Commercial news vlog - July 2021

Commercial news vlog - July 2021


 

COVID UPDATES

 

End of suspension to wrongful trading laws

From 1 July, the suspension of the wrongful trading laws will end, and UK Directors may be personally liable if they continue to trade knowing that there is no reasonable prospect of avoiding an insolvent winding up/administration and fail to take every reasonable step to minimise potential losses to creditors.

See Practice Note: Corporate Insolvency and Governance Act 2020—temporary changes to the wrongful trading regime [Archived]

 

Corporate & Commercial

 

New Block Exemption

The CMA has published a consultation on a replacement to the existing Vertical Agreements Block Exemption Regulation (‘VBER’). Here’s a quick summary:

  • VBER exempts certain competition law rules from supply chain agreements – such as franchise agreements.  
  • The current VBER expires on 31 May 2022. Expect a 1-year transition period.
  • There are unlikely to be any fundamental changes but there will be some important changes.
  • To deal with concerns about the death of the High Street, it’s likely that there will be allowances for suppliers to:
    • charge higher prices for goods that are intended to be sold online; and
    • to allow suppliers to impose different standards for online to ‘bricks and mortar’ sales;
  • Wide parity clauses whereby a product or service may not be advertised on better terms on any other channels will continue to be outlawed, but there will be an allowance for narrow parity clauses (where the restriction is limited to the retailer’s own published price).
  • The CMA will provide more guidance on agency agreements – particularly for instances where a retailer acts both as an agent and as an independent distributor for different products of the same supplier (dual role agents).
  • Interested parties have until 22 July to respond to the consultation document.

The EU is also currently reviewing its Vertical Restraints Block Exemption. In fact, the Commission last week launched a consultation on the draft regulation/guidelines (see further). Also, the UK’s new vertical regime is likely to be modeled closely on the EU’s current/new regime.

See: UK Competition law—daily round-up (17/06/2021)

See Practice Notes : The Vertical Restraints Block Exemption and Analysing vertical agreements under EU competition law, EU competition law and selective distributionEU competition law and exclusive distribution agreements, Competition law and legacy 

 

Unfair contract terms

In the recent case of Phoenix Interior Design v. Henley Homes1, Henley Homes refused to pay the final instalment of Phoenix’s fee alleging quality issues. Phoenix defended stating that its standard terms excluded liability if the total price of the goods has not been paid by payment due date. The Court ruled that this clause was void; it did not meet the reasonableness requirement in the Unfair Contract Terms Act 1977, because:

  • it was an unusual clause, tucked away in the standard terms and conditions;
  • Phoenix had not explained why an anti-set off clause would not have sufficed instead;
  • the effect of the clause was potentially exorbitant – the slightest delay in payment meant that any claim could be avoided and the timing of payment was complicated in this case as it was linked to completion rather than a fixed date.

This case is a reminder that the more prominent, heavily negotiated and well understood the clause, the more likely it is to be upheld.

See: Incorporation of standard terms, UCTA, contractual completion (Phoenix v Henley)

See Practice Notes: Contracts for the sale and supply of goods—business to business and Standard terms and conditions—incorporation and Exclusion and limitation of liability

 

Proposed climate-related disclosures for standard listed companies

The FCA has proposed to extend the application of its ‘comply or explain’ climate-related disclosure requirements to all standard listed issuers – for financial years beginning on or after 1 January 2022. The disclosure requirements reference the recommendations published by the Financial Standards Board’s Taskforce on Climate-related Financial Disclosures (TCFD). The FCA Consultation Paper will close on 10 September with finalised rules being published by the end of this year.

See: FCA consults on climate-related disclosure rules for listed companies and certain regulated firms

See Practice Note: Voluntary environmental, social and corporate governance (ESG) reporting

 

Data security

 

UK data adequacy decision

In June, the EU delivered a data adequacy decision for the UK under the EU’s GDPR regime. That adequacy decision excludes only a relatively small sub-set of personal data transfers (personal data transferred to the UK for the purposes of UK immigration control and personal data that falls within the scope of a certain 'immigration exemption'). This means that most personal data may continue to flow freely from the EEA to the UK. Legal challenges are however expected.

See: Practice Note: Brexit—implications for data protection

 

Standard contractual clauses

The new EU standard contractual clauses (‘SCCs’) for use under the EU’s GDPR came into force on the 27th June. SCCs allow personal data to be lawfully transferred to third countries outside the EEA that have not been approved by the EU as having adequate data protection laws.

Businesses relying on SCCs for international transfers under the EU’s GDPR must transition to the new SCCs by 27 December 2022.

The new SCCs are clear that (following the Schrems II decision that we have previously reported on), data exporters cannot blindly sign the SCCs; they must complete a transfer impact assessment (‘TIA’) – to consider whether the laws of the country of the data importer are adequate and whether any ‘supplementary measures’ are needed. Final guidance on the on TIAs was also issued last month by the European Data Protection Board.

The new EU SCC’s will not be valid for use under equivalent UK data protection laws – but the UK Information Commissioner will consult on the UK SCCs this month.

See: The new EU GDPR standard contractual clauses for international transfers and Consultation on UK SCCs for international transfers to start in July 2021, ICO official says  

See Practice Notes: UK GDPR and EU GDPR—transfers of personal data internationally and to international organisations, UK GDPR , EU GDPR—transfer impact assessments and supplemental measures and EU GDPR—transfers of personal data internationally and to international organisations

 

GDPR Article 27 representative enforcement

The EU’s GDPR requires organisations that process personal data of EEA citizens or residents but who are located outside of the EEA to appoint a data protection representative (DPR) in many situations. This often-overlooked provision is now more likely to be noted following a €525,000 fine being issued to LocateFamily.com for breaching that obligation. There is a similar requirement to appoint a UK DPR for organisations that process personal data of UK individuals but are not based in the UK.

See: Locatefamily.com fined €525,000 for failure to appoint data protection representative

See Practice Notes: EU GDPR—extra-territorial reach and UK GDPR—extra-territorial reach

See Precedent: Key terms for insertion into a services contract for the appointment of a data protection representative in the UK or EEA

 

ICO's new Data Sharing Code of Practice

In May, the ICO's Data Sharing Code of Practice was laid before Parliament. It is a statutory code and a guide for organisations that are controllers sharing personal data.

See: ICO welcomes laying of Data Sharing Code of Practice before Parliament

See Practice Note: Personal data sharing between controllers

 

Advertising & Marketing

 

Directors may be liable for a company’s IP infringements

The recent case of Lifestyle Equities v Ahmed2 has sent a worrying message to directors that they may be personally liable for intellectual property infringements committed by their companies. Unlike many of the previous cases where directors had been personally liable, the directors in this case had not acted in bad faith and the company was not a ‘one man band’ business. The personal liability of the directors was, however, relatively modest being 10% of their salaries (representing the profits made by them, rather than all the profits made by the (now dissolved) company).

See: Joint and several liability upheld by Court of Appeal (Lifestyle Equities CV v Ahmed)

See Practice Notes: Trade mark infringement and Remedies for trade mark infringement

 

Employment

 

Deliveroo riders not entitled to worker rights protection

We recently reported on the Supreme Court Uber decision that confirmed Uber drivers are ‘workers’ and therefore entitled to worker rights including holiday pay and national minimum wage. The Court of Appeal has now ruled3 in the Deliveroo case finding that the Deliveroo riders are not workers. The critical difference being that Deliveroo riders can substitute themselves whereas Uber drivers are required to personally perform the services.

See: Deliveroo riders are not workers with ECHR Article 11 right to form trade unions

See Practice Notes: Worker status, Reference to Central Arbitration Committee and The Central Arbitration Committee

 

Employees can be transferred to multiple new employers under TUPE

In a recent case, a council engaged a contractor to fit kitchens in social housing. The contractor had two teams completing this work. Following a re-tender, the work was awarded to two different contractors – one for the North and one for the South. The outgoing contractor decided that the team that had worked mostly in the South would transfer to South based contractor and vice-versa. The Employment Appeal Tribunal4, following a Court of Justice of the European Union decision5, determined this simplistic approach was wrong and, instead, each employee must be considered individually even if this led to an employee transferring to both incoming contactors.

See Practice Note: TUPE—service provision changes

 

Gender Critical belief

A recent Employment Appeal Tribunal case of Forstater v CGD Europe6 concerned Ms Forstater’s claim that she had been discriminated against because of her held belief that a person’s sex remains the same regardless of a person’s stated gender. The EAT, overturning an earlier Tribunal decision, agreed that her belief was capable of protection as a philosophical belief in the Equality Act 2010. To be protected as a philosophical belief it must meet criteria including that it is:

‘..worthy of respect in a democratic society, not  incompatible with human dignity and not conflict with the fundamental rights of others’

The Tribunal had decided that her belief did not meet this criterion but the EAT disagreed saying that as her belief does not ‘get anywhere near to approaching the kind of belief akin to Nazism or totalitarianism’  it does still meet the requirements of being a philosophical belief.

See: Believing that a person’s sex is an immutable biological fact is protected under the EqA 2010 (Forstater v CGD Europe, Center For Global Development and Ahmed) and The Forstater Judgment: What Next?

 

UK Government publishes 1 July right to work guidance

The Home Office has published its revised Code of Practice on Preventing Illegal Working covering the changes to the right to work check requirements for EEA citizens which came into effect on 1 July. Failure by an employer to undertake the correct right to work check can lead to a criminal penalty.

See: Home Office updates illegal working penalty scheme for employers and UK government publishes 1 July right to work Code

See Practice Notes: Brexit materials—right to work checks

 

Long COVID

Cases of ‘long COVID’ in the UK are increasing. ACAS has now published guidance for employers in response to the growing impact of long COVID. The new ACAS guidance acknowledges that it is not possible to say yet whether long COVID will be a disability but recommends making ‘reasonable adjustments’ to allow for workers who are suffering with the condition – such as allowing flexible working hours or temporary redistribution of duties or allowing workers to work from home.

See: Acas provides advice on dealing with employees with prolonged effects of coronavirus (COVID-19)

See Practice Note: Coronavirus (COVID-19)—sickness and other absence

 

Consumer

 

New right to repair rules

Products such as washing machines, TVs and fridges should become easier to repair and cheaper to run under new rules that came into force on the 1st July and require manufacturers to make spare parts available to people buying such appliances although they have a grace period of up to two years to make spare parts available. 

See: Ecodesign for Energy-Related Products and Energy Information Regulations 2021

See Practice Note: Consumer Rights Act 2015—goods

 

Cases, laws, decisions referred to in this Bulletin

1. Phoenix Interior Design Ltd v. Henley Homes PLC [2021] EWHC 1573 (QB)

2. Lifestyle Equities v Ahmed [2021] EWCA Civ 675

3. R (on the application of the IWGB) v CAC and Roofoods Ltd t/a Deliveroo [2021] EWCA Civ 952

4. McTear and Mitie v B Bennett and others UKEATS/0023/19/SS

5. ISS Facility Services NV v Sonia Govaerts & Atalian NV, formerly Euroclean NV Case C-344/18

6. Forstater v CGD Europe (2021) UKEAT/0105/20/JOJ

Disclaimer

Nothing in this Bulletin, or on the associated website, is legal advice. We have taken all reasonable care in the preparation of this Bulletin, but neither we nor the individual authors accept liability for any loss or damage (other than for liability that cannot be excluded at law).

 

 

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About the author:
Iain founded Radius Law in September 2013 which has been designed to meet the exacting standards that Iain had of his law firms during his time as an in-house counsel.

 

Iain’s in-house career spans 14 years with the 7 years from 2006 to 2013 being the General Counsel and Chief Compliance officer for the Mercedes-Benz UK Group. In this role he led a team of 18 staff.
Iain has previously been recognised in the Financial Times Innovative Lawyers report as a thought leader in legal management. He has spoken regularly and had published articles particularly on how to measure legal value.

Aside from legal management, Iain has significant expertise in regulatory work, particularly competition law and anti-bribery. Iain has led the implementation of large scale compliance programmes and also managed regulatory investigations.

Outside of the day job Iain has a passion for community projects and has been a non-executive director of a housing association and also established a debt advice centre. This social conscious approach continues in Radius Law with a bold commitment to pay 10% of profits to charity.