Services

E-commerce and mail order businesses beware - the European Court has held that the European Distance Selling Directive (97/7/EC) means suppliers must reimburse initial delivery charges to consumers who cancel distance contracts.

The issue arose in the context of a German mail order company whose conditions of sale provided that the consumer should pay a flat rate charge for the delivery of goods which the supplier would not refund if the consumer cancelled the contract.

The court said that the purpose of Article 6 of the Distance Selling Directive is to prevent consumers being discouraged from exercising their cancellation rights under the Directive. All businesses located in the EU will have to comply.

See - Handelsgesellschaft Heinrich Heine GmbH v Verbraucherzentrale Nordrhein-Westfalen eV, Case C-511/08.

For further information contact Maninder Gill.

On 7 July 2010, the High Court handed down a ruling in which it dismissed a competition defence against alleged breach of a restrictive covenant in a franchise agreement.

Clarifying an important term of franchise agreements, the High Court has ruled that the restrictive covenant in a franchise agreement did not breach competition law or unlawfully restrain trade.

The restrictive covenant imposed a one-year post-termination restriction on participation in a similar or competing business. The High Court concluded that such a restriction was necessary to prevent the risk that know-how and assistance provided by the franchisor would, after termination, be used to aid the franchisor's competitors. The restriction therefore did not constitute a restriction of competition that fell within the Competition Act 1998.

The High Court also concluded that the restrictive covenant did not constitute a restraint of trade at common law.

See - Pirtek (UK) Ltd v Joinplace Ltd (t/a Pirtek Darlington) & Ors ([2010] EWHC 1641 (Ch)), Mr Justice Briggs, 7 July 2010

For further information contact Maninder Gill.

Companies should be aware that this Act comes into force in April 2011 abolishing creating separate offences of bribing another person, being bribed, bribery of a foreign public official, and failure of a commercial organisation to prevent bribery.

'Adequate procedures' will have to be implemented to prevent associated persons from committing bribery. Guidance has not yet been given on these procedures, however, earlier guidance indicates companies should ensure they have: a clear statement of anti-corruption culture visibly supported by those at the top of the company; a code of ethics; principles applicable regardless of local laws and customs; individual accountability; a clear policy on gifts and hospitality; a clear policy on outside advisors and agents including due diligence risk assessments and ensuring advisors/agents follow the company's antibribery code; a clear policy regarding political contributions and lobbying activities; training on anti-corruption policies provided to all levels of staff; regular checks to ensure adherence to stated policies and procedures; a helpline enabling employees to report concerns on possible bribes being paid or received; and consistent and appropriate disciplinary processes.

The possible penalties for infringement include an unlimited fine and/or a maximum prison sentence of 10 years. The Act has a wide scope in regards to area, being applicable anywhere in the world if an infringement is done by someone who has a connection to the UK. Therefore companies should update their current anti-bribery procedures as soon as possible in order to avoid infringement.

For further information contact Maninder Gill.