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

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.

Self Employed Workers Claim Unfair Dismissal

Many contractors who are really employees, wrongly pretend to HMRC that they have self employed status. Yet they turn up to work every day, are controlled by the employer, not allowed to substitute a different person to undertake the work and have all the hallmarks of being employed. In a recent Court of Appeal case it was held that two such workers could later argue they were employed when it suited them.

Andrew Bryan says:

"This case should serve as a warning to employers to be absolutely sure that workers are really self-employed, otherwise their contractors might later bring unfair dismissal claims if their contract is terminated, which is only possible for employees who have worked for a year for that employer. It is also worth, on a regular basis, having lawyers check your consultancy and contractor agreements and also advise on whether individuals really are employees or not.

The interesting legal point in this case was that the employer was saying the employees (Mr Payne and Mr Grace) could not, in effect, lie about their legal status when it suited them for tax purposes. Then completely change their view when it suited them to bring an unfair dismissal claim against the employer, arguing that they were employees all along. The employers tried to argue that the contract was "tainted with illegality" as the individuals had misrepresented to HMRC that they were self employed when they were employed. The court found that the individuals were originally taken on a self-employed basis but later the employer had suggested to them they were employed. Obviously, if an employer can avoid making any such suggestions that will put the employer on much stronger ground. The court thought there was an error of categorisation of the employment contract rather than an illegality or misrepresentation by the employees and they could bring claims as if they were employees.

It is important that contracts are correct and the distinction does matter between employees and contractors. For example, if the contractor is producing work protected by copyright or patents the contractors will retain ownership unless the contract says otherwise, whereas with an employee, copyright and patent rights automatically rest with the employer."

Contact us if you need advice on your employees and contractors.

Supermarkets Raided by OFT

On 24th April some leading supermarkets were raided by the Office of Fair Trading after a tip-off by Wal-Mart/Asda about practices which may breach UK competition law. Emails were seized in what the supermarkets claim is a "fishing expedition", crossing many products and sectors.

Andrew Bryan says:

"The raids follow a separate investigation into pricing arrangements for cigarettes sold in supermarkets and came the same week that the Competition Commission issued its report into the sector. However, the OFT in the same week also had to pay Morrisons £100,000 in a settlement of the company's libel action against the OFT arising from an OFT press release suggesting Morrisons was guilty of competition law breaches (before that is proven) in the on-going investigation into milk pricing.

The OFT appears to be getting tougher. It issued a statement of objections - the equivalent of a writ/claim - against 112 construction companies recently for alleged cover pricing and compensation payments. Many of these companies have already admitted guilt and applied for leniency. Although some parts like the ban on price fixing and cartels are very easy to understand, not all businesses understand what information they can exchange with a supplier or rival about forthcoming price increases, pricing, discounting on retail prices and the like. The supermarkets have complex arrangements and relationships with their suppliers and it is wise to take legal advice on competition law in relation to many of these practices. Bigger companies often have written competition law compliance programmes and training for staff and issue regular warnings to ensure all employees know what the rules allow. Breach of the rules can lead to fines of 10% of worldwide group turnover, restrictions in agreements are rendered void and third parties can sue for damages. In addition, negative publicity will result. Where there is horizontal price fixing or bid rigging, jail sentences are possible as is extradition to the US if there is a US element, where prison sentences of 10 years for breach of anti-trust legislation are common.

Investigations by the EU are also possible for breach of EU competition law. Recently, formal charges were sent to a group of multi-national companies allegedly involved in a conspiracy to fix prices of marine equipment supplied to the oil industry. This follows raids on the companies 12 months previously in a case which has led to investigations in the US and UK and the first charges for individuals involved for the criminal cartel offence under the UK 2002 Enterprise Act.

Corporate Restructurings

Not all businesses are as high profile as Northern Rock or Bradford & Bingley but many are going through similar periods of financial difficulties at present. Many need more cash like some of the banks that have been in the press during May 2008.

Nicholas Eve says:

"Act early and do not panic, is our principal advice to local businesses in difficulties in the present economic climate. If you may need more funds, think about that early before creditors are calling. Look at cash flow on a regular basis. The Companies Act 2006 sets out the duties directors owe to a company and if you operate through a limited company you need to ensure you comply with your legal obligations. It is an offence to trade whilst insolvent. It is important to take advice from solicitors or accountants before that point is reached so that sensible decisions can be made about the business.

It may be possible to sell off the shares in the company or its assets or sell a partnership or business operated as a sole trader which is preferable to going into liquidation as a company (or bankruptcy for a company). It is better to take charge, appoint your own liquidator or effect voluntary arrangements with creditors where possible. We can steer you through the process and also advise on any sale or refinancing of your business."

Call Nicholas on 01329 822333

Liquidation and Bankruptcy

Some local businesses and individuals can get into financial difficulties. On 21st December, Travelscope Holidays Ltd ceased trading as it was unable to meet its liabilities. In this case, those traveling will have protection as the company is a member of ABTA but many local businesses find they are last in line for payments when a customer goes out of business.

Matthew Bailey says “We can advise you on how to protect yourself against suppliers and customers going out of business. Obviously, protection includes having written terms and conditions of sale which clearly apply and under which ownership of the goods you sell to customers does not pass to them until payment is made (known as a retention of title clause). The clause may also give you a right of entry to their premises to retrieve your goods if they go out of business. These clauses need to be carefully drafted to avoid the clauses being classed as a “charge” or mortgages. Such charges are only valid if registered at Companies House like any other mortgage so avoiding rending those provisions applicable is important.

We can also advise you on payment clauses in contracts, letters of credit for foreign supplies, performance bonds and other legal protection measures. In addition, if you are in difficulties, then we can provide you with all the advice and guidance you need. Individuals go bankrupt and companies go into liquidation. However, there are other options too such as IVA – individual voluntary arrangements with creditors for individuals, and administration instead of liquidation for companies. We also advise on clauses in commercial contracts which deal with situations of liquidation and when contracts can be terminated in such a case. The earlier advice is sought the better. It can often be wise to be in charge of the winding up of a business rather than leaving it to the creditors to apply to wind the business up.

Contact Matthew on 01329 822333

Protect your Inventions

Many local businesses need better protection for their valuable commercial inventions. In December, new patent rules came into force simplifying the patent system. Patents can be registered for up to 20 years for new products or new processes.

Roger Hahn says:

“Some companies let inventions go without bothering to register them as patents, which is a waste. Others find inventors disclose the invention too soon because they have not signed confidentiality or non-disclosure agreements (NDAs) before discussing the invention with a possible business partner. We can draw up NDAs for you and advise on how best to protect your business’ intellectual property.

Another recent change is a new patent scheme run by the UK Intellectual Property Office, whereby customers can now request an online certified copy of their patent applications on line. On 13th December 2007 the revised European Patent Convention came into effect. It makes it simpler to apply for patents too where registration is needed in more than one country in the EU.

“It is wise to have written agreements with collaborative partners dealing with ownership of patents and other intellectual property rights and to ensure in commercial contracts, and even standard conditions of purchase, that it is made clear which party will own any resulting intellectual property rights. Although employers will own patents in inventions made by employees in the course of their normal duties or duties specifically assigned to them, if the individual is self employed that does not apply and it is wise to have written contracts dealing with this. We can draw up these for you. Contact us for further information”.

Call Roger on 01329 822333

Trade Marks

Many of our local clients use innovative names for their businesses and products. Some protect these by registered trade marks. From 1st October, new rules for trademarks come into force.

Matthew Bailey says:

“The new rules provide that the UK Intellectual Property Office (IPO) will now examine trade mark applications to see if the mark is distinctive and suitable for registration as now - but they will no longer check if someone else has the same or similar name. This means that unless trade mark owners are watching out for new registrations by competitors and others, they may find someone registers their name as a mark.

However, companies can oppose an application for registration of their own name or a similar name but that will occur only if they notice it is going through. This makes the UK system similar to that applying in the other 26 EU states which are part of the Community Trade Mark system. Many UK trade mark owners also apply for Community Trade Marks, which provide one mark protecting them in 27 EU states. Under the CTM system 25% of marks which are applied for are opposed but currently in the UK it is only 5%. It is likely that oppositions will also rise in the UK under this new system.

However, the IPO will notify applicants if it notices an overlap with an existing mark. There is also a system where existing owners can pay to use notification services. Contact us if you have any trade mark or similar issues. Call Matthew on 01329 822333

Directors' Duties

The Companies Act 2006 has changed the law on duties of directors. From 1^st October four of the new seven duties placed on directors of companies are in force.

John Guest says:-

“The four new duties are that the director must act within the powers granted to them by their company, that they must exercise independent judgement, must use reasonable skill, care and diligence and must promote the success of their company. The other three duties come into force in October 2008 - to avoid conflicts of interest, declare interests in transactions with which the company is involved and a duty not to accept benefits from third parties.

Many of these duties already exist as developed in case law over the years but this is the first time they have been written down in a statute. The duty to promote the success of the company extends the existing law. The director has to “act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole” This will include considering the interests of the employees, what consequences a decision will have long term, fostering good relationships with suppliers, customers and others, impact of the business on the community and environment and keeping the company’s reputation for high standards high.

If a director does not pay heed to these issues then they could be sued later by shareholders suing in the company’s name.

For more information on directors’ duties and the Companies Act 2006 in general call John on 01329 822333.

Data Protection

Do you hold mailing lists or information about customers, suppliers and other individuals? If so, you may well need to be registered under the Data Protection Act and also comply with the privacy protection and other measures in the Act. Recently the Information Commissioner found that Orange Personal Communications Services had not processed personal data properly. New members of staff were allowed to share usernames and passwords when accessing the company IT system. In a separate case, it also found that Littlewoods Home Shopping had breached the Act in a case where a customer could not stop the company using her data for direct marketing even after she informed them.

Matthew Bailey says:

“The July Annual Report of the Information Commissioner describes many recent breaches of the law by businesses. We advise a wide range of clients on their obligations under the Data Protection Act 1998 and related regulations. At present the IC is consulting on a new code to replace the current Code of Practice on CCTV under the 1998 Act. All those who use CCTV at work need to comply with the current code until the new one is in place. It requires signs to be placed, amongst other requirements, so that people who are being filmed are aware of the filming.

In a related development, the European Court of justice held that the EU acted unlawfully in allowing private personal data about EU passengers traveling to the U.S. to be passed to the U.S. authorities without their permission. Therefore, a new solution had to be found. The EU has now come up with a new Passenger Name Records (PNR) arrangement. If you gather customers’ data and do mailings to them you should ensure you comply fully with the data protection rules. We can advise you on the law in this field and draft documents for you - such as employee email and internet policy documents for use with staff.”

Call Matthew Bailey for further information on 01329 822333

Bank Charges - OFT Test Case

In late July, the Office of Fair Trading started a High Court action for a declaration on the application of the law in respect of unauthorised overdraft charges. Many local people have been seeking to reclaim what they regard as charges that were too high when they went overdrawn, in breach of their agreement with the bank, and incurred charges as a result. In some places, the courts have been overwhelmed with small claims being litigated and many banks have settled and repaid charges to customers. In the first half of the year £1 billion was paid back to customers and HSBC alone has refunded £116m. Whether they should have waited for a definitive court decision remains to be seen.

Matthew Bailey a partner says

”Tens of thousands of complaints that these charges are unfair have been received by the County Courts and the Financial Ombudsman Service. The banks do not accept that the unfairness rules of the Unfair Terms in Consumer Contract Regulations 1999 apply. The OFT believes that they do and is seeking to establish this legal principle clearly in the court. It would be helpful to have a binding precedent in this area of law rather than non-binding county court judgments and lots of ‘out of court’ settlements. The OFT is also undertaking a market study into personal current accounts, which addresses wider questions about competition and price transparency in the provision of personal current accounts. Banking did not used to be free in the UK. Some people will remember when every cheque was paid for by the customer. Those who do not overdraw their accounts unlawfully may find they pay for those in breach of contract if free banking goes as a result of the study.”

”If you need information on this area of law or even as a business are concerned about whether your own terms might breach the 1999 regulations, contact Matthew for advice on 01329 822333”

Fair Competition

The Office of Fair Trading’s Annual Report, published in July, highlights the importance for local business clients of avoiding a breach of the Competition Act 1998. Fines can be heavy in this area of up to 10% of worldwide group turnover:

Andrew Bryan says “Businesses may not realise that they cannot even exchange price information with competitors, never mind fix prices and any arrangements that might amount to bid rigging or horizontal price fixing can land you in jail or even extradited to the US for prosecution there, where there is a US element to the arrangement.

The report points out that, as a result of the OFT’s investigation into collusive tendering by construction companies in England, it has uncovered evidence of bid-rigging in thousands of tenders with a combined estimated value approaching £3bn. At the end of March 2007, the OFT announced its intention to fast track the investigation by making an offer of reduced financial penalties.

Even companies acting alone can breach the UK competition rules if they enjoy a dominant market position and then engage in practices such as excessive or predatory pricing or refusal to supply customers in some cases. Many commercial agreements have to be carefully drafted to avoid infringement of the rules, even provisions such as non-competition clauses in distribution agreements. Anyone exporting or importing goods within the 27 EU States also needs to be aware of the single market rules – that once goods are put on the market by the owner of any trademark or other intellectual property right that protects the goods, they must be allowed to circulate freely.

Call Andrew on 029 9221 0170 for further information.

Buying and Selling a Business

Many of our local business clients buy or sell businesses. Sometimes they own a limited company and sell its shares and sometimes its assets and in other cases they trade in partnership or as a sole trader and are selling assets to the buyer. John Guest says:
“We provide advice and guidance on business sales and purchases and can ensure you are properly protected legally in all contractual documents relating to the sale or purchase. In June, the Office of Fair Trading issued a consultation in revised guidance in merger cases. Some mergers, particularly in narrow local markets where the parties’ market shares are over 25%, may need to be cleared by the OFT.

Under the Enterprise Act 2002, the OFT has a duty to refer certain mergers to the Competition Commission. The exception allows the OFT to decide not to refer where the markets involved are not of sufficient importance to justify a reference. Existing guidance suggests that the OFT may consider a merger in a market worth as little as £400,000 per year to be of sufficient importance to justify a reference to the Competition Commission. The revised guidance raises the market size threshold to £10 million. Many other legal issues relating to a sale of a business arise, including protection for employees under regulations known as TUPE 2006.
Call John on 01329 822333 for further information.

Notes

1. Since real consumer harm can arise in cases below that threshold, it is subject to certain caveats. Specifically, the OFT is less likely to make use of the exception where:
   - market concentration is very high and entry prospects are low, making substantial consumer harm likely
   - there is evidence of coordination, such as price-fixing, between competitors in one or more of the markets in question
   - a reference would have important precedent value for business, or
   - a substantial proportion of the likely detriment is suffered by vulnerable consumers.
   
2. The OFT decided to review its guidance in this area because it was concerned that an unduly narrow interpretation of the exception might result in mergers being referred to the Competition Commission where the risk of consumer harm was low and any adverse effect would be small-scale. In such cases the costs involved potentially outweigh any benefit of intervention. This concern has been heightened by the impact of the Court of Appeal’s judgment in IBA Health.
   
3. The consultation paper is at http://www.oft.gov.uk/shared_oft/consultations/oft933con.pdf
   
4. The deadline for comments is 10 August 2007
   
5. Under current law, the OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
   
6. In its February 2004 judgment in IBA Health v OFT [2004] EWCA Civ 142, the Court of Appeal criticised the OFT Guidance in force at that time, which described the threshold test for reference as whether there was a ‘significant prospect that a merger may be expected to lessen competition substantially’, as setting too high a threshold for reference.
   
   As a result, OFT guidance was revised, and it now states that the threshold for reference will be met if there is a 'realistic prospect that the merger will lessen competition substantially'.
   
   The effect of the judgment, and the change in OFT guidance, is widely regarded as having lowered the threshold for references and, consequently, having made reference in marginal cases more likely.
   
7. Under the Enterprise Act 2002, a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million or, as a result of the transaction in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.
   
8. Reference should also be made to the existing 'Mergers: substantive assessment guidance' and 'Interim arrangements for informal advice and pre-notification contacts'. The latter sets out the OFT interim practice since April 2006 on the provision of informal advice for proposed mergers.

Recycling of Electrical Waste

ON 1st July, the UK brought into force the EU Waste Electrical and Electronic Equipment (WEEE) Directive. This imposes new requirements for the disposal of electrical waste. Ian Robinson says:-

“The WEEE directive covers a wide range of products such as:

• Large household appliances: fridges, freezers, microwave ovens, washing machines
• Small household appliances: vacuum cleaners, toasters, coffee machines, electric toothbrushes
• IT and telecommunications equipment: PCs, laptops, monitors, keyboards, printers, cordless phones
• Consumer equipment: radios, TVs, DVD players, video recorders etc
• Lighting equipment: low-energy Compact Fluorescent Lamps (CFLs) are classified as WEEE
• Electric tools: all tools such as drills, saws, sewing machines. Only large, stationary industrial tools are exempt
• Toys, sport and leisure equipment: electric trains, game consoles, cycle computers etc
• Medical devices: implanted or infected products are exempt
• Monitoring and control devices: smoke alarms, thermostats etc
• Automated devices: this classification covers all appliances that automatically deliver products, e.g. drinks, food, money etc.

Businesses which sell these items can either give consumers the right to return the goods to the shop when they are going to be thrown away in replacement for a new item or they can opt to fund centralised recycling. There are at least 36 different "producer compliance schemes" manufacturers and importers can join. The schemes arrange collection, delivery and disposal of affected waste without further charge to the customer. The average cost of each device subject to the regime is estimated to be less than GBP1 per item sold.

Many of our clients will be affected by the new rules. Call Ian on 023 9286 2424 for further information.

_______________

Notes

Information the WEEE regulations is on the website of the Department for Business, Enterprise and Regulatory Reform (formally the DTI) at http://www.dti.gov.uk/innovation/sustainability/weee/page30269.html
Many trade associations also provide some guidance to their members on this topic.

No Smoking

Since 1st July 2007, it has been against the law to smoke in enclosed or virtually enclosed public places and workplaces, including vehicles. Andrew Bryan says:

"We have been advising local businesses on the new law. They need to make sure they have the following:

• All the required no smoking signs in place
  
• Staff, customers, members or visitors are aware that the premises and vehicles are legally required to be smoke free


• All existing smoking rooms have been closed or removed

It is now against the law to smoke in most enclosed and substantially enclosed public places and workplaces. Some local councils are considering banning it in public parks too. Premises are “enclosed” if they have a ceiling or roof and are wholly enclosed either on a permanent or temporary basis (except doors, windows or passageways). Premises will be considered substantially enclosed if they have a ceiling or roof, but have an opening in the walls which is less than half the total area of the walls. The area of the opening does not include doors, windows or other fittings that open or shut. A smoking shelter that has a roof, back and two sides will be substantially enclosed.

If a company decides to provide a unenclosed smoking shelter, it must check with the local authority as there may be planning permission required, licensing, building control and noise issues to consider. Private clubs and company cars are also subject to the ban. Those using their home for work purposes will also have to abide by the rules in those places where clients or customers go, and will need to put up No Smoking’ signs. On the spot fines of £150 can be imposed, as well as other penalties."

If you want legal advice on these new rules or any other health and safety issue relating to your business call Andrew on 023 9221 0170.

Competition Law Breaches

Most local clients know they cannot reach agreements with competitors about the prices they will charge to customers. This is a serious breach of the Competition Act 1998 and could land them in jail. However, not all are aware that acting alone they could also breach the competition rules if they are in a local ‘dominant market position’. In May, the Office of Fair Trading provisionally found that the council-owned Cardiff Bus Company engaged in predatory behaviour designed to eliminate a competitor.

Roger Hann says “The company deliberately made a loss after another bus company, 2Travel plc, entered the market. Cardiff Bus is accused of providing a new ‘no-frills’ bus service which operated below cost and was withdrawn once 2Travel left the market. The OFT found that the Cardiff Bus Company, which carries an estimated 80,000 people each weekday in Cardiff, used its dominant position to run its ‘no-frills’ services with revenues so far below costs that it was impossible for its competitor to remain in the market. If you are concerned about conduct of another company or indeed that of your own business, call us for advice on competition law.

In another case in May, the OFT announced it was carrying out a number of on-site searches as part of a criminal investigation into suspected cartel conduct in relation to the market for marine hoses used to transfer oil. Searches were carried out at two addresses in the UK, one of which was a home address. This is the first time that the OFT has carried out a search at a home address as part of a cartel investigation. The allegations under investigation relate to a possible worldwide conspiracy between executives of a number of companies to rig bids, fix prices and allocate markets in the supply of marine hoses. Marine hoses are typically used by customers in the oil and defence industries to transport oil between tankers and storage facilities. The suspected cartel may have affected contracts worth hundreds of millions of pounds. The OFT's criminal investigation has been coordinated with investigations by the US Department of Justice and the European Commission. The OFT's investigation is being carried out under the Enterprise Act.

We can fully advise you on competition law and put in place for you a competition law compliance programme.

Call Roger on 01329 822333 for further information.

Unfair Terms

Many local businesses have terms and conditions of sale or purchase when they sell or buy goods. This is very useful protection. The Government is consulting on when terms are valid and when they might be ‘unfair’.

Christina Smith says “The Office of Fair Trading is consulting on its guidance on what is an unfair term in a consumer contract. This is a very interesting document as the OFT sets out which terms it regards as unfair and which it does not. Revised guidance is due by August. We are often asked to draft contract terms for clients and it is surprising how some companies have no written terms of business at all.

We can draft standard terms of sale or purchase and advise you on how to ensure your terms stick. Some of our clients also have internet websites and need terms and conditions for those too. As the law changes fairly frequently in this field, it is wise to take legal advice. Sometimes a term which appears very helpful saying there is no liability on the part of a supplier is invalid as the law ensures that unreasonable or unfair terms in some contracts are unacceptable. This is why it is sensible to take legal advice to ensure the terms limit and exclude liability as much as possible to protect your position but do not go too far in excluding so much liability the entire clause is void.

Also, anyone who employs salesmen to sell their goods or services needs to prepare for new laws due in December which will prohibit 31 listed trading practices used to put pressure on customers and make other ‘unfair trading’ practices subject to challenge.

Contact Christina on 023 9221 0170 for further information.

Monitoring Employee Emails

If you run a business you may be concerned about the extent to which you can legally monitor employees. Perhaps you want to check their emails or listen to telephone calls. In a recent case before the European Court of Human Rights, the court held that the UK Government must pay £3,000 damages and legal costs to Lynette Copland whose emails, phone calls and web use had been monitored, by her employers at CarmarthenshireCollege, without her knowing.

Andrew Bryan says “This was the material fact – that she had not been told that her emails might be read. Most employers do tell employees and/or have a web use policy which tells them so, and so would be unaffected by this decision. Here it was held that her rights had been breached under the European Convention on Human Rights Article 8 - that "everyone has the right to respect for his private and family life, his home and his correspondence". The college had no policy in place at the time informing employees that their communications might be monitored.

The law in the UK is contained in the Regulation of Investigatory Powers Act 2000 which allows interception if employees are told, for most purposes, and the Data Protection Act 1998 under which there is a code of practice for employers. This covers surveillance of employees too. These apply in addition to a general right of privacy under the Convention mentioned above. Most employers would be wise to take some legal advice to ensure their current email policies and staff handbook are fully up to date and best protect them against this kind of claim.

Call Andrew on 023 9221 0170 for further information.

Exports and Imports - BPI seeks damages from CD WOW!

Do you buy CDs on line? If so, are you sure of your source? CD WOW! which sells CDs on line is being sued by the recording industry. Importing products protected by copyright, trade marks, patents or other such rights from outside the 29 EU/EEA member states amounts to infringement of those rights.

Ian Robinson says “There are important legal rules on export and import of goods and products such as CDs. Many companies forget to draw up legal contracts or terms of business which deal with export and import issues within the law and we can help with this. It is only where the goods are bought within the European Economic Area countries and were first sold there by the owner of the rights or its licensees that they can be bought and sold and exported freely from country to country in the EEA.

Another interesting issue concerns customers and restrictions on customers. The Office of Fair Trading has been looking at this point. Some suppliers have sought to charge websites higher prices for goods than shops because shops have higher costs and provide more guidance to customers. Customers go into the shop, take the advice and then go home and buy more cheaply on-line. UK and EU competition law can have an impact here and dominant companies need to treat like cases alike and not discriminate. It is certainly an area in which to seek legal advice.

Call Ian on 023 9286 2424 for information.