Commercial Law Changes

Since 11th January, all EU states (except Denmark) have had to apply the so-called Rome II regulation.

This regulation deals with which jurisdiction and laws will apply in international disputes and the new rules apply to actions which lead to damages since 19th August 2007.

In most commercial contracts, the agreement will state which laws apply – English, French or whatever. Matthew Bailey, partner, says

“We can advise you on how to deal with international jurisdictional issues in commercial disputes and agreements. Rome II applies to what is known as “choice of law in non contractual matters” such as disputes over patents, copyright and other matters where a contract is not involved. Where there is a contract, a regulation known as Rome I (which was agreed last year) applies and states that if the contract specifies which laws apply usually, that choice is respected. Do your contracts make clear which laws apply? Do they specify which courts have jurisdiction, an issue determined in the EU usually by the contract terms under the Brussels Regulation?

Commercial law changes on a regular basis and another recent development has involved the laws on advertising. The European Parliament has pointed out that some countries, such as the UK, do not give consumers enough rights under the unfair terms directive. The UK’s Consumer Protection from Unfair Trading Regulations 2008 have been in force almost a year. Although a decision last year suggested competitors might have a right to bring action where a competitor unfairly advertises in breach of the regulations, the regulations themselves indicate that, instead, complaints are brought to bodies such as the ASA and Trading Standards. The EU is of the view that the regulations in the UK do not give consumers effective redress as they cannot sue for damage.

If you want us to look at your commercial contract terms or advise on the impact of the Rome II regulation and the advertising rules call Matthew on 01329 822333. Now is a good time to revise terms particularly to ensure you retain ownership of title to products until payment is made. There is a widespread misconception that buyers can recover goods for which payment is not made from their customers. This is wrong. Unless the contract says so there is no such right. If the term is simply on an invoice it almost certainly will have no legal validity.

Bribery Bill

In difficult economic times, employees can turn to bribery and cartels to win contracts and meet targets. Obviously this is illegal and unwise and the new Bribery Bill will make it even more risky a practice.

Ian Robinson, partner, says:

"The proposal is for a new bribery offence. This will apply to companies and also limited liability partnerships (LLPs) registered in England and Wales. They will breach the rules where they negligently fail to prevent bribery by an employee or agent. This shows the importance of training for staff as the company could be responsible even though it knew nothing of the practice. This is already the case with breaches of UK and EU competition law in the Competition Act 1998 and Articles 81 and 82 of the Treaty of Rome. Under the Bribery Bill, it would be a defence to show a company had adequate procedures in place to prevent bribery offences being committed by employees.

The Law Commission has recommended that it should be possible to hold directors and senior managers liable if they consent to, or connive in, the commission of bribery offences.

We would recommend to assist with such defence, that companies put in place staff training and also provide written guidance of the company’s policies aimed at combating corruption. Some companies may also include a clause in their commercial contracts that those with whom they contract have similar policies in place. A clause about bribery and corruption is very common in UK Government contracts already. We can draft such policies for you in addition to competition law compliance programmes. Given that the first people have been failed for breach of UK competition this year, now would be a good time to provide some guidance to employees and revise contracts. Call Ian on 023 9286 2424 for further information.

Buying a Business and Confidentiality

Many local clients are considering buying or selling a business and, in doing so, secrecy is paramount. If details get out, the deal can be scuppered so it is important to keep things under wraps to protect relationships with customers and suppliers. In some cases, employees will be inclined to leave if they get wind of a deal in the offing.

Lawrence Furlong says:
"In the current economic climate some sales are forced due to liquidity problems and some buyers are snapping up businesses or assets. Some people often do not properly consider the legal side of the sale and purchase of a business. In June, the Information Commissioner’s Office published new guidance to help organisations comply with the Data Protection Act when providing information about their employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

TUPE ensures that employees’ terms and conditions of employment are preserved when a business or undertaking is transferred to a new employer. To achieve this, TUPE requires that certain information is provided to the new employer before the transfer takes place. This will include details of pay, contracted hours, holiday entitlement and any details of disciplinary or grievance action relating to that employee. The Data Protection Act does not prevent the transfer of this information as it is a requirement by law. However, both parties must comply with the Act when handling the information, for example ensuring it is accurate, up-to-date and secure.

If you are considering buying or selling a business contact us for a competitive quote. Call Lawrence on 01329 822333

Notes

1. Phil Jones, Assistant Commissioner at the ICO, said: “Organisations should consider their data protection obligations early in the transfer process and only transfer the information required by the new employer. Additionally, if not prevented by insider trading restrictions, employees should be told that their information is going to be passed on.”

2. A copy of the guidance can be downloaded from the ICO website at

http://www.ico.gov.uk/upload/documents/library/data_protection/practical_application/gpn_disclosure_employee_info_tupe_v1.0.pdf

3. The 7th edition of Beswick & Wine - Buying and Selling Private Companies and Businesses has just been published, which provides guidance in this field (Tottel Publishing 2008).

Jail Sentences for Price Fixing

Three oil executives were jailed for price fixing on 11th June in the first such prosecution ever for a cartel.

Ian Robinson says:

Sadly, some of our clients do fall foul of the criminal law and it is important to get immediate high quality legal advice whether the matter simply be speeding, assault, corporate fraud or price fixing.

In this case the jail sentences were between three and five years and were imposed on three directors. They were also disqualified from serving as directors.

The three men had pleaded guilty to a single cartel offence and will be eligible for release after they have served about half their sentences. The judge found that the men were guilty of a “carefully orchestrated and comprehensive process” of fixing prices.

The three used codenames, secret meetings and Swiss bank accounts and the judge found they had cheated customers, including the Ministry of Defence, into paying higher prices. Mr Whittle was paid $300,000 a year for several years to run the arrangement, which he did “as a full-time job”. The cartel is still being examined by the EU and the US authorities and indeed the men were arrested in the US last year after a cartel meeting was bugged.

The US allowed them to return to the UK after a plea-bargain under which they would plead guilty in the UK and serve time in prison. In the US, jail sentences of ten years, of which the entire period is served in jail, are common.

Points to note include:-

· Increasing tougher attitude in the UK to cartel offences

· Real risk of jail sentences

· A search warrant was executed both at the offices of the company and one director's home, which is permitted under the UK competition rules

· Bugging of a cartel meeting in the US

Call Ian on 023 9286 2424 for advice in this field. We can draw up a "raids" policy for your business so that staff know how to react if the OFT raid your premises. We can also draft a competition law compliance programme for you as well as advise on whether particular practices or agreements are valid under competition law. If you are the victim of an anti-competitive practice or abuse of market power, we can advise you your remedies.

Notes

1. The sentences were imposed under the Enterprise Act 2002. The jail sentences would have been much longer had all the period of the arrangement been after cartel activity was criminalised by the Enterprise Act 2002.

2. The jail sentences were as follows:

· Peter Whittle, a consultant, went to prison for three years. He was the global coordinator of a cartel fixing prices in the market for marine hoses. He was also disqualified as a director for seven years.

· Bryan Allison had previously been managing director of Dunlop Oil and Marine and he was jailed for three years. He was subject to a five year director disqualification order

· David Brammar, Dunlop Oil & Marine's sales director, was jailed for 30 months and banned from serving as a director for five years.

3. John Fingleton, OFT Chief Executive, said:

'This was a highly sophisticated and well-organised cartel, involving all the major manufacturers of marine hose worldwide over many years, where the cartel members secretly employed a full-time coordinator to allocate contracts and fix prices. This first criminal prosecution sends a clear message to individuals and companies about the seriousness with which UK law views cartel behaviour. The OFT will continue to investigate and prosecute cartels vigorously, with the aim of ensuring strong competition within the UK economy.' The OFT said "Officers of the OFT executed search warrants at Dunlop's offices and Whittle's home in May 2007 and seized extensive and compelling evidence of the cartel arrangements. At the same time, in an operation coordinated between the OFT and the US Department of Justice, the defendants were arrested in Houston, Texas, where a cartel meeting had taken place the previous day and was covertly recorded by the US authorities. A number of other suspects were also arrested by US authorities".

4. On 5th May the EU confirmed it had sent a statement of objections to companies involved in this cartel which means an EU competition law case is also now starting in respect of this alleged cartel’.

See
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/284&format=HTML&aged=0&language=EN&guiLanguage=en

Next Trainee Solicitor Intake

Trainee Solicitors:

We will be interviewing candidates for the next intake in Spring 2010, with a contract start date of September 2011.

Applications, by email, can be accepted from January 2010 and those we wish to take further will be contacted.

Personal Injury

A baby damaged at birth has failed to recover damages. In Garcia v East Lancashire Hospitals NHS Trust the court looked at what was the cause of the damage to the child was and determined there was no negligence by the NHS trust concerned. Difficult cases such as this will rest on the medical evidence concerned.

Matthew Bailey says:

"We handle a wide range of personal injury cases and few are as traumatic as when a baby dies or is injured at birth. A damaged child will cost the parents a lot of money to raise and where the hospital has been negligent a claim can be brought. Although in the Garcia case, the connection between the action of the hospital and the damage was not found (and the court determined that even if the child had been induced and the birth been earlier the injury (a stroke) would still have occurred) in other cases a valid claim can be made. It is also important that those responsible are called to account. The same applies if you are injured at work through the fault of an employer or in an accident such as whilst driving the car.

Many personal injury cases can be handled on a no-win, no-fee basis if you prefer and once liability is established the question of damages needs to be determined. If you need any advice on personal injury issues contact us for information"

Call Matthew on 01329 822333 for advice.

Buzz Marketing - New Rules

Many local clients try all kinds of weird and wonderful advertising stunts rather than a straight forward brochure or mailing. One of the newer forms of advertising with potential to reach many prospective customers is internet marketing.

Ian Robinson says:

"We can advise you on all the rules and regulations in this area. On 26th May, the new Consumer Protection from Unfair Trading Regulations 2008 comes into force. These regulations have an impact on buzz marketing and marketing via social networking web sites such as Facebook and MySpace.

The regulations introduce a new criminal offence of "Falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession or falsely representing oneself as a consumer" (sched 1 para 22). This has huge implications for the advertising industry as some modern advertising methods work on the basis that individuals online are engaged to recommend a product to their friends or a group of individuals go to sit in a bar or other public place and talk loudly about the virtues of a particular product. So from 26th May, planting a comment in a blog without making clear that the message has been placed by or on behalf of the business could be a criminal offence.

In addition, anyone seeding viral advertisements online in a way that implies they are just a member of the public could also infringe that prohibition. Another area where businesses often fall foul of the law is where they use photographs in brochures, on websites and online without permission from the copyright owner. It always pays to check difficult legal issues with lawyers before an expensive marketing campaign is launched and also to ensure there are writing contracts with advertising agencies which makes clear whether the agency or customer are responsible for legal compliance.

For further information call Ian Robinson on 023 9286 2424.