12 December 2018

Radar - April 2020 – 6 of 5 Insights

Radar - December 2018: other interesting developments

A few other things to note from 2018.

CJEU decision on restriction on the sale of luxury brands on third-party platforms

In January, we reported on a CJEU ruling which held that restricting the sale of goods via online platforms where goods of all kinds are sold, is a legitimate means of preserving the luxury image of those products and reduces the risk of damage to the brand which might occur if there is a lack of oversight of the way in which the products are sold.

It is, therefore, permissible to prohibit authorised distributors of luxury goods from selling on third-party platforms (such as Amazon and eBay), as long as the authorised distributors are allowed to sell the products on their own websites. In such a selective distribution system, a third-party marketplace ban is likely to be appropriate and necessary in order to maintain and preserve the luxury aura of the products, an image which is important from a consumer's point of view.

The position is not as clear for non-luxury products, and it seems that a case-by-case analysis would be required to determine whether a restriction of sales on a third party platform might be anticompetitive. In November, for example, the CAT upheld a decision to fine Ping Europe Limited for breach of competition law due to the ban it imposed on retailers from making online sales of its golf clubs. The CAT said that even though Ping had a genuine commercial aim of encouraging purchasers to use its dynamic fitting method, it could have used less restrictive means than imposing an online sales ban. The fine was slightly reduced as the CAT held that it had originally been wrongly assessed.

For genuine luxury products, however, as long as the relevant criteria are met, third-party market place bans should be enforceable by suppliers.

Law Commission consultation on the use of e-signatures in legal documents

In September, we reported on the Law Commission consultation on the use of e-signatures in legal documents. This is of interest mainly because we hope that it will lead to resolution on the issue of whether and how deeds can be signed electronically.

CJEU ruling on commercial agency status

The CJEU ruled in November on a reference relating to the question of whether an individual can be protected under the Commercial Agents Directive (implemented in the UK as the Commercial Agency Regulations) despite working from the office of their principal and having other non-agency responsibilities to the principal.

The CJEU held that neither of these elements ruled out a person from protection as an agent provided their independence was not compromised. The CJEU said three conditions are required in order to attract commercial agent status under the Directive: a person must be a self-employed intermediary; the contractual relationship must be of a continuing character; and the person must on behalf of and in the name of the principal, either negotiate or negotiate and conclude the sale and purchase of goods. These conditions are exhaustive which means no other conditions (like requiring the person to work at a different premises to the principal) could be added. The individual must, however, be sufficiently independent from the principal to attract commercial agent status and national courts should consider:

  • Whether the person's use of the principal's facilities prevented them from pursuing independent agency activities;
  • Whether the nature of any non-agency responsibilities, the way they were performed or paid for, and the reality of financial risk, prevent the person from performing their agency activities independently.

Digital Services Tax

The government announced a new Digital Services Tax (DST) in the autumn budget to apply from April 2020. The tax of 2% will be applied to revenue over £25m derived from certain services linked to UK users provided by online marketplaces, social media platforms and search engines with global revenue of over £500m. Loss-making businesses will not have to pay the tax and those with low profit margins will pay a reduced rate. There is very little detail available at the moment as to how that will be determined. Revenues caught will include advertising revenues generated by social media platforms or search engines, and commission charged by online marketplaces (not revenue from online sales). The DST will not apply to financial or payment services, the provision of online content, sales of software or hardware, nor to television or broadcasting services.

The DST will be introduced as an interim measure pending agreement on a digital tax by the G20.

The Treasury and HMRC have published a consultation which covers:

  • The definition of the in-scope businesses and exemptions.
  • How to determine which revenues are taxable.
  • The safe harbour for unprofitable or low-margin businesses.
  • The proposed review mechanism.

The consultation closes on 24 February 2019.

In this series

Technology, media & communications

Maintaining supply chains during the COVID-19 outbreak

15 April 2020

by Multiple authors

Technology, media & communications

UK Gambling Commission focuses on safety

20 April 2020

by Debbie Heywood

Technology, media & communications

Consumer protection during COVID-19

15 April 2020

by Debbie Heywood, Anjali Chandarana

Technology, media & communications

UK's Digital Services Tax now applies

20 April 2020

by Debbie Heywood

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