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Quest Means Business

EU Wants to Outlaw `Wild West' Derivatives Practices; Greenspan Calls for Tax Hikes

Aired September 15, 2010 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RICHARD QUEST, HOST, QUEST MEANS BUSINESS: City slickers you watch out, the EU wants to outlaw Wild West practices.

It is a taxing issue. Alan Greenspan says he is now in favor of raising taxes.

And Lego is left picking up the pieces after being told, no, you can't trademark the brick.

I'm Richard Quest. It is midweek and I still mean business.

Good evening.

Welcome to Wild West territory. That is the phrase, the Wild West, used by Michel Barnier the European commissioner, to describe that place where derivatives are traded over the counter, hidden away from the watchful eye of the regulators. The Wild West it may be, but no more.

(DESK BELL CHIMES)

The European Commission wants to be the sheriff that is going to clean up that town. The commission has published draft rules on the trading of complex financial products; the very products seen as having contributed to the global financial crisis.

We need to explain what this territory, what the guns, what the bullets are in this Wild West. And you can join me in the library of the saloon, to see. It is all about the EU reforms on derivatives. Trades which will be cleared by central clearing houses. Now the idea is it will be a mandatory reporting of certain derivatives trades. They will have to go-these so-called over the counter, OTC, highly complicated-some would say exotic-derivatives would be channeled through various clearing houses. To give you an idea of how significant this is, the OTCs are expected to be valued at around $600 trillion. And it was the failure to monitor derivatives that was largely credited, perhaps, with making a bad crisis even worse.

One of the big issues that they'll be looking at, the so-called short selling. And here they want the power. This is where you sell something you don't own. Now some countries already have banned naked short-selling. For instance, there will be a European securities markets authority with the power to suspend risky trade. And there will be a ban by certain direct ways of naked short-selling. Ultimately, though, EU reforms and regulations, they will standardize the rules across the block. You will basically, in future, have one set of rules which everybody is expected to follow.

Now, putting this into perspective. The EU commissioner involved, Michel Barnier, said that he was absolutely determined the environment that was currently underway would not be allowed to continue.

(BEGIN VIDEO CLIP)

MICHEL BARNIER, COMMISSIONER, EUROPEAN UNION (through translator): We know the numbers of transactions involved, $600 billion. We know that this takes place in a very non-transparent way. And we want the light to shine on people who are not used to that.

(END VIDEO CLIP)

QUEST: The proposals will have to be approved by the European parliament and the bloc's member nations before they can become law. For more on the impact they could have, Edmund Parker is co-head of global derivatives practice, at the international law firm, Mayer Brown. He joins me now.

Sir, the U.S. has already done its Dodd-Frank bill and is now intending to regulate derivatives. Now the Europeans are doing similar. Who has the harsher rules?

EDMUND PARKER, GLOBAL DERIVATIVES PRACTICE, MAYER BROWN: I think the U.S. we are seeing some harsher rules. There was some provisions included in Dodd-Frank called push out, which said that the U.S. financial institutions had to push out their derivatives desk to separately capitalized entities.

That is going to have a big cost in the United States. We haven't seen anything similar proposed in Europe. There is also the Volcker rule in the United States, which is going to put limits on proprietary trading of derivatives, as well as the potential to introduce position limits. Now, none of that has been proposed in Europe.

QUEST: Right.

PARKER: What we have seen is on both sides of the Atlantic, a push for standardized derivatives, to be centrally cleared, and traded on exchange. What is standardized, are standardized derivatives? That is going to be the crucial question, when the regulation comes into force.

QUEST: Right.

Let me just jump in here, and try and understand. I mean, it is likely that to some extent there has been huge lobbying by banks, investment houses, against them. But the rules now in Europe are there to be eventually passed. Are you encouraged that they will do the job?

PARKER: I think so. I think that there will be the right balance between allowing innovation within the derivatives market, which allows new types of contracts get momentum. And standardization, which means those contracts will be recognized by both the regulators and the industry as being suitable to be centrally traded on clearing platforms and exchanges. So I'm convinced that in Europe there is the right balance coming through.

QUEST: So we've got bans on naked shorts. We are going to have markets, we're going to have, you know, exchanges where derivatives can be traded. We are going to have standardized rules. How long will it take the industry to find a loop hole, to take advantage of it, and for another bubble in derivatives somewhere else to start blowing up?

PARKER: Well, that is always-there is always, perhaps, the cat and mouse there. And I think it is really going to come down to the new regulatory body, ESME, having sufficient teeth and having that ability to look at derivatives on a pan-European basis and to work together with the industry to make sure that there is the right balance. But I think it is the same balance you'd find in the equity markets or any market between a regulator-regulating sufficiently and the markets having freedom to innovate.

QUEST: All right. Edmund Parker, in New York, we thank you for your insights. Many thanks, indeed.

Europe's stock markets were focused on commodity shares rather than financial ones. And all the indices fell. Mining and energy shares, some of the worst performers. BP actually was down 2.6 percent, BHP Billiton, down nearly 1 percent, Total down 1.6 percent. Roach the biggest loser in Zurich, down 1.7 percent. Chief executive told Reuters Roche won't merge its two separate research and development units.

The governor of the Bank of England has warned unions to accept the cuts or fail your children. He was speaking at the trades union congress in Manchester. Mervyn King said radical austerity measures were necessary to achieve sustainable growth. Earlier this week the congress said it would coordinate strikes to protest against what they called the government's reckless spending cuts.

Meanwhile, in France, a controversial pension reform has moved one step closer to law. After debating through the night, France's lower house of parliament voted to raise the retirement age from 60 to 62. The measures enraged workers across the country. A one day nationwide strike earlier this month, if the plan gets the approval by the French senate.

Speaking of retirement and pensions, there is a fascinating article that I have been reading highlighting the fact-did you know the French spend longer in retirement than almost everyone else? More than nearly 20 years in fact-more than 20 years, six more than average. OK, who has got the shortest? Who has the longest? Have a look at this. You can read the article for yourself. I've posted it at Twitter.com/RichardQuest. And I'll also have a profitable moment at the end of this program on pensions and retirement.

The former chairman of the Fed is speaking out about how to fix the ailing economy in the U.S. Now raising taxes is part of the solution, in a moment we'll talk about that.

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(COMMERCIAL BREAK)

QUEST: Welcome back.

In the U.S. debate is raging over how to boost growth in the world's largest economy. And a familiar figure has weighed in. The former Fed Reserve Chairman Alan Greenspan made a rare speech in New York and came out with a surprising remedy for the yawing U.S. budget deficit. Maggie Lake is in New York, joins us now actually from the streets of New York.

A delightful day outside the Time Warner Center, there.

Maggie, Alan Greenspan and the notion of raising taxes, bizarre.

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Very bizarre, shocking. I mean this is someone who philosophically comes from a very different place. And that is not the only strange thing about it, Richard. You and I have covered Greenspan for years and the man made a career of being almost impossible to understand. Not so today.

As you said, making a rare public appearance and not only that speaking very frankly and taking a very different stance than we are used to. Have a listen.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FMR. CHAIRMAN, U.S. FEDERAL RESERVE: I'm coming out in favor, for the first time, in my memory, of -uh, of raising taxes. And the reason I'm doing that is essentially that I think that we're getting to the point at this stage that unless we come to grips with the deficit problem very quickly, that we are fooling ourselves about how much time we have.

(END VIDEO CLIP)

LAKE: That is a very harsh warning, Richard. And this is not just an off the cuff comment, or an accident. This is a man who thinks very hard about what he says, because he knows a lot of people listen. And he's very clearly concerned about what is happening in Washington. Not only that, he is sort of talking about the harsh truth and reality in a way that no politician here in the U.S. can or will do right now. We are leading up to a very bitter mid-term election and saying that you are going to raise taxes is political suicide here in the U.S. as you know.

QUEST: Yes, you talk about political suicide, you know, they are talking about whether they should extend tax breaks, let alone raise taxes.

But, Maggie, look I don't wish to be disrespectful to the former chairman of the Federal Reserve but has he lost it? Does anybody take him seriously anymore?

LAKE: Oh, yes, they do. But you bring up a point about his credibility, Richard. And it is a legitimate one. And it is interesting because right before it came out we had the story posted on the CNNMONEY web site here in the U.S. And a couple of comments coming from people who are on the site blogging, one of them saying, from Craig in San Francisco: "This from the man who brought us the housing crisis, lax banking oversight, and credit bubble? Why are we listening to this guy?"

And another person, in Milwaukee, saying to Greenspan, "Shut up and sit on your T-bills. So he does have a little bit of a credibility problem on Main Street. But the thing is he was in power for a long time. And he's not the only one sounding the alarm, Richard. I talked to Glenn Hubbard this week. One of the architects of the Bush tax cuts. He is also very concerned that the bitter bi-partisan fighting in Washington really has left lawmakers off the track of the right path. So a lot of economic heavyweights coming out and speaking about this. We're going to run the Hubbard interview later this week. He wrote a book about it. So there is clearly some concern coming from insider, from Republicans, that both parties have lost their way.

QUEST: Maggie, you and I have talked about this many times. The austerity of Europe seems like it may finally be crossing the Atlantic. Maggie, you and I will talk more as the week wears on.

LAKE: Absolutely.

QUEST: Lovely day there. Go and have an ice cream, or something, whatever one does at that time in the afternoon. Don't send us the bill. Austerity remember.

Talking about what markets have been doing. There was a move to stem the seemingly unstoppable rise of the Japanese yen. For the first time in six years Japan intervened in the currency markets to weaken the currency. The banks of Japan began buying up dollars this morning after the yen hits a fresh 15-year high against the U.S. currency.

Now if you look at the trend since June, that is the scenario, it is yen to the dollar. OF course, that number is very, very small. It would have to be in slight reverse to show it the other way around. The result of today's activity-and that is why we've shown it this way-because you see the yen depreciating there. The yen has actually fallen around 3 percent against the dollar, a few moments ago. The dollar buys you 85.53 yen, at the start of the intervention it was 82, and a bit more.

Fresh from Tuesday's victory in party leadership contest, Japanese Prime Minister Naoto Kan appears to be stepping up efforts to wrench his country out of deflation. But if the fundamental policy hasn't changed, today's actions could unwind. I put this to David Bloom, the global head of FX Strategy at HSBC.

(BEGIN VIDEOTAPE)

DAVID BLOOM, GLOBAL HEAD OF FX STRATEGY, RESEARCH, HSBC: One has to remember that the Japanese authorities have unlimited firepower. And by that what I mean is they have deflation in Japan and have zero interest rates. So once they are creating and selling their own currency, so once you sell your own currency and it won't cause inflation, and it won't put downward pressure on interest rates, you have unlimited firepower. So, they have a very good chance of succeeding.

QUEST: That is a technicality, isn't it? That means they can simply throw money at the market if you like. Literally, pour it down the drain. But it doesn't mean that the intervention will be long-term or even medium term successful.

BLOOM: You are quite right. It doesn't mean it will be successful but they have got a fighting chance. Don't forget when you are selling other people's currency it can run out. Here you cannot run out and it is fits in with your fundamentals. The question is if the amounts become so huge and so big will they balk at it? And that is what happened in Switzerland, when in one month added $75 billion, approximately, of dollars in one month. And they turned around saying this isn't working. And they pulled away from it. And the Swiss franc then continued to strengthen. So, you have a good point there.

QUEST: The history of intervention. All the way back to the Lourve (ph) and the Plaza (ph) accords, it is spotty at best. I mean it worked to some extent when it is coordinated and on a massive scale and set to political agenda with it.

BLOOM: Yes, but here we have got the massive scale. And that is what is frightening the market, the unlimited firepower of the Japanese authorities. But you are right, it acts more as a parachute rather than anything else. So they can buy themselves some time. They can slow the yen appreciation. And they can try and change market sentiment. But they have got to come in fast, furious and in big size now in order for it to work.

QUEST: David, should-should other countries have been invited to join in, even only on the sidelines to show an element of coordination. Although, it would have been perhaps hard to have got too much support elsewhere?

BLOOM: We'll we've seen other countries intervene. We still see it in emerging markets the whole time. We have seen it in Switzerland recently. But nobody seems to be able to have coordinated the intervention in effects. They have coordinated rate cuts in this current financial problems, they have coordinated other actions, but it seems on foreign exchange there is no coordination. And you are absolutely right, with unilateral action he firepower that that particular bank has, it kind of dissipates.

QUEST: And one final thought does occur to me. What do you believe is the correct level of the yen/dollar?

BLOOM: Well, I would say 95 to about 105, is about right. And anywhere in between that range they will be comfortable-and I would be comfortable with. The problem is the yen was strengthening. When the-in the summer, when the bond markets were rallying, everybody said it is a flight to safety and bought yen. But then what happened is the U.S. numbers looked better, they started buying equities and selling bonds. But the yen continued to rally. So I think the Japanese authorities thought there is nothing to change sentiment here. We need to step in. And they have-

QUEST: Right, but-let me just-

BLOOM: And they are trying to change sentiment.

QUEST: Let me jump in on that, though.

BLOOM: Sure.

QUEST: Let me jump in on that. Because the yen continued to appreciate against what one would have thought of economic fundamentals. Why is the yen continuing to appreciate? That is the heart of the matter.

BLOOM: That is the heart of the matter. There must be a natural flow. If you think you-if you are Japanese and you are holding money in the U.S., you are not earning much money at all. Your returns are very low. In Japan there is deflation of 1.5 percent. You might as well bring your money home and just put it under the mattress and in fact your return on your money is higher than buying two-year paper in the U.S.

So there must be a natural flow into Japan. And that is why the intervention may not succeed. But they are giving it a good shot and what they need to do is throw everything at it now and not elongate the cycle and do little bits and pieces now and again. They need to throw everything at it and try and push it to 95 in a month.

(END VIDEOTAPE)

QUEST: And we will watch. Do you think 95, in a month, bearing in mind we told you it is at 83. That would be a remarkable movement. If the yen was to go from 83 to 84, to 95 in four weeks, that would be worthy-I'll buy you drinks all around.

It is a heavyweight battle to decide the shape of the Web. The company that defines the past of personal computing (UNINTELLIGIBLE) the upstart (UNINTELLIGIBLE) the X49, after the break.

(COMMERCIAL BREAK)

QUEST: Internet Explorer is still the way most of us get onto the Web. For the last few years it has not been the only place perhaps to go for innovation. There have been others, such as Firefox or Google's Chrome. Now, Microsoft says its new Internet Explorer 9 is going to change all of that. It is calling it a major technological shift for the company whose dominance has been chipped away by the competitors.

And you'll see what I mean if you look at this. Now at the moment Internet Explorer counts for roughly 60 percent of the global browser use. The company has steadily lost market share; 12 months ago that 60 percent was closer to 70 percent. As Explorer has lost share, then who has been taking it? Moving along, and you'll see Firefox, for the first time it has broken the 20 percent barrier; 23 percent of people are now using Firefox from Mozilla.

But this is another interesting one, 7 percent of people are using Google's Chrome. Now, Chrome was only launched a couple of years ago, and is already in their place, behind Firefox and Explorer. Chrome, Firefox, Explorer, are followed on by Apple's Safari, Opera software browser, and a host of others, all of whom just about 5.2 percent.

Microsoft, of course, the new approach comes after a deal with the anti-trust regulators. Remember they now insist that instead of having just internet explorer. You are asked whether you want to have explorer as being your default. And now, of course, Internet Explorer 9 will have a major impact. It will not only take the default position, but also it will update the way Explorer uses the Internet, the look and feel of sites.

Microsoft, like its competitors, is focusing on capability, called hardware acceleration. Techie stuff, as I heard from Tami Reller, the vice president of Microsoft's Windows, and she explained how it all works.

(BEGIN VIDEOTAPE)

TAMI RELLER, CORPORATE V.P., MICROSOFT: What we've done with Windows Internet Explorer 9 is really bring some of the great functionality that we have with Windows 7 into IE9. So for example, when you are looking at one Web site you can snap that page to one side of your PC and then bring up another Web site and be able to see that at the same time. It really starts to feel like a native Windows application and you can do many of the same things that you would do with all the Windows applications that you use and love everyday.

For example you can also take your favorite sites, those that you mentioned, and pin them to the task bar. So they are very easy to access and use and use multiple Web sites at one time. And then again the speed makes such a difference in today's Web. There are so many graphics and videos and graphically enriched Web sites.

QUEST: Right. How much of all-

RELLER: Speed matters.

QUEST: How much of all of this is driven now, of course, as the result of various anti-trust activities by regulators. We do now have a choice. We do have a choice on our computers, we can elect which browser we want to have installed. We can elect, obviously, which browser is going to be our default. So much more so than previously, Windows Internet Explorer is in a battle now isn't it?

RELLER: Well, we certainly see our job as making sure that for the billion Windows customers out there today and growing, that we do give them the best Web experience. And the best browser experience on Windows. And that is absolutely what we did with Windows Internet Explorer 9. We really talked to customers, listened. Really looked at how they used the Web. I mean for Windows customers, the number one thing that they do, is browse the Web. So that experience has to be great. And so making IE 9 a great experience was a very high priority for us.

QUEST: My viewers watching will be saying, but every version of EI until now has either been hacked, or has had greater security deficiencies than say Safari, or the competition. Have you dealt with that? Are you confident that it is more robust on that front?

RELLER: Yes, making IE the most trusted browser on the Web is an incredibly high priority. And we feel very good about the work that we've done in IE 9. It has to be fast. We have made it a really clean design, and absolutely trusted, was a high priority.

(END VIDEOTAPE)

QUEST: Have you got any thoughts on that? @RichardQuest, is the Twitter address for that one. Where you and I can have a bit of a discussion. I mean is Internet Explorer, Firefox, I get confused between them all.

In a moment one company, two continents, and safety in the spotlight. A British parliamentary committee mulls the BP's report and is investigating implications of the Macondo disaster.

Meanwhile, in the U.S. court room, complaints against the company of looking are looking costly.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN. And on this network, the news always comes first.

The headlines, Pope Benedict XVI is to begin a four day tour of the United Kingdom tomorrow. Victims of abuse by Catholic priests are already demanding that he hand over all the information that the Catholic Church has on the subject. Pope Benedict is expected to meet victims of the abuse during his visit.

France's national assembly has approved pension reform after a hectic all night legislative session filled with name calling. The plan to raise the retirement age from 60 to 62 passed. It must now be approved by the senate if it is to become the law. Thousands of workers held a strike against the age hike earlier this month and last month, too.

Military helicopters, metal detectors and armed federal agents will be in place in Mexico City today, as the country celebrates 200 years of independence. The celebration being clouded over the drug war. In the city most affected by the violence, there won't be the traditional ceremony at the municipal square. Citizens of Ciudad Juarez will have to watch television to hear the mayor shout, "Viva Mexico!"

Tony Hayward has denied that he is cutting corners during his time at BP. The chief executive, the outgoing chief executive of BP, was speaking to members of the British parliament. Mr. Hayward once again defended the firm's safety record. But his expertise was overshadowed by a record in this morning's "Financial Times" about safety in the North Sea. According to documents, all but one of its five North Sea installations failed to comply with emergency regulations. The company was accused of failing to carry out drills to simulate oil spills (INAUDIBLE). BP says it's corrected the issue and is now in compliance.

Back in the U.S., BP is facing other pressures -- federal papers filed in New Orleans. The U.S. government may sue BP and other companies involved in the spill, who may also send the subject to lawsuits. The claims may be sought under the Oil Pollution Act and Clean Water Act.

The oil spill in the Gulf of Mexico has been a damaging and costly affair. So far, BP says it's set aside $20 billion for claims. It's paid the U.S. government $390 million for the cost of the cleanup.

Only last week, BP received a $128 million bill from the Obama administration.

Jim Boulden has been monitoring the Comments Committee questioning.

Jim joins me now -- Jim.

JIM BOULDEN, CNN CORRESPONDENT: It's interesting, really. I mean this is the first chance we've got to hear from Tony Hayward in detail since he decided to step down as CEO. And this was about the North Sea, which is what's, you know, it's a very important place for oil output from the U.K.

But we wanted to know and what the parliamentarians want to know is what lessons can be learned in the Gulf of Mexico and applied to the North Sea. And they certainly couldn't resist but ask Tony Hayward immediately about the Gulf of Mexico and what other lessons might have been learned -- what new things might we have learned.

And you mentioned earlier about cost cutting. And I thought it was really interesting how he put this. And he -- we should listen to this in a minute, exactly what he was saying about cost cutting. They wanted to know if anything he had done by cutting costs could have affected or caused the disaster in the Gulf of Mexico.

(BEGIN VIDEO CLIP)

TONY HAYWARD, CEO, BP: -- how this occurred. The assessment and investigation of this accident suggests that costs weren't any part of how this occurred.

(END VIDEO CLIP)

BOULDEN: So he's saying it's not about cost cutting at all. And he went on to talk about other issues, as well. And he talked, of course, about the -- the contractors. He talked about complacency, I thought was the most interesting, Richard, a complacency he admitted in the industry, even though they were drilling in 5,000 feet, something, you know, deepwater, which is new to this industry.

He did say this to the committee. He said, really, that there was just too much complacency amongst everyone in the industry, of course, not just BP.

Let's hear what he had to say.

(BEGIN VIDEO CLIP)

HAYWARD: The industry was not prepared to deal with a subsea blowout in 5,000 feet of water. The reason we were not prepared is we believed we had effectively mitigated that risk so that it was not going to occur.

Now, that probably was not the right conclusion on the part of the industry with the benefit of hindsight.

(END VIDEO CLIP)

BOULDEN: Now, this was a far cry, Richard, from when he appeared before Congress in July. Remember, the grilling -- the hostile reaction...

QUEST: Right.

BOULDEN: -- he had. This was more of a fact finding mission by members of the parliament who will be interviewing a lot of people...

QUEST: Did he have enough -- hang on. Because Tony Hayward, a 30 year lifelong at BP. He knows his business...

BOULDEN: Yes.

QUEST: -- when it comes to drilling.

BOULDEN: Yes.

QUEST: He knows his business when it comes to the oil industry. There's no question about that. He may have been -- he may not have been a particularly good CEO in the crisis, but does anyone take him seriously these days?

BOULDEN: Well, they -- they wanted to -- to actually tap into his knowledge before he left. And so that was very key that they talked to him. And they also talked to two other people from BP, as well. And they wanted to know from that report from the FT that you talked about is, should we be worried about the North Sea?

Are we too complacent in the North Sea, as well?

QUEST: We just need to be -- very briefly, Jim, these other developments -- we ticked them off quickly. The -- the U.S. Justice Department is suing BP. But BP says last week or this week that the $30 billion may be more than enough that it put aside.

BOULDEN: Yes. Yes, more than enough because it has, actually, put a -- put -- put so much money aside that it will be paying over the next couple of years and because we -- that most of the oil seems to have disappeared. But we don't have all the lawsuits yet. Maybe the government, but we don't have the private lawsuits and we don't know how much that's going to be.

QUEST: Jim, we will continue this. Hey, come on. B -- if B...

BOULDEN: For years to come.

QUEST: -- Basel.

(LAUGHTER)

QUEST: I can tell you, we could do Basel again.

BOULDEN: Basel 4 one day?

We'll be here talking about it.

QUEST: Jim Boulden, many thanks, indeed.

OK, the toy store is open. Next, look at the LEGOS mark and you'll wonder why it's not unique to LEGOS.

I'll explain, after the break.

(COMMERCIAL BREAK)

QUEST: It may look innocent enough. It's been the subject of a ruling in Europe's highest court. Look at this -- the letters of our program, QMB, QUEST MEANS BUSINESS, as made by LEGO. But the European Union now says you can't trademark the bricks that LEGO makes and that's bad news for LEGO.

Max Foster...

MAX FOSTER, CNN ANCHOR: Yes?

QUEST: -- is in -- is in the QMB playground.

FOSTER: We're going to come to my masterwork in just a moment.

QUEST: Max...

FOSTER: My first question is, though -- and it's a crucial question.

QUEST: Right.

FOSTER: I'm going to present it to you.

QUEST: OK.

FOSTER: But it's a question that LEGO is presenting to everyone -- what does that image say to you?

What is that?

QUEST: All right, I mean it's obviously, it's a -- it's a piece of LEGO.

FOSTER: Exactly.

QUEST: It's a piece of LEGO.

FOSTER: And that's what LEGO is arguing. And it's saying that means LEGO -- it would dishonest to say it's anything else. So, therefore, it should own the rights to that image. That's what we're talking about here.

And this went to the courts. The problem is, the company that makes this -- perfectly legally -- also said what it looks like its product, as well. This is a -- a Mega Blok. It's not LEGO. But it's allowed to make these legally. And it says if you say that's LEGO, actually, it could also be a Mega Blok, as well.

So LEGO went to court and ended up losing the case. It doesn't own the rights in it, Richard, to this image. That's what we're talking about here, not the actual product.

QUEST: So why is it significant, because I mean this does look like LEGO -- I mean it does and it doesn't. But it's not square. It doesn't really look like LEGO.

So who are -- who has been successful at actually getting their image?

FOSTER: Well, even LEGO isn't sure how much value it can attach to this 3D trademark, is what they're saying. But it's a huge business. When you look at the scale of the business, the -- the key is to just protect anything they can from it.

Let's look at this.

QUEST: Yes.

FOSTER: Beautiful, isn't it?

QUEST: Did -- you didn't make this?

FOSTER: It took a long time, as you might say, in your honor, Richard.

QUEST: Right. Right.

FOSTER: It's an airplane.

QUEST: Right.

FOSTER: The point is, this is a set of LEGO. And LEGO sells three sets a second around the world. It's a massive, massive business. Go back to 1949. This is how many pieces of LEGO the company has actually sold. That's what it's trying to protect. And it's trying to use whatever legal channels it can to protect that business.

QUEST: OK, they can't protect LEGO, but these companies have managed to protect their trademark.

FOSTER: Exactly. So what you've got here is the Coca-Cola logo. So it owns the trademark to that logo. No one else can use it. But it also owns the 3D trademark to the shape of the bottle. LEGO says it should also be allowed a 3D trademark over the shape -- the sort of shape of that. The same applies to the fellow that you're eating right now.

QUEST: Have a piece. Is this -- I mean...

FOSTER: My reward.

QUEST: No.

Is this significant at the end of the day?

Who really cares whether LEGO gets the right to the trademark its -- its -- look, we know LEGO. We know there are competitors.

Why does it matter?

FOSTER: LEGO says, well, the intellectual property lawyer say it is important and he's a lawyer. The broader company says they don't really know yet, but they want to protect it if they can. Obviously, if Mega Blok can't sell that image, then it's at a bit of a disadvantage to LEGO, that can.

QUEST: All right. Many thanks.

FOSTER: Thank you very much.

QUEST: You can't do that.

Give me that.

All right, let's have a look at the big board as we bring this to an end. The big board in New York is currently trading and it is up 16 points at the moment. The Dow Jones Industrials is at 10542.5.

Finally tonight, a Profitable Moment. And I want to return to the idea of France. When I first started work, my late father used to try and impress upon me the in particular of saving for a pension. I was young. I didn't care.

But now, as I head toward 50, the pension issue is very close and real. I was reminded of these numbers by that OECD report, which showed that the French spend the longest time in retirement -- 24 years. Even in the U.K., we spend an average of 18 years in retirement -- 18 years living on a pension. Well, let's hope it goes better than those that happened while in the crisis of the last two years.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest.

Whatever you're up to in the hours ahead, I hope it's profitable.

"MARKETPLACE AFRICA" now.

END