Welcome to our monthly round - up of legal developments of interest to the technology sector. My name is Mike Rebeiro and I am the Global Head of Technology at Norton Rose. Today I’m speaking to you with my colleague, Oliver Stacey, a corporate finance partner in our technology team.
In this webcast we’re going to be speaking about the following issues:
- the extension of remit of the Advertising Standards Authority to online marketing;
- a key decision regarding in-house lawyer privilege;
- the Government’s consultation on the revised E-Privacy directive;
- the new Bribery Act;
- the Equality Act; and
- the new law applying Competition Act restrictions in property contracts.
Online advertising continues to grow its share of the UK marketing pot; with some commentators believing it will soon account for thirty per cent of all marketing spend. In response to this growth the Advertising Standards Authority (the ASA), the UK’s independent advertising regulator, has announced that it will extend its regulatory remit to cover all online marketing communications. This extension will take effect from the first of March next year. Currently, the ASA only regulates paid-for advertising. It does not regulate website content. This will change and the advertising codes will apply in full to all online marketing. This will include advertisers’ marketing on their own websites and also marketing in other non-paid-for space under their control, such as social networking sites like Facebook. However, the ASA will still not regulate journalistic and editorial content.
The ASA will be able to apply sanctions in respect of online marketing. These will allow the ASA to demand the removal of paid-for links to pages hosting a banned advertisement, with the agreement of search engines. In addition, the ASA will be able to place its own adverts online highlighting an advertiser’s continued non-compliance with the codes.
Firms who advertise on-line and digital advertising agencies should review all digital marketing materials to ensure they comply with the ASA’s advertising code prior to the first of March next year.
In recent years the European Commission has taken an active interest in certain participants and activities in the technology sector, the extensive inquiry into Microsoft being the best known example. If you work for a technology company with a significant market share and know that the Commission is interested in your activities, then the recent Akzo case will be of interest and may influence the way you manage the investigation.
In that case the European Court of Justice decided that a business's internal communications with its in-house lawyers are not covered by legal professional privilege for the purposes of investigations by the European Commission. The Court decided that in-house lawyers should not benefit from legal professional privilege. This is because in-house lawyers have an employment relationship with the undertaking they are advising, and therefore, do not have the same level of professional independence as external lawyers. In such cases in-house teams may prefer to instruct outside counsel whose advice would be privileged.
In-house lawyers should also bear in mind the potential difference between the European privilege rules and those of the jurisdiction in which they are providing advice. For example, an internal communication with an in-house lawyer will be covered by legal professional privilege if the investigation is conducted by the Office of Fair Trading. However, the same communication will not attract legal professional privilege if the investigation is conducted by the Commission.
Click on the link below to read a Norton Rose briefing on this case.
The key changes to the E-Privacy Directive on which the government is consulting are:
- the introduction of a duty on providers of electronic communications services to notify personal data breaches to the Information Commissioner’s Office;
- regulations requiring providers of electronic communications services to have in place procedures to respond to requests for information; and
- the penalties, including criminal penalties, for breaches of the E-Privacy Directive.
For browser settings to be sufficient to constitute consent, the government proposes that:
- browser owners will need to provide users with information about cookies and how to change the browser settings;
- browser owners may need to change the browser settings themselves, to make them more user friendly; and
If you are affected by the issues in the consultation, and wish to respond to it you must do so by the third of December. You will see a link to the document below.
With much media coverage, the Equality Act 2010 came into force on the first of October. The Act draws together, and expands, the plethora of existing discrimination legislation. The Act affects every provider of goods, services and facilities. Probably of most concern to in-house lawyers are the substantial changes the Act makes to employment law.
The key employment provisions which came into force include:
- a basic framework of protection against direct and indirect discrimination, harassment and victimisation;
- the introduction of a new concept of “discrimination arising from disability”;
- making pay secrecy clauses unenforceable; and
- preventing employers from asking pre-employment health questions.
Whilst you will no doubt be aware of these changes, you may not be aware that certain other provisions of the Act have yet to come into force. The Government is still considering how to implement these remaining provisions. They include such contentious issues as the provision of gender pay gap information and positive action in recruitment and promotion.
More details on the provisions of the Act and its implications for your HR team are set out in the Norton Rose briefing which can be accessed via the link below.
In recent years many companies in the technology and telecoms sectors including Siemens, Hewlett-Packard and Lucent Technologies have faced high-profile global investigations in respect of alleged corrupt practices in contract tendering procedures. As we discussed in last month’s webcast, the new Bribery Act will make such investigations possible in the UK and will make it a criminal offence to fail to prevent bribery. The Act will impact upon the way buyers of technology will run tender processes and the types of incentives technology companies will be able to offer to customers or prospective customers. The Ministry of Justice has now published a consultation paper containing draft guidance on the bribery prevention procedures that commercial organisations can put in place to prevent persons associated with them from bribing. The draft guidance comprises six principles which should inform procedures put in place to prevent bribery.
Let’s look at these principles:
First: commercial organisations must keep up to date with bribery risks in a sector or market. This will be important if you are bidding for contracts in jurisdictions where corruption is commonplace.
Second: top level management should be committed to preventing bribery and establishing a culture whereby all employees are made fully aware that bribery is unacceptable. For those technology companies with large sales forces this would include educating and training their sales force. We recently saw in the EDS case what damage a less than honest sales man can do.
Third: commercial organisations must have due diligence policies and procedures in place covering all parties to a business relationship, including the supply chain.
Fourth: commercial organisations need to ensure that their policies and procedures relating to bribery are clear, practical, accessible and enforceable.
Fifth: commercial organisations should implement their anti-bribery policies and procedures and ensure they are embedded in internal controls, recruitment and remuneration policies, operations, communications and training on practical business.
Finally: implementing monitoring and review mechanisms to ensure compliance with anti-bribery policies and procedures and issues as they arise is recommended.
These principles are wide ranging. Technology firms should review the draft and consider what steps they need to take to ensure they remain in control of their business risks, and comply with the Act. Click below to read a detailed briefing on the consultation paper.
Many technology companies have substantial leasehold estates particularly those who have retail operations or a network of sales offices. Traditionally, the balance of power in negotiating the terms of leases has rested with landlords. For the first time competition law may help technology tenants to negotiate more favourable terms or, at least help them avoid onerous restrictions, for example, obliging them to procure associated services such as cleaning or insurance from the landlord. A new law, taking effect in April 2011, will for the first time apply competition law to restrictive covenants and clauses in UK property contracts. Covenants and clauses which breach the rules will be void and unenforceable, and the parties may also face other sanctions. The new rules will apply to existing contracts which were signed before April 2011, as well as to new contracts. You should be aware, however, that not every restrictive covenant or provision in a property agreement will be caught by the new law; it will apply only to those provisions which are restrictive of competition in the production or sale of goods or services.
In advance of the new law coming into effect you should review for compliance restrictive provisions in existing property agreements.
Click below to read a full Norton Rose briefing on the new law.
Thank you for listening to this webcast today. We hope you found it useful.