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Eversheds Annual Retail Conference presentation slides, London - 23 September 2011
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Retail Annual Conference
Focused on international retail
Antony Gold, Eversheds LLP
23 September 2011
From evolution…
…to revolution
Dark Ages
Year Dot
InnovationFrom bartering
1900
1960
1995
2010
60
35
15
Middle Ages
Degree ofInnovation
InnovationFrom bartering To buying in bulk, selling in ones
Dark Ages
Year Dot 1900
1960
1995
2010
60
35
15
Middle Ages
Degree ofInnovation
InnovationFrom bartering To buying in bulk, selling in onesTo artisan shops in markets
Dark Ages
Year Dot 1900
1960
1995
2010
60
35
15
Middle Ages
Degree ofInnovation
Innovation General merchandisers – Self-service
Dark Ages
Year Dot 1900
1960
1995
2010
60
35
15
Middle Ages
Degree ofInnovation
Innovation General merchandisers – Specialist chains
2010
Dark Ages
Year Dot 1900
1960
1995
2010
60
35
15
Middle Ages
Degree ofInnovation
Innovation e-Commerce
2010
Dark Ages
Year Dot 1900
1960
1995
2010
60
35
15
Middle Ages
Degree ofInnovation
Innovation m-Commerce
2010
Dark Ages
Year Dot 1900
1960
1995
2010
60
35
15
Middle Ages
Degree ofInnovation
The last 20 years
The last 20 yearsKey changes
Key trends
• Changes in space
• Consolidation
• Supply chain
• Consumer technology
Retailer perspective
• Power passing from manufacturer to retailer to customer
• From location to brand
• From limited opening hours to open all hours
The present
Drivers for a different approach to Consumers/Citizens
14Copyright © 2010
Social Networks
Retail under threat - 1
15Copyright © 2011
Retail under threat - 2
16Copyright © 2011
Retail under threat - 3
17Copyright © 2011
Retail under threat - 4
18Copyright © 2011
Predictions for the future
A huge restructuring of retail space
Price inflation
Sustainable operating model
Sourcing rethought
Localism
The relentless growth of the supermarkets
The shopping experience will be the differentiator
Mass customisation
Many fascia brands will disappear
Sustainable products
Internationalisation
Retail will become a more recognised career choice
Cross-channel retailing
A generational change
Fast supply chain
The next 20 years Widespread, seamless cross-channel retailingKey trends
• Consumer technology
• Access to information at no cost
Power shift
• From store location to customer location
• From retailer sets prices to customer checks price at point of purchase
The next 20 years Customers as designers
Key trends
• Manufacturing technology
• „I don‟t want that one‟ (personalisation on demand)
Power shift
• From „buy what I sell‟to „I‟ll create your design‟
Stores reinventedA unique customer experience
• To browse
• To play with and sample products
• To gather information
• To order
• To pick up what you have already ordered
How to succeed Hyper-personalisation
Key trends
• Retail brand independent of location
• Customer analytics on an increasingly rich data set
• Highly personalised interaction
Power balance
• Retailer insights on individual customer versus information consumers have
• Customer service
The Social Media revolution
25Copyright © 2011 Accenture All Rights
On the move -Consumers require joined up
platforms, devices, and experiences.
Real estate issues when expanding into Europe and beyond
Gareth Ashfield, Eversheds LLP
23 September 2011
Global Perspective
on Retail
PRESENTED BY:
MARK BURLTON
Partner, Retail Services
Cushman & Wakefield LLP
September 2011
29
GLOBAL ECONOMY
RETAILING TRENDS
CROSS BORDER ACTIVITY
CONCLUSION
A G E N D A
GLOBAL ECONOMY
31Global Economy
GLOBAL ECONOMY is in the early
stages of recovery
CONSUMERS are feeling more
confident with their own balance
sheet and are starting to spend again
32
Source: Cushman & Wakefield Research, International Monetary Fund
Global Economy
EUROPEAN UNION
$16.2 Trillion
U.S.
$14.7 Trillion
CHINA
$5.9 Trillion
JAPAN
$5.5 Trillion
UK
$2.3 Trillion
INDIA
$1.5 Trillion
BRAZIL
$2.1 Trillion
SIZE OF THE MARKET
33
SIZE OF MARKET
Source: Cushman & Wakefield Research, U.S. Bureau of Economic Analysis, OECD, Moody’s Analytics
Global Economy
The U.S. is still the largest
retail market in the world
Private Consumption
Billions, $US Dollars
34
REAL GDP GROWTH 2009-2012
Source: Cushman & Wakefield Research, U.S. Bureau of Economic Analysis, OECD, Moody’s Analytics
Global Economy
The tale of two markets –
mature markets and
emerging marketsY-o-Y %Change
35
REAL CONSUMER SPENDING GROWTH 2010-2012
Source: Cushman & Wakefield Research, U.S. Bureau of Economic Analysis, OECD, Moody’s Analytics
Global Economy
Emerging Markets are leading the growth in
global consumer spending – with an appetite
for luxury and recognizable Western brands
Y-o-Y %Change
36Global Economy
Source: Cushman & Wakefield Research
STOCK MARKETS AND RETAIL SALES 2006-2011
The stock market has
proved to be a leading
indicator of retail sales
Stock Market
(Y-o-Y %Change)
Retail Sales
(Y-o-Y %Change)
Stock Market
(Y-o-Y %Change)
Retail Sales
(Y-o-Y %Change)
Stock Market
(Y-o-Y %Change)
Retail Sales
(Y-o-Y %Change)
37Global Economy
Source: IMF, Fitch, Moody’s, Standard & Poor’s
FISCAL DEFICITS AND DEBT
Negative sovereign ratings actions have
moved beyond Ireland and Greece
Dec 2010 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011
Caa1/
CCC
Greece
Japan
AA-
BB+
Aa2
A- A3/BBB-
Baa3/
BBB+
Baa1/
BBB-USA
AAA
AA-
Italy
A+
AA-
B
AA+
Rating placed on negative outlook
Rating downgrade(s)
Spain
B1/BB-
Aa2
AA+
Ireland
Portugal
Belgium
AA+
A+
Baa1
Aug 2011
AAA
Aa3
RETAILING TRENDS
39Retailing Trends
SPENDING PATTERNS are changing
for mature and emerging markets
TECHNOLOGY is becoming a bigger part
of consumer purchasing
RETAILERS are changing footprints
40Retailing Trends
0.550.53
0.45 0.45
United States France Italy Germany
0%
10%
20%
30%
40%
50%
60%
Source: Booze & Co. 2011
PERCENT of CONSUMERS SELF-IDENTIFYING AS “SPEND SHIFTER” 2011
Shopping for “needs” not “wants” will dominate retailing going forward.
Self-identified “spend shifters” cut across ages in mature markets
41
Source: Bain & Company
Retailing TrendsWORLDWIDE LUXURY GOODS CONSUMPTION 2011
Emerging markets will continue to drive
the luxury segment globally in 2011
42Retailing Trends
Source: Cushman & Wakefield Research, U.S. Census Bureau
INTERNET AND CATALOG SALES AS A PERCENTAGE OF U.S. TOTAL SALES 1992-2010
Share of internet and catalog
sales in the U.S. is accelerating
similar to Moore’s Law
43Retailing Trends
Source: Cushman & Wakefield Research, JP Morgan
$160B$211B
$273B
$352B
$429B
$482B
$572B
$681B
$821B
$963B
GROWTH OF E-COMMERCE 2004-2013
E-commerce is growing faster
outside of the U.S.
44
Mobile commerce
(M-commerce)
will play a dominant
role in E-commerce
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
0
10
20
30
40
50
60
70
80
90
100
Pe
r 1
00
in
ha
bit
an
ts
Mobile cellular telephone subscriptions
Internet users
Fixed telephone lines
Mobile broadband subscriptions
Fixed broadband subscriptions
*Estimates
Source: ITU World Telecommunication/ICT Indicators Database
Retailing TrendsGLOBAL INFORMATION / COMMUNICATION TECHNOLOGY 2000-2010
45
Source: Cushman & Wakefield Research, World Bank, Facebook
Retailing TrendsSOCIAL MEDIA AND POPULATION 2011
If Facebook was a country, it would be
the third largest country in the world
CHINA: 1.3 billion
INDIA: 1.2 billion
FACEBOOK: 600 million
U.S.: 310 million
INDONESIA : 240 million
BRAZIL: 200 million
46Retailing Trends
Retailers are changing their footprint to drive
profitability
Polarisation
Flight to quality
Saturation in domestic
markets
Quality of adviceLessons from first
movers
47Retailing Trends
ECONOMY is recovering and consumer
spending is on the rise
SPENDING PATTERNS
have changed
TECHNOLOGY will continue to
affect the way people make
buying decisions and purchases
RETAIL REAL ESTATE formats and
locations will continue to evolve
CONCLUSION
CROSS BORDER ACTIVITY
49Cross Border Activity
THE CURRENT RECOVERY
has created two tier
economies in the mature
and emerging markets
RETAILERS’ search for sales
in both is accelerating cross
border activity
50
RENTAL RATE GROWTH, GLOBAL SHOPPING LOCATIONS, JUNE 2010 – JUNE 2011
Source: Cushman & Wakefield Research Main Streets Across the World 2011
Cross Border Activity
Growth driven by fierce competition for the
most high-profile locations and aggressive
expansions on behalf of retailers
51
Source: Cushman & Wakefield Research Main Streets Across the World 2011
GLOBAL RENTAL RATE GROWTH OVER FIVE YEARS
Cross Border Activity
Global retail markets have rebounded, despite the
fragile economic recovery in many countries
52
Source: Cushman & Wakefield Research Main Streets Across the World 2011
Cross Border ActivityTOP GLOBAL SHOPPING LOCATIONS
U.S. and Asia-Pacific markets dominate the list
of World’s most expensive shopping streets
53Cross Border Activity
U.S. RETAILERS EXPANDING
54Cross Border Activity
EUROPEAN RETAILERS EXPANDING
55Cross Border Activity
ASIA PACIFIC RETAILERS EXPANDING
56
666 Fifth Avenue
New York
Source: Cushman & Wakefield Research Main Streets Across the World 2011
Cross Border ActivityTOP LOCATIONS IN THE AMERICAS
57Cross Border Activity
Source: Cushman & Wakefield Research Main Streets Across the World 2011
TOP LOCATIONS IN EUROPE
Leicester Square
London
58Cross Border Activity
Source: Cushman & Wakefield Research Main Streets Across the World 2011
TOP LOCATIONS IN ASIA PACIFIC
Pedder Building
Central Hong Kong
59Conclusion
ECONOMY is recovering and consumer
spending is on the rise
SPENDING PATTERNS have changed
TECHNOLOGY will continue to change the
way people make buying decisions and
purchases
RETAIL REAL ESTATE formats and
locations will continue to evolve
RETAIL REVIVAL is shaping new
cross border strategies
THANK YOU - Q&A
cushmanwakefield.com
HR issues for 2011/2012
Shrinkage in employment legislation?
Prospects for change
Audrey Williams, Eversheds LLP
23 September 2011
Modernising UK Law
• The review aims to:
– “ensure businesses feel more confident about hiring people”;
– “support and encourage parties to resolve disputes earlier”;
– Address concerns that weak (and “vexatious”) cases are plaguing the system;
– ensure employment tribunal cases “move more swiftly to conclusion”
• Prompted by huge (56%) increase in the number of employment tribunal claims (236,100 in 2009-10)
Resolving disputes in the workplace
• Early conciliation:
– Shortened version of ET1 to go direct to ACAS rather than ET within statutory time limit;
– Reduction of 12,000 ET claims per year estimated;
– Statutory period of one month for ACAS conciliation;
• The provision of information
– including a statement of loss as required information
• Formalising offers to settle
– tribunal to be able to increase or decrease the amount of any award where parties have unreasonably rejected an offer of settlement;
Summary of proposals
Modernising our tribunals
• Strike outs:– To be made at any hearing (not just PHRs) or without
hearing; and• Deposit orders:
– Similarly to be made at any hearing or without hearing;
– Doubling maximum level of the order to £1,000; and• Costs:
– No intention to move to general costs recovery policy; BUT
– Current cap on costs awards to be doubled to £20,000; and
Tackling weaker cases
Resourcing the system effectively
• Consultation on how best to implement a fees mechanism is due in Spring 2012
Businesses taking on staff and meeting obligations• Extending the qualification period for unfair dismissal:
– From one to two years (3,700 - 4,700 fewer claims)
• Financial penalties:
– For employers found to have breached rights;
– Between £100 and £5,000 to be based on the total amount of the award made by the ET
Charging fees
Agency Worker Regulations 2011
• Gold Plated ? Amendments ?
• Reduce reliance
• Closer monitoring of usage and record keeping
• Commercial renegotiation
• Clearer pay and job structures
HR issues for 2011/2012
International and EU issues: retirement and
gender proposals
Audrey Williams, Eversheds LLP
23 September 2011
• Jordan and Saudi Arabia
– Employer retirement age: 60 for men; 55 for women but employment may continue if both parties consent.
• United Arab Emirates
– Retirement driven by work visa approval. Historic position is 60 years. Recent amendments mean visa renewals will be provided in usual way until age of 65.
– May be possible to get approval to work longer e.g. up to 70 where there is a skills shortage.
Doing with/without mandatory retirement
Differences of approach
• France
– Compulsory retirement permitted from age 70
– Termination is not automatic, ie employer has to give notice of the retirement
– Employees aged 65-69 can be offered retirement but cannot be forced to retire against their wishes
Doing with/without mandatory retirement
Differences of approach
• Germany– Employees who reach state pension age retire
automatically as long as this is provided for in a contract of employment or collective agreement
– State pension age = 65• Will gradually rise to 67 by 2029, beginning in 2012
– No need to 'justify' the retirement– Ending of employment is automatic so no need to run any
process
Doing with/without mandatory retirement
Differences of approach
• Great Britain
– From 6 April 2011, limited scope for retirement ; default of 65 repealed – have to justify.
– Northern Ireland:
• Same as GB at present
• Not yet clear whether/when will change
Belgium
• Compulsory retirement not permitted; but
• Notice required to dismiss is reduced to 6 months at 65
Doing with/without mandatory retirement
Differences of approach
• Mandatory retirement permitted at/above a particular age– The Netherlands
• possible to terminate employment on the basis of the employee reaching the state pension age
• State pension age is currently 65– might be increased to 66 or 67 (proposal for new
legislation pending)
• Termination on grounds of age for younger employees only possible if can be justified.
Doing with/without mandatory retirement
Differences of approach
• Mandatory retirement permitted at/above a particular age
– Spain
• As a general rule, mandatory retirement is permitted at 65 if provided for by the applicable Collective Bargaining Agreement
– Sweden
• Employer can compel retirement at 67
• The employer can not make the employee retire at a younger age, except where full disability pension available
Doing with/without mandatory retirement
Differences of approach
• Mandatory retirement legal; no minimum age
– Ireland
• Employee must have reached employer‟s normal retirement age for the job
– South Africa
• Employer may dismiss if employee has reached the normal or agreed retirement age
• Standard practice for employment contracts to contain a provision prescribing the retirement age.
Doing with/without mandatory retirement
Differences of approach
0
5
10
15
20
25
30
35
%age female presence on Boards*
* Boards of larger listed companies, 2009/2010
Female presence on Boards in Europe
EU average is only 11%
• UK:
– No legislation, pressure through Lord Davies‟ report setting a 25% target for female Board presence by 2015 for FTSE 100, public target setting by the FTSE 350, greater gender disclosure and transparency
• Germany:
– No national legislation but renewed discussion on the possibility of introducing legal quotas
• France:– Companies have until:
• 1 January 2014 to make their Boards 20% female• 1 January 2017 to make their Boards 40% female
– It applies to listed companies and companies with an average headcount, for 3 consecutive years, of 500 permanent employees and a net turnover of at least €50,000,000
Female presence on Boards
The role of legislation in speeding up progress
• Spain:
– Since 2007, larger quoted companies have 8 years to attain 40% females on their boards. Not mandatory until 2015
– A CGC requires an explanation where few female directors, plus how it will be corrected
• Norway:
– Has a quota – 40% of boards must be women
– Sometimes criticised as being problematic (are women appointed on merit or to make up numbers?)
Female presence on Boards
The role of legislation in speeding up progress
• Belgium:
– No legislation
– A CGC requires attention to be paid to diversity
– Current legislative proposals to force 30% quota
• Italy and Austria:
– Quota legislation under discussion
• EU initiative:
– A 2010 warning from the EU Commission: companies have a year to sort out gender board imbalances, failing which it may legislate
Female presence on Boards
The role of legislation in speeding up progress
Equality Act (EA):
• Positive action in recruitment and promotion provision, public sector equality duty in force
• Dual discrimination provision scrapped
• Consultation on third party harassment
• What about gender pay measures?
– 14 September 2011 Eversheds hosted launch of Voluntary Gender Equality Reporting by Home Secretary Theresa May
Recent government announcementsEquality Act
HR issues for 2011/2012
Flexibility for all – the government agenda
Audrey Williams, Eversheds LLP
23 September 2011
Shared parental leave
• Consultation on Modern work placed published on 16 May 2011. The government proposes to:
– Extend right to request flexible working to all (timescale for introduction to be confirmed)
– Provide more flexibility for men and women to share parental leave between them
– Current intention is for new parental leave measures to come into force in 2015
• extend the right to request flexible working to all employees;
Final Remarks
and Questions?
Consumer Protection
Consumer Protection from Unfair Trading
Regulations 2008 – an update
Elizabeth Hyde Eversheds LLP
23 September 2011
Consumer Protection
• in force on 26 May 2008
• harmonises law across EU
• overhauls UK legislation
• applies to commercial practices
• general principle of fair treatment
Consumer Protection from Unfair Trading
Regulations 2008 – avoiding the pitfalls
Consumer Protection
Misleading Actions (Regulation 5)
Actions which mislead by:
• containing false information or deceiving (or being likely to deceive) the average consumer;
• where the false information or deception relates to specific information set out in the Regulations;
• And where the average consumer takes (or is likely to take) a different decision as a result
Misleading Practices
Consumer Protection
Misleading Actions (Regulation 5)
Relevant information:
• Main characteristics
• existence of the product
• the price or the manner in which the price is calculated
• the existence of a specific price advantage
Misleading Practices
Main characteristics
• availability
• composition of product
• method/date of manufacture
• quantity of product
• geographical origin
Consumer Protection
• What is „misleading omission‟
Practices which:
• omit or hide material information; or
• provide it in an unclear/ambiguous manner; and
• the average consumer takes (or is likely to take) a different decision as a result)
Misleading Practices
Consumer Protection
• What is the „Average Consumer‟
• reasonably well informed, reasonably observant and circumspect
Misleading Practices
Consumer Protection
What are aggressive practices?
CPR prohibit practices which:
• by harassment, coercion or undue influence;
• significantly impair freedom of choice/action; and
• cause the average consumer to take a different decision
Aggressive Practices
Consumer Protection
Factors suggesting an aggressive practice
• timing, location, nature or persistence
• threatening/abusive behaviour
• exploitation of specific circumstances
Aggressive Practices
Consumer Protection
• Schedule 1
• 31 specific practices deemed unfair in all the circumstances
Banned Practices
Consumer Protection
Commercial practice is unfair if:
• it is not professionally diligent; and
• it materially distorts, or is likely to materially distort the economic behaviour of the average consumer
General Prohibition
Consumer Protection
• fines
• time limits
• individual liability
• defence
Offences
Consumer Protection
Offence due to
• mistake;
• information;
• act/default of another;
• accident; or
• cause beyond control
and due diligence applied
Due Diligence Defence
Consumer Protection
Avoiding the pitfalls
Systems and procedures
Training of staff
Audits
Monitoring complaints
Consumer Protection
Case law update
Consumer Protection
• Snow-covered Lapland village
• ‘Where dreams really do come true’
• ‘it would light up those who most loved Christmas’
• ‘where we have prided ourselves on attention to detail’
• ‘We can assure you of an absolutely magical scene’
Lapland New Forest Park
Lapland New Forest Park
Lapland New Forest Park
Lapland New Forest Park
Consumer Protection
• Victor Mears, 67 and Henry Mears, 60
• £30 per ticket – 42,000 tickets sold
• £1m advance ticket sales
• Action taken by Dorset Trading Standards
• Charges of misleading public
Lapland New Forest Park
Consumer Protection
• 13 months imprisonment
• Large number of people affected
• Target was families with children in the run up to Christmas
• High sums of money involved
• Judge said they showed, not one „scintilla of remorse’
Lapland New Forest Park
Consumer Protection
• January 2011
• „Sale‟
• Products never offered at higher price
• Eight offences
• £12,000 plus £2,625 costs
Powys v Rebo Limited
Consumer Protection
• First High Court decision
• Scratch card gave the consumer the impression they had won a prize
• OFT applying for an order to prevent sale
• Misleading actions and omissions
• Breach paragraph 31of Schedule 1
The Office of Fair Trading v Purely Creative
Limited
Consumer Protection
• Paragraph 31 of Schedule 1
• „Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either –
• (a) there is no prize or other equivalent benefit, or
• (b) taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost’.
The Office of Fair Trading v Purely Creative
Limited
Consumer Protection
Court said..
• The requirement to pay for a nominal rate call to collect prize was not misleading
• minimal cost e.g. postage stamp or nominal rate call or money that did not reach the promoter's pocket
• promoter must not receive payment to off-set the cost of the prize
The Office of Fair Trading v Purely Creative
Limited
Consumer Protection
• Average Consumer
• reasonably well informed, reasonably observant and circumspect
• ‘consumers who take good care of themselves should be protected, rather than ignorant, careless or hasty consumers’
• Court ruled that whether the Average Consumer would read all the terms and conditions will depend on the circumstances
The Office of Fair Trading v Purely Creative
Limited
Consumer Protection
Ofgem Investigations
Doorstop Selling
• Concern of mis-selling
• Pressure
• Many companies suspending doorstop sales
Consumer Protection
Dealing with the Regulators
•Trading Standards powers to obtain documents
•Offence of obstruction
•Privilege
•Time limits for prosecutions
Final Remarks
and Questions?
Competition law and land agreements
The new regime
Adam Collinson, Eversheds LLP
23 September 2011
Outline
• The new regime in a nutshell
• A more detailed look at the key prohibition
• Risks (and opportunities)
• Where will the prohibition bite?
• Assessing whether a land agreement is likely to be caught
• Quick case studies
• Questions
The new regime in a nutshell
• Restrictions in agreements relating to land are now subject to normal UK competition rules on restrictive agreements
• The rules catch not just new agreements but pre-existing ones as well
• Restrictions in these agreements could be void and unenforceable where they constrain competition on a market (and there may be other consequences besides)
• In turn that may lead to changes in the nature of the trading environments enjoyed by retail outlets
Background
• Chapter I Competition Act 1998 (which prohibits restrictive agreements) was originally rendered inapplicable to many types of land agreement by the Land Agreements Exclusion Order (LAEO)
• The 2006/8 Competition Commission investigation into grocery retailing led to a review of the exclusion
• The LAEO was repealed with effect from 6 April 2011
• The OFT issued guidelines in March 2011 summarising how competition law can apply to land agreements in the UK– http://www.oft.gov.uk/shared_oft/consultations/land-
agreements/land-agreements-guideline.pdf
Chapter I Competition Act 1998
CHAPTER I PROHIBITS:
• Agreements between “undertakings”
• Which have as their object or effect
• The appreciable restriction of competition
• On a relevant market
• And have no redeeming features which would justify their exemption
Consequences of infringement
• Infringement carries the risk of (among other things)
– Investigation and fines (no fine may be imposed in respect of the period prior to 6 April 2011)
– Disqualification of directors
– Actions for damages from those who suffer loss as a result of the agreement
• But in most cases
– Unenforceability will be the primary risk (or opportunity)
Where will it bite?
• Unlikely to bite
– Normal property clauses (service charge, alterations, repairs, hours of use, etc)
– Restricted user clauses (unless the landlord is also active in the tenant‟s trading market)
• Might bite
– Exclusivity arrangements, restricted user clauses (where the landlord is also active in the relevant market), freehold restrictive covenants
• Certain to bite
– Price fixing provisions
Assessing land agreements (1)
• Relevant markets in which competition takes place
– Product / service scope
– Geographic scope
• Rationale for restriction
• Appreciability of restriction / foreclosure effect
– Market structure / market shares
– Duration of restriction
– Availability of other suitable premises nearby from which to undertake the relevant activity (special characteristics required / planning restrictions) ?
Assessing land agreements (2)
• Enforcement priorities in relation to land agreements mean OFT will focus on
– agreements between competitors
– agreements where there is market power (a market share above 30%)
• OFT will assume that market share is less than 30% (and market power doesn‟t exist) wherever there are four or more independent retail fascias (including the beneficiary of any restriction) operating on a market
• But this doesn‟t preclude aggrieved companies pursuing matters independently
Assessing land agreements (3)
• NB the position can change over time so agreements can slip in and out of infringement (need to monitor?)
• If a restriction of competition is not appreciable there is no infringement
• If it is appreciable the agreement may still merit exemption if
– The agreement produces efficiencies
– There is no less restrictive way of attaining those efficiencies
– A fair share of the benefits flowing from the agreement will accrue to consumers
– The agreement does not eliminate competition
Quick Case Studies
Case Study One
• You are legal counsel for a successful department store
• The business lets some space to concessions of branded products which compete with certain products the department store sells
• The current draft of the lease contains a clause requiring the concessionaire
– only to offer reduced prices when the department store is having a sale (and at those times not to sell at prices more than 5% lower than the prices of equivalent products in the department store)
– at all other times to sell at full price
Case Study Two
• You are legal counsel at a leading operator of wine bars which has an existing bar in the Greek Street area of Leeds city centre (a very popular eating and drinking area)
• Other operators are keen to get a position in this area
• The business wants to sell the wine bar and impose a restrictive covenant against future use as a wine bar
Case Study Three
• You are legal counsel at a chain of electrical stores
• The business is keen to gain entry to a relatively new but very successful out-of-town retail park
• The landlord has refused you a lease to the soon to be vacant unit claiming the terms of another lease prevent him letting to another electrical store
Underlying concepts to remember
• Agreements containing price fixing restrictions will always be unlawful and problematic
• As regards other agreements
– Restrictions of competition not restrictions of activity are what is important
– To assess these restrictions focus on
• Relevant markets in which competition takes place (product / service and geographic)
• Structure of those markets (market shares and number and identity of other competitors)
• Rationale for / justification of restriction
• Market power / extent of foreclosure
Any questions?
Final Remarks
and Questions?
Dealing with the social media explosion
The HR dimension
James Bull, Eversheds LLP
23 September 2011
Issues involving the use of social media in
recruitment
• Advertising vacancies
- websites
- using smart phones to attract interest from target audiences
• Reducing bureaucracy and saving costs
• Potential to exclude social groups
• Discrimination
Issues involving the use of social media
during the life of the employment relationship
• Performance management – productivity
- excessive personal use of internet or emails via work computers or smart phones, including use of Facebook and Twitter
• Conduct
- derogatory comments about the employer or customers & bringing the company into disrepute (Taylor v Somerfield and Preece v JD Wetherspoons)
Issues involving the use of social media
during the life of the employment relationship
• Conduct
- bullying and harassment of fellow colleagues
- discriminatory remarks (Gosden v Lifeline Project Limited)
Risks of IT misuse and abuse by employees
• Damage to reputation
- derogatory statements
- bringing the business into disrepute
• Security
- breach of the Data Protection Act
- disclosure of confidential information
• Tribunal claims
- discrimination
- third party harassment
Employees duties to the employer in terms of
confidential information
• Implied duties
- to act honestly towards the employer
- to disclose to the employer all information relevant to its business
- not to make secret profits from the employer‟s business
- to respect the confidentiality of the employer‟s business information
- not to compete with the employer‟s business
Employees duties to the employer in terms of
confidential information
• Express duties
- contractual clauses
• Whistle blowing
The need for clear internal policies on the
use of social media forums
• Preserving good business relationships and promoting a positive business image
• Having a clear policy
- restricting the use of employer‟s IT resources
- restricting the use of smart phones during work
- restricting employee use of confidential information
- prohibiting bullying, harassment and discrimination
The need for clear internal policies on the
use of social media forums
• Having a clear policy
- prohibiting negative comments about the employer, its customers, suppliers and employees
- making clear to employees that social media messages may reflect on their employment
• Training
- awareness and understanding of the policy
• Disciplinary procedures
Final Remarks
and Questions?
Dealing with the social media explosion
Reputational Risk & Advertising Issues
Andrew Terry, Eversheds LLP
23 September 2011
What do we mean by social media?
• A “conversation” v “one-way traffic”
• Wide ranging:
– Social and business networking sites
• e.g. Facebook, LinkedIn, MySpace, Bebo
– Blogs: a “web log”
• e.g. Twitter, Blogspot, Square Space
– Digital media sharing
• e.g. YouTube, Flickr, Slideshare
– Wiki
• BUT much overlap and rapidly changing
• AND your own website
Areas of corporate risk
• Another means of corporate communication BUT lack of control, brevity and casual use increase reputational risk:
– defamatory comments
– misleading advertising
– disclosure of private information
– employee misconduct
• Manage by:
– adopting appropriate internal policies
– reviewing regularly
– devoting adequate resources
– complementing established marketing
Third party comments
• Monitor third party sites for damaging comments and IP infringement
• Monitor sites/content under your control (even though you may lose “intermediaries” defence)
• Identify and communicate with disaffected customers
• Internal response team
• Legal intervention
– Defamation law
– Notice-and-take-down procedures
– Privacy rights
Defamation
• Wide protection – any statements which make readers think worse of a person or organisation
• Publication
• Balance of power in Claimant‟s hands
• Defences available (justification, fair comment, qualified privilege)
• Aim – vindication (damages, apology, retraction, costs)
• Clear potential for vicarious liability
Notice-and-take-down procedures
• Defamation actions: author, editor, publisher
– Identifying the author
– Likelihood of relief against bloggers etc
– Position in meantime
• Role of ISPs and other “intermediaries”
– E-Commerce Regs 2002 (Reg.17-19) -defence for mere conduit, caching or hosting if no actual knowledge
– s. (1) Defamation Act - if not an author, publisher etc and no reason to believe defamatory
– May lose protection if have editorial control
• Put on notice (including for IPR infringers)
Privacy rights
• Right to respect for private and family life, home, health and correspondence – Article 8 ECHR
(1) Is it private information?
(2) Is there a reasonable expectation of privacy?
(3) Is there a genuine public interest?
• “Private Information”
– emotional relationships / family / friends
– job performance
– business information
• Injunctions v “Super Injunctions”
ASA : online remit extension
“Advertisements and other marketing communications by or from companies, organisations or sole traders on their own websites, or in other non-paid-for space online under their control, that are directly connected with the supply or transfer of goods, services, opportunities and gifts”
• Primary intent is to sell something though not necessarily immediately
• Has it appeared in the same or very similar form in third party space?
• New sanctions – enhanced name and shame, removal of adverts
ASA : user generated content
• UGC is content created by private individuals –outside remit
• But UGC falls within remit if adopted and incorporated within own marketing communications
• Customer reviews – inside or outside remit?
• Content excluded from remit extension:
– press releases and other public relations material
– editorial content
– natural listings
– heritage advertising
Content of social media policies
• who writes the copy?
• tone of company “voice”?
• what is the posting process from inception to publication?
• how often do you update or post?
• who monitors and how often?
• policing in moderation (abuse v negative comments)
• correcting mistakes quickly
• ensure enforcement is uniform
Final Remarks
and Questions?
Using Social Media as a Promotional Tool
Mary Kelly, Eversheds LLP
23 September 2011
Social media trends across markets
Social media: a few facts
500,000,000
The number of global users Facebook reports they have registered
Social media advertising spend will increase 400% by the
year 2014
- Forrester
One out of every five minutes online is spent on social
media related sites
- Nielsen
Half of the 29 million Facebook subscribers in
the UK check their page at least once a day
- PWC
It took Facebook 3 years to reach
worldwide audience of 50 million - and another four years to reach over
half a billion
Facebook valuedat $50 billion
- PWC
Retail marketplace pressures and the use of social media
Social media opportunities
Some examples of retailers‟ use of social media (Continued)
What do consumers want from digital marketers?
…Create value for consumers… keep it exciting
…one of the main reasonscustomers site for „friending‟a corporate Facebook page isto get access to special offersand sales discounts.
- E&Y Reaching Consumers GloballyMay 2011
Running promotions on social media…
…Terms and conditions
Running promotions on social media…
• Gambling Act 2005 (different regime in Northern Ireland)
• Consumer Protection from Unfair Trading Regulations 2008
• UK Code of non-broadcast Advertising, Sales Promotions and Direct Marketing (“CAP Code”)
… however, regulations are not harmonised throughout the EU
…Regulations and Codes of Conduct still apply
Social media platform terms and conditions…
…What you need to be aware ofFacebook
Promotions Guidelines
• Release and disclaimer of Facebook liability
• Methods of entry using a Facebook platform
• Facebook cannot be used as a means to notify winners of a promotion
• Promotion cannot use Facebook functionality, eg „Like‟ button as a voting mechanism
• Third party advertisements prohibited
• Must not incorporate any functionality that identifies which users visit a page/ promotion
You Tube
• Must provide participant ability to read rules of entry before they enter a competition/ promotion
• Entry to a promotion must be free/no money requirement
• Promotions must indemnify YouTube in respect of any contests/promotions run on YouTube
• Possible to use „Retweet‟ as a condition of entry
• Must provide a link to promotion terms and conditions
Social media promotions
Case study: Timberland Trail of Heroes
Social media promotions (Continued)
• Part of Timberland‟s 2011 “Nature Needs Heroes” marketing strategy - its biggest environmentally focused marketing campaign
• Geocache contest run through Facebook and website
• Collaboration between Timberland, ad agency and Groundspeak - a Geocaching community website
• Run in 6 European cities at the same time (London, Milan, Paris, Madrid, Berlin and Brussels)
• Consumers register themselves as members of the geocaching community and log individual caches
Timberland Trail of Heroes - Features
Social media promotions (Continued)
• Ensure the mechanics of the promotion are clearly described and comply with all relevant social media platform terms and conditions
• Where time and location are key to the promotion ensure it is consistent in each time zone
• Be clear as to what data is to be provided by a participant, how it is to be used and that appropriate consents are provided
• If complex, test it out on a smaller restricted number of users. Timberland trialled the promotion with the blogging communities
• Get country specific legal review
Timberland Trail of Heroes - Lessons
Social media promotions (Continued)
• Fashion retailer Facebook quiz wanted to share results instantaneously on Facebook page. Site already built by agency. Led to wasted costs.
Examples
Social media promotions (Continued)
• Understand and participate in the development of your social media and promotional strategy
• Engage with your marketing and social media colleagues early in respect of the mechanics and terms of promotions
• Ask lots of questions as to how promotions will operate - regulations still apply to social media in the same way as more „traditional‟ promotions
• Your contribution may save time, money and reputation - and enhance the use of social media as a promotional tool
Conclusion
Final Remarks
and Questions?
Google AdWords
The current state of play
Kaisa Mattila, Eversheds LLP
23 September 2011
Google AdWords
• Continuing “hot topic” among retailers
• Evolving area of law – several recent decisions
• AdWords = allows traders and businesses to purchase keywords to trigger the display of a „sponsored link‟ advertisement whenever an internet user searches for the selected keyword.
• Controversy: registered trade marks freely available for any advertiser to purchase as keywords
Introduction
• Distinguish NATURAL results from ADWORDS
Google AdWords
• … for online advertisers?– Capture Internet traffic interested in similar products /
services
– Communicate sales of branded products
• … for trade mark owners?– Diversion of trade = lost sales
– Customer confusion & counterfeits
– Loss of prominence & higher advertising costs
• … for Google?– Huge revenue source – 97% of US$28bn in 2010
What is their significance…
Google AdWords
• Brand owners: use of trade marks as AdWords amounts to trade mark infringement both by the advertiser and by Google
– Use of identical sign (usually)
– In the course of trade
– In relation to goods/service which are usually identical to those protected by TM registration
– Also possible dilution & free riding on reputation of well-known brand
• Distinguish between TRIGGER ONLY use and AD TEXT use
The trade mark law angle
• TRIGGER ONLY USE vs. AD TEXT USE
Google AdWords
• ‘Use’
– Google is not “using” TMs by offering them for sale as advertising keywords or by displaying the advertisements = no infringement
– Advertisers, however, do “use” the TMs in the course of trade in relation to products / services when selecting them as AdWords so capable of infringing.
• Infringement by advertisers
– Only if damages the „core function‟ of the trade mark as a guarantee of trade origin (in other words, is liable to lead to confusion)
• Cases: Louis Vuitton Malletier SA v Google France; re-affirmed in Die
BergSpechte Outdoor Reisen v Gunter Guni & ors (both March 2010)
The current state of play
Google AdWords
• Potential damage “if the advertisement does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originated from the trade mark owner or an undertaking economically connected to it”
– “Normally informed?” / “Reasonably attentive?”
– “Only with difficulty”?
• A question of fact to be determined by national courts on a case-by-case basis
• Little guidance from the European Court
The current state of play
Google AdWords
• Potential liability for Google if not exempt under E-Commerce Directive as Information Service Provider!
– Would need to be acting as a mere information storage/transfer service with no active role, knowledge or control over the content of the information stored/transmitted on behalf of the end user
• Extent of Google’s involvement a matter for national courts on a case by case basis
– Could be held liable for AdWord use by an advertiser if a brand owner brings unlawful content /activities to Google‟s attention and it fails to act expeditiously to remove that content
– Note: depends on the activity itself being unlawful!
The current state of play
Google AdWords
• Interflora v Marks & Spencer – Opinion of the Advocate-General of the European Court:
– M&S infringed the Interflora trade mark by purchasing INTERFLORA as an AdWord (Internet users might believe M&S was part of Interflora‟s sales and delivery network given Interflora‟s unusual business model) despite the word not appearing in the ad text
– AdWord use is also capable of:
• diluting the reputation of trade marks to become generic terms; and
• taking unfair advantage of their reputation
provided that the TM appears in the actual ad text.
Likely developments
Google AdWords
• Advertisers: unclear scope of what could amount to infringement – increased caution, particularly with ad text use
• Warning sounded to Google re: ISP liability
Steps to take:
– “Test searches”
– Report unlawful/confusing use to Google
– Report any counterfeiters to Google
– Write to advertiser?
– Exercise caution when using AdWords yourself!
The way forward
Google AdWords
• Does not prevent the selection of TMs as keywords in the EU/EFTA
• Will only investigate ad text in response to brand owners‟ complaints and will only carry out a “limited investigation” into whether the keyword combined with the ad text is confusing as to the origin of the goods being advertised
• If satisfied that there is potential confusion, will take down the advert
Parallels to decided cases: focus on confusion
Possible impact of forthcoming Interflora decision?
Google’s current AdWords policy
Google AdWords
Thank You!
Kaisa Mattila
Solicitor, Intellectual Property Group
Any questions?
Final Remarks
and Questions?
IT Procurement & Retail
Bruce Cairns & Mike Gladwin, Eversheds LLP
23 September 2011
10 Key Contracting PointsNo. 1 - What are the deliverables?
•specifications
•tender documents and requirements specifications
•change control
10 Key Contracting PointsNo. 2 - What rights do you get?
•software licences
•group usage
•contractors
•types of licence
10 Key Contracting PointsNo. 3 - When will you get it?
•project plans
•milestones
•liquidated damages
•walk away rights
10 Key Contracting PointsNo. 4 - How much will it cost?
•link payment to milestones and acceptance
•fixed charge?
•avoid time and materials
•avoid cost elements “to be agreed”
•rate card
•avoid uncapped increases
10 Key Contracting PointsNo. 5 - Acceptance tests
•agreeing test criteria
•customer participation
•end to end and modular
•integration with customer systems
10 Key Contracting PointsNo. 6 - What if it goes wrong?•damages
•termination
•liquidated damages
•service credits
•liability caps
10 Key Contracting PointsNo. 7 - Customer Group issues
•what is the current group?
•dealing with changes to the group
•assignment
•outsourcing service providers
10 Key Contracting PointsNo. 8 - Data protection
•your risk as data controller
•contractual obligations on data processor
•outside EEA?
•liability caps for breaches
10 Key Contracting PointsNo. 9 -Service descriptions & service levels
•support and maintenance
•clear descriptions
•clear service levels
•bronze or platinum?
10 Key Contracting PointsNo. 10 - Unravelling the deal
•exit planning
•software licences post termination
•ongoing support
•replacement services
•has the supplier got you by the throat?
Final Remarks
and Questions?
Annual Retail Conference Data Protection Update – Issues for 2011/12
Cookies – Have you got the right recipe?
Elaine Fletcher, Eversheds LLP
23 September 2011
What‟s New?
• Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011
• Storing information on user‟s terminal and accessing it
• Mainly but not just „cookies‟
• Information does not have to be „personal‟ or „identifiable‟
• Still have to comply even if anonymous, aggregated or statistical
• Additional to Data Protection Act 1998
What has changed?
• Clear and comprehensive information on purpose of cookies
• Pre 26 March 2011 – providing opportunity to refuse them (known as „opt out‟)
• From 26 March 2011 – giving prior consent to use them (known as „opt-in‟)
What does this mean?
• You have to obtain the user‟s „freely given and specific indication of agreement‟
• Explanations of use of cookies to be clearer, more specific, and more granulated
• Browser settings probably not adequate yet –requires level of explanation and selection beyond current standards
• Repeat consent not required once consent obtained on first website visit, BUT
• New consent for each change of cookie use
How is consent obtained?
• Pop up boxes
• Acceptance of suitable terms and conditions
• Check out the ICO‟s wording at www.ico.gov.uk
The ICO would like to use cookies to store information on your computer, to improve our website. One of the cookies we use is essential for parts of the site to operate and has already been set. You may delete and block all cookies from this site, but parts of the site will not work. To find out more about the cookies we use and how to delete them, see our privacy notice. [ ] I accept cookies from this site. [Continue]
What practical steps are needed?
• Engage with e-commerce teams and identify:
– Each and every cookie used – is it deleted when browser closed?
– What each one does – what information is collected, is it identifiably linked?
– Why it is used – site essential cookies vs improved experience/ enhanced service
– Whether the business still needs uses/ needs it
• Review and revise website privacy policies and incorporate consent mechanisms
• Check ICO website for emerging guidance
Reasons to comply
• ICO‟s usual enforcement powers
• Civil Monetary Penalties now extend to cookie requirements (up to £500k)
• ICO increasingly asking to audit businesses
• Customer confidence
• ICO won‟t enforce for 12 months IF actively trying to comply
Final Remarks
and Questions?
The International Management of Disputes
Issues for Retailers
Richard Little, Eversheds LLP
23 September 2011
Retail: implications of international expansion
• Opportunities abroad in expanding businesses
• Managing business in multiple jurisdictions
• Impact of relevant local laws on effective operations – from start to finish
Key considerations
• Contractual protections when establishing operations overseas
• Preparation for and termination of contracts
• Strategy and tactics in international dispute resolution
Laying the Groundwork…..
• Structuring the operation – balancing control, capital and risk
- own branch?
- franchise?
- concession?
- agent/distributor?
• Research relevant jurisdiction – need for approvals/licences
Contractual Protections
• Ensuring your contract works for you:
- Retaining control over operations
- Ownership of stock and premises
- Termination provisions
- Choice of governing law and dispute resolution clauses
• Effective drafting reduces risk of costly disputes
Anticipating potential risk
Jurisdiction
• May impact upon choice of structure
- mandatory provisions in certain jurisdictions
• Consider jurisdiction clause in contract
• Specify applicable law
Principles of Contractual Interpretation
• UK position - Court gives a document its ordinary meaning unless there is a clear mistake on its face. Admissible background evidence limited to factual matrix.
• Contrast other jurisdictions – importance of retaining paper trail of any discussions.
• Ensure tight drafting – use a second pair of eyes for a “sense check”
Preparing for termination
• Early preparation is key - find out what is happening on the ground
• Issues to consider:
- stock
- premises
- local licences
- employees
• Practical implications
Terminating contracts
• Importance of clear contractual terms
• Managing an effective exit:
- Know your contract
- Awareness of “on the ground” performance
• Consider relevant applicable law
• Compile any necessary evidence
Terminating Contracts
• Is pre-action correspondence appropriate?
• Is injunctive relief available?
• Mandatory application of local jurisdiction?
• Consider local law position on disclosure, privilege, confidentiality etc
Strategy and tactics in international dispute resolution
• Retain appropriate local team
• Project management of disputes
- particular logistical difficulties of working cross-border
• Appropriate use of technology
© EVERSHEDS LLP 2011. Eversheds LLP is a limited liability partnership.