved, foreign investors should be mindful of the additional reporting requirements imposed by these conditions. These new adjustments would require Bayer to be compliant so as to ensure that its operation in Australia is not affected by the ever-changing tax and investment laws.

Foreign Investment Review Board

Due to firm adherence to trade laws, Australia has a number of conventions, treaties and agreements designed to facilitate smooth running of the companies (both national and multinational) and to prevent legal issues. During the visit, German Chancellor Merkel expressed very much to the free trade agreement between Australia and the EU stand by. In this regard, Turnbull stressed that the FTA is not only an economy, but also reflects the similar values ??of the two countries. According to ANZ news, Merkel stressed that Germany and Australia share the same values, and international trade policy is very important for Germany. She said: "Germany has always supported Australia in the area of free trade agreements . We have made great progress in this regard." Before the talks, Turnbull said in a speech that free trade agreements are not just economic issues. For Australia and the European Union , the Free Trade Agreement provides us with an opportunity to “show what we insist on and what we are against” when the world faces serious security challenges. Turnbull also mentioned the incident in which the former Russian spy in the United Kingdom was attacked by nerve gas. He said that countries with the same values ??and understanding of human dignity have responded in common. "We believe that living in a free and democratic country is a fortune. Human beings need a law-abiding international order." Many commentators and observers consider the agreement as a breakthrough for firms and companies from these countries. That is why some of the headlines clearly acknowledged the effort of Hexagon. One of the headlines read Australian ambassador to France, the Hexagon "has everything to gain from a rapprochement of the European and Australian economies. The agreement was made in the Australian capital of Canberra

Australia is one of the fastest growing economies in the world. It recently negotiated a Progressive Global Trans-Pacific Partnership Agreement (CPPP) with ten other countries in the Pacific region. The future EU-Australia agreement will allow European companies to compete on an equal footing with companies from countries with which Australia has already concluded trade agreements . The agreement will also provide additional security to companies such as Bayer.  Bayer will feel free to explore and expand its ventures because of the cordial relationship between the Germany and Australia brought about by such negotiated trade agreement.

Another legal issue that may face Bayer is patent protection. Australia is a member of Paris Convention Treaty (PCT) and as treaty expects, the Australian government works hard to ensure that there is no patent infringement. However, the issue of patenting will not affect Bayer so much because the past behavior shows that Bayer is good in innovation and creation of patents. So far, the number of PCT associated with Bayer is 180. On the other hand, the number of PCT associated with Bayer CROPSCIENCE is 166. This clearly shows that Bayer is complying with the PCT and this is a positive move as far as current and future endeavors are concerned.

Treaties, Agreements, and Conventions

Similarly, in China, Bayer won patent case where it had sued a Shilang company in China for patent infrigment. In the case, The plaintiff Bayer Schering Company claims that Bayer Schering is a subsidiary of Bayer, a world-renowned pharmaceutical company, and the patent holder of the Chinese patent ZL93100215.X. The invention title of the patent is "quinolonecarboxylic acid and naphthyridonecarboxylic acid derivatives and its preparation method", the application date is January 9, 1993, and the authorization announcement date is April 28, 1999, and the patent is still in an effective state. The plaintiff produced, sold and exported the drug containing "Moxifloxacin" as the active ingredient according to the patent, which is a kind of 8-methoxy fluoroquinolone with antibacterial activity. Treatment of upper and lower respiratory tract infections, such as acute sinusitis, chronic bronchitis episodes, community acquired pneumonia, and skin and soft tissue infections, is widely used and has a large sales volume in China. The victory clearly shows that Bayer is keen in aspects related to the patent protection and this gives the company a upper hand when doing business in Australia. Most of Bayer's current business activities are based on innovation in recent years. Currently, approximately 40% of Bayer's annual sales revenue comes from patented products developed by Bayer Labs over the past 20 years . Bayer's R&D centers are mainly located in Europe, the United States and Japan, as well as small-scale, specialized, such as R&D centers in Shanghai.

For Bayer R&D investment is a huge support for Bayer's business philosophy. Bayer will continue to strengthen its investment in innovation and R&D. Our goal is to lead the market with innovative products protected by patents . Bayer's huge investment in R&D relies on Effective intellectual property protection for research and development and sales of innovative products is particularly important for Bayer's already mandated protection of intellectual property rights. The company is determined to protect intellectual property , including patents , trademarks and copyrights . Any illegality of our innovative products. Both production and trade can cause harm to our business model and should be stopped, especially for counterfeit products such as medicines and pesticides, which will cause great damage to consumers and the environment."

References

AUSTRALIAN GOVERNMENT, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11) [web page] (2018) < https://dfat.gov.au/trade/agreements/not-yet-in-force/tpp-11/Pages/trans-pacific-partnership-agreement-tpp.aspx> , (Accessed 9/18/2018)

AUSTRALIAN GOVERNMENT, Latest news on tax law and policy [web page] (2018) < https://www.ato.gov.au/general/new-legislation/latest-news-on-tax-law-and-policy/>, (Accessed 9/18/2018)

BAYER, Australia/New Zealand, Bayer, [web page] (2018), <https://www.bayer.com.au/> (Accessed 9/18/2018).

BAYER, Bayer Crop Science Australia logo, Bayer, [web page] (2018) <https://www.crop.bayer.com.au/> (Accessed 9/18/2018).

BLAKENEY, M., Intellectual property enforcement: a commentary on the anti-counterfeiting trade agreement (ACTA), Cheltenham, U.K., Edward Elgar. 2012

BUCK, T., ‘Bayer reports sharp rise in legal cases linked to its weedkiller,’ Financial Times, [web page] (2018), < https://www.ft.com/content/18e45e34-a6df-11e8-8ecf-a7ae1beff35b>, (Accessed 9/18/2018).

BUCK, T., ‘US legal woes drive Bayer shares to 5-year low’, Financial Times, [web page] (2018),<https://www.ft.com/content/304d673a-a15a-11e8-85da-eeb7a9ce36e4>, (Accessed 9/18/2018)

CATEORA, P. R., AND JOHN L. G., International Marketing. Boston: (Irwin McGraw-Hill, 2002).

CONNOR, P., Global Price Fixing. (S.l.: Springer US, 2001).

HODGSON, C., ‘Bayer falls again after latest legal setback over Monsanto weedkiller, Financial Times, [web page], <https://www.ft.com/content/54613b36-a13e-11e8-85da-eeb7a9ce36e4>, (Accessed 9/18/2018)

HOECK, M., Cooperation and Technological Endowment in International Joint Ventures: German Industrial Firms in China. (Köln: Kölner Wissenschaftsverl, 2008).

JASPER, C., ‘Agribusiness giants Bayer and Monsanto clear US regulatory hurdles for $US66b mega merger’, ABC News, [web page] (2018), <https://www.abc.net.au/news/2018-05-30/bayer-monsanto-merger-gets-green-light-from-us-regulator/9814702>, (Accessed 9/18/2018)

JENNEWEIN, K., Intellectual Property Management: The Role of Technology-Brands in the Appropriation of Technological Innovation. (Heidelberg: Physica-Verlag Heidelberg, 2005).

JONES D., Recent Developments in Transfer Pricing and the Taxation of Multinational Companies in Australia. (White Paper. 2017)

PAUL, J., AND RAMNEEK K., International Marketing: Text and Cases, (New Delhi: Tata McGraw-Hill, 2008).

ROCKEL, M., Internationalisation: the Strategic Challenge for Western Fine Chemicals Company Bayer Chemicals Arising from the Growth of China. (Munich: GRIN Verlag GmbH, 2005).

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