Monthly commercial law update: Top 5 developments in December

Monthly commercial law update: Top 5 developments in December

Strange to see how a good dinner and feasting reconciles everybody: Samuel Pepys

So is everyone happier then? Relaxed, recharged and a tad more rotund after a long break?

Perhaps you are struggling to plough through the various files on your desk that you were hoping would magically disappear over the holiday period?

If so, why not take a break for a few minutes and check out December's commercial law update? It contains details of some of last month’s top developments, from 'pay and stay' clauses to news on the ever-developing 'right to be forgotten' remedy.

Supply of goods and services: 'Pay and stay' clauses

There was plenty of discussion in the media last month as the news broke that Premier Foods received various sums of money from their suppliers to secure ongoing relationships with them: so-called 'pay and stay' arrangements.

Nicholas Spearing, head of the London antitrust group at Milbank, Tweed, Hadley & McCloy, considered the key competition law issues for us and found that the matter is not as clear-cut as some critics have claimed (see ‘Pay-to-stay’ deals – where’s the harm? from our blogging colleagues at Randi).

In our interview with him, he stated:

frequently, pay-to-stay deals will be treated as part of the normal cut and thrust in a competitive market. They do not appear to be an enforcement priority either in the UK or Brussels.

He added:

in assessing regulatory risk, much will depend on the market shares of the participants and the importance of their business to other players in the supply chain. Where a supplier or retailer is dominant, adverse effects on competition and consumers are likely to be more marked.

It is clear that this requires ‘particular caution under both UK and EU law’ and that ‘payments that deliver effective exclusivity will be judged accordingly’.

He finished by adding by way of warning:

competition risk will be further heightened where the scheme generates few demonstrable efficiencies or consumer benefits.

Contracts: Common European Sales Law withdrawn

Mid-month, the European Commission published its Work Programme for 2015. In it, it published a list of legislation that it intends to withdraw.

Item 60 of that list is the controversial Common European Sales Law, which will be withdrawn in favour of a modified proposal 'in order to fully unleash the potential of e-commerce in the Digital Single Market'. The Commission states that it will wait for the views of the European Parliament and the Council on the proposals before formalising the withdrawals.

The Work Programme sets out 23 new initiatives proposed by the Juncker Commission and 80 existing proposals which the Commission proposes to withdraw or amend for political or technical reasons. The programme reflects the Commission’s strengthened commitment to cutting red tape and removing regulatory burdens.

One of the areas that will be of particular interest to commercial lawyers is the proposal to create a new Digital Single Market Package which will aim to create the conditions for a vibrant digital economy and society by:

  • complementing the telecommunications regulatory environment;
  • modernising copyright rules;
  • simplifying rules for consumers making online and digital purchases;
  • enhancing cyber-security; and
  • making digitalisation mainstream.

Data protection: Article 29 working party issues opinions

The Article 29 Working Party published an opinion on the so-called right to be forgotten. The opinion sets out how European data protection authorities intend to implement the judgment of the CJEU in the case of Google Spain and Google v Agencia Española de Protección de Datos (AEPD) and Mario Costeja González.

The opinion sets out the group's interpretation of the ruling as well as the common criteria to be used by the data protection authorities when addressing complaints. Criteria will be applied on a case-by-case basis and in accordance with relevant national laws. The right only affects the results obtained from searches made on the basis of a person's name and does not require deletion of the link from the indexes of the search engine altogether. Thus the original information will still be accessible using other search terms or by direct access to the source. Significantly, the opinion states that de-listing should also be effective on all relevant .com domains.

In addition, the working party has published a new opinion on device fingerprinting in which it addresses perceived serious data protection concerns for individuals arising from the use and proposed use of device fingerprinting. It gives the example of the use of device fingerprinting as an alternative to HTTP cookies for analytics and tracking. Valid consent is required unless an exemption applies. The same principle applies to the use of device fingerprinting for storing information on the user's terminal device. The opinion makes it clear that device fingerprints can constitute personal data.

Finally, the working party has also published a new working document on a co-operation procedure where approval is sought for standard contractual clauses.

Data protection: CJEU rules on Data Protection Directive and the use of CCTV

The Court of Justice of the European Union (CJEU) ruled in František Ryneš v Úřad pro ochranu osobních údajů Case C-212/13 on the application of the Directive 95/46/EC on data protection to domestic surveillance cameras.

It held that the Directive applies to a video recording made with a surveillance camera installed by a person on his family home. The Directive nevertheless makes it possible to assess that person's legitimate interest in protecting the property, health and life of his family and himself.

The case arose in the context of a family whose house was attacked several times. They installed a CCTV system and the recordings made were handed over to the police who identified two suspects, who were subsequently prosecuted. A suspect disputed the legality of the processing of their personal data and the owner was fined. The case was referred to the CJEU.

The CJEU emphasised that the image of a person recorded by a camera constitutes personal data because it makes it possible to identify the person concerned. Video surveillance involving the recording and storage of personal data falls within the scope of the Directive, since it constitutes automatic data processing. The CJEU said that under the Directive, it is not permitted as a general rule to process personal data unless the data subject has given his consent.

The Directive does not apply to the processing of data carried out by a natural person in the course of a purely personal or household activity, but the CJEU found that exception must be narrowly construed. Accordingly video surveillance which covers a public space and which is directed outwards from the private setting of the person processing the data cannot be regarded as an activity which is a 'purely personal or household activity'. However data processing is permissible without the consent of the data subject where it is necessary for the purposes of the legitimate interests pursued by the controller. The data subject need not be told of the processing of his data where the provision of such information proves impossible or would involve a disproportionate effort.

Member states may restrict the scope of the obligations and rights provided for under the Directive if such a restriction is necessary to safeguard the prevention, investigation, detection and prosecution of criminal offences, or the protection of the rights and freedoms of others

Trade finance: Government proposes to nullify bans on invoice assignment clauses

The government is proposing to nullify bans on invoice assignment terms on business to business contracts.

The proposals are part of its plans to remove barriers to invoice finance. It seeks views on its proposals, the draft regulations which would implement them and the costs and benefits of the measures on both companies and the invoice finance market.

Invoice finance allows a business to give the right to future payment to a finance provider in exchange for a loan up to the full value of the invoice. It can provide an important source of finance if a business has to wait a long time between completing a job and receiving payment.

The ban on invoice assignment is often part of a more general ban on an assignment clause in the contract to stop a supplier from sub-contracting. As a result, an organisation's access to invoice finance is often unintentionally restricted.

In December 2013, the government published a discussion paper. It asked whether removing contractual barriers to selling invoices would be helpful to small businesses because it would increase their access to different finance options. The majority of respondents to the paper agreed it would be helpful.

In its response, the government announced it would introduce legislation to remove these barriers to financing. Clauses 1 and 2 of the Small Business, Enterprise and Employment Bill provide the broad legislative power to do this. The consultation ends on 16 February 2015.

So that's it for this month. See you again in 4 weeks. In the meantime, if you have any comments, we very much welcome them below.

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