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direct marketing rules in the Privacy and Electronic Communications. Regulations. The callers ... The recent case of Roy
LexisNexis In-house News Bulletin

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Keeping you abreast of the big commercial legal stories that could affect your business.

September 2016 Corporate & Commercial > Data Security >

Advertising & Marketing > Employment >

Corporate & Commercial Warranties and representations In the recent case of Indemitsu Kosan Co v Sumitomo concerning the purchase of a business, the Buyer brought a misrepresentation claim against the Seller despite the relevant issue being clearly referenced as a warranty in the purchase agreement (rather than a representation). The Buyer argued that because the completed contract was provided ahead of completion the Seller was representing that the warranties were accurate. This was an important point for the Buyer as a warranty claim would have been time-barred. In addition, a successful misrepresentation claim would allow the Buyer to be put in the same position it would have been had the contract never been entered, whereas the remedy for a warranty claim will usually only allow for contractual damages. The Court refused the claim. The contract was clear that the relevant issue was a warranty and the Court was not willing to consider any alternative interpretation. This case is a good reminder about the key differences between warranties and representations and the importance of using the right terms depending on what has been agreed.

Competition > Bribery & Corruption >

EU Council adopts EU Trade Secrets Directive The Trade Secrets Directive came into force on the 6th July, and Member States have two years to implement it. Subject to Brexit, it will be law by June 2018. The intention of the directive is to harmonise the law of trade secrets across the EU. It is not expected to have a significant impact in the UK due to our well-developed judge made law in this area. A trade secret has a reasonably wide definition in the directive but states that any company seeking to rely on its protections will need to show that it has taken reasonable steps to keep the information confidential. Good practices such as non-disclosure agreements will, therefore, be important. The directive will make it unlawful to disclose trade secrets or acquire trade secrets in a way that is contrary to “honest commercial practices”.

Software Incubator Ltd v Computer Associates UK The Commercial Agents Regulations only protect agents that have a “continuing authority to negotiate and conclude the sale or purchase of goods”. Previously, intangible software had not been considered as “goods” in the Regulations. However, the recent case of Software Incubator Ltd v Computer Associates UK Ltd has turned this definition on its head. This is a helpful clarification and update of the law. One small point to highlight is that in this case the software was generally sold on a perpetual licence but the door has been left open for someone to argue that software sales on limited licences may not be categorised as goods. The ability to fall within the Commercial Agent Regulations will, generally, be good news for agents particularly because of the rights it gives for termination payments. 1

The Insurance Act 2015: practical changes for insurers to consider

Safe Harbor and the new EU-U.S. Privacy Shield

The 12th August marked the day that the Insurance Act 2015 came into force. This is the most significant reform of UK business insurance law in over 100 years. Here’s a summary of the key points:

We reported last month on the introduction of the new EU-U.S. Privacy Shield. Unsurprisingly, the ICO has now made it clear that it is no longer acceptable for companies to rely on the invalidated Safe Harbor scheme.

• The Act introduces a new duty of “fair presentation”. This places a more onerous duty on the insured to provide information that they actually know and to search for information that they ought to know. In addition, the disclosure must be made in a manner which is reasonably clear and accessible so it is not simply a “data dump”. • Prior to the new law, a material non-disclosure would allow an insurer to avoid the entire contract. Now, for the insurer to avoid the contract completely it will have to show that the non-disclosure was deliberate or reckless. • An insurer cannot avoid a claim simply because of a breach of a term in an insurance policy unless that breach relates to the loss.

Data security Change and Save disguises nuisance calls as “market research” In the last few weeks, the ICO has taken action against Change and Save Ltd for making nuisance calls. This company argued that it was making the calls for market research and was not subject to the direct marketing rules in the Privacy and Electronic Communications Regulations. The callers asked questions about wills but also promoted certain commercial services. The ICO was not impressed and determined that the company had been “sugging” (selling under the guise of research). The company has been issued with a stop order. Failure to comply will result in prosecution.

GP practice fined £40,000 for data protection breach A GP practice has been fined £40,000 for the unlawful disclosure of personal data. The GP Practice had been responding to a request by an individual for data relating to his child (a subject access request) but failed to delete personal data of the individual’s estranged wife. This is a significant fine given the size of the GP Practice and underscores the importance of data protection awareness even in small businesses.

Advertising & Marketing CMA sends social media warning to celebrities The Competition and Markets Authority (CMA) has recently taken action in its quest to improve advertising transparency with a letter of warning sent to 43 celebrities and 15 companies that pay celebrities to remind them of their advertising responsibilities. It has also secured undertakings from a social media marketing company and a clothing retailer to prevent misleading online practices. The CMA said that one company had given advertisements that looked like independent opinions, and the other had failed to give consumers the complete picture by refusing to publish critical reviews. Essentially, the CMA expects all adverts to be fair and transparent. If for example, there is a paid-for endorsement, this should be clear to the reader e.g. by including #ad. The CMA has issued open letters to retailers which host customer reviews on their websites and to marketing departments, marketing agencies and their clients to ensure this message is being shared.

Employment The role of HR in disciplinary investigations The case of Dronsfield v University of Reading concerned a university professor who had been dismissed for gross misconduct.

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The employment tribunal found that the dismissal was fair even though it was aware that the investigating officer’s report had been amended following discussions with the University’s HR department and in-house lawyer. The Employment Appeal Tribunal (EAT), however, returned the case for a fresh tribunal to reconsider. The EAT held that it was not acceptable to simply rely on a report where there was clear suspicion that it was not the product solely of the investigating officer. This case demonstrates the need for HR departments and lawyers to tread carefully in disciplinary investigations.

Whistleblowing

Public Health England (PHE) has published new framework advice for businesses and employers to help them create their own policies on the use of e-cigarettes. Forcing e-cigarette users to use the current smoking shed may illicit grievances from e-cigarette users based on the employer’s failure to provide them with a smoke-free environment. On the other hand, PHE accepts allowing e-cigarettes to be freely used in the work-place may not be acceptable for commercial reasons and there is, at least, some suggestion that there may be a small health risk to some bystanders. In summary, PHE recommends the employers implement new and distinct policies for the use of e-cigarettes.

The recent case of Royal Mail v Jhuti has widened the scope of whistle-blower protection. In this case, Ms. Jhuti raised compliance concerns about her colleague in an email which she later retracted following pressure from her manager. Ms. Jhuti subsequently raised a grievance and another manager was appointed to review the case. The new manager was informed that she had raised concerns but he was only provided with her email retracting the concern and was told that she had accepted that she was mistaken. Ms. Jhuti was dismissed by the new manager for poor performance. Ms. Jhuti then brought a claim for unfair dismissal on the grounds that she had been dismissed for making the whistleblowing report. The tribunal dismissed this claim as the new manager had not been aware about the detail of the compliance concern. The Employment Appeal Tribunal reversed this decision stating that even if the decision is made by an individual that does not have the full facts, the company can still be liable where it is found that the dismissing manager may have been manipulated by another manager.

Advocate General gives opinion on headscarf dismissal case Similar to the G4S case that we reported in July, we’ve now had another Advocate General Opinion concerning a ban on wearing an Islamic headscarf. In the case of Asma Bougnaoui Association de défense des droits de l’homme (ADDH) v Micropole SA the Advocate General has stated that the ban is direct discrimination. We now wait to see if the European Court of Justice will follow the Advocate General’s opinion.

E-Cigarettes: advice for employers and organisations There are now 2.8m e-cigarette users in the UK. As they continue to grow in popularity, there are questions being raised for employers on how to deal with e-cigarette users.

Competition Amazon Market Place trader fined £163,371 An Amazon Market Place trader has been fined £163,371 for agreeing on prices with a competitor through the use of automated repricing software. The CMA’s investigation which was coordinated with the police included searching the residential home of one of the company’s directors.

Lego Germany fined for preventing online discounts The German competition regulator has investigated LEGO. LEGO’s discount system discouraged online sales due to a formula that rewarded shelf space. No fines have been imposed after LEGO agreed on undertakings to change its practices. This case makes it clear that although a manufacturer can impose qualitative standards, these cannot be used to restrict online sales.

Truck firms fined record €2.93bn for price fixing In July the EU issued its highest ever penalty for a cartel offence. The penalties totaling €2.93bn against four truck manufacturers (Daimler, Volvo, Iveco and DAF) were discounted following the manufacturers admitting to the offences. Scania has decided to continue to contest the action. MAN avoided a fine as it blew the whistle on the cartel. It is understood that the EU’s investigation found that the manufacturers had held informal meetings between 1997 and 2004 to discuss their future pricing plans and that after 2004 the co-ordination had generally been by email. 3

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Bribery & Corruption

SFO takes action against SMEs The Serious Fraud Office’s latest action under the Bribery Act 2010 is against a company described in the judgment as a “small to medium sized enterprise”. Previously the cases have only concerned large listed companies so this dispels a commonly held myth that the SFO is only interested in the blockbuster cases.

The company which self-reported the crimes to the SFO has suffered financial penalties of more than £6.5m. The financial penalty may have been higher but the modest financial ability of the company and the fact that it had self-reported reduced the penalties by more than 50%. The parent company agreed to repay almost £2m of the dividends it had received from its subsidiary. Whilst I am sure this was considered an appropriate action, the Court was clear it was not legally necessary as the parent company had not been aware of the criminal activities of its subsidiary.

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