Welcome to the July 2020 edition of our Retail & Consumer monthly news round-up
This newsletter focuses on key news and updates for retail and consumer-facing businesses around the world, including our latest briefings on the COVID-19 pandemic and its impact on the sector.
You can find all our COVID-19-related updates for retail and consumer businesses on our dedicated InFocus page here.
Please get in touch, or visit our webpage for more information about Bird & Bird's Retail & Consumer Group.
In this newsletter:
Coronavirus and Business Interruption (BI) Insurance in the UK: do you have coverage?
The COVID-19 pandemic has caused substantial and widespread disruption to businesses across the UK, preventing many from operating in their entirety. Consequently, business owners may look to recover some of their losses by claiming under their business interruption ("BI") insurance policies.
However, it is currently unclear whether BI policies will provide coverage and, if so, what losses will be payable by insurers. Since the start of the Coronavirus outbreak, a number of policyholder claims have been reported in response to initial rejections by insurers. As a result, the Financial Conduct Authority ("FCA") has decided to commence a 'test case' in the English Court, in an effort to provide certainty to the market.
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Brands revamped: the migration to the virtual world
Out of sight, out of mind – the fear of being forgotten in the midst of intermittent lockdowns has become very real, especially for "brick-and-mortar" brands which were hitherto unknown in the online space. Although some physical retail operations have resumed with the relaxation of "lockdown" measures, there is still lingering uncertainty amidst the World Health Organisation's warning that the worst is yet to come, and that there will be no return to the “old normal” for the foreseeable future.
At the cusp of this new era, businesses have realised that technology may be key to staying afloat. Some have explored creative ways of hosting virtual events, others have accelerated the implementation of e-payment solutions, and many more have attempted to build an online brand presence to maximise their reach over consumers in this "contactless" world.
In light of current trends, we discuss some strategies and pointers for brands looking to digitise and move online going forward.
First arrests made in the UK in connection with alleged Coronavirus Bounce Back Loan Scheme fraud
It was reported on Friday 10 July 2020 that two men were arrested in North London in connection with fraudulent applications to the Coronavirus Bounce Back Loan Scheme (the "BBLS"). In addition to the arrests, the police also obtained 10 account freezing orders over accounts which held funds in excess of £550,000.
The alleged fraud came to light when police investigating a separate offence searched a vehicle. They found documents believed to be related to applications for loans on behalf of fake companies.
The application process for the BBLS has been considered a target for fraud by commentators. In reports of Friday's arrests, Detective Sergeant Neil Stanley from the Metropolitan Police's Economic Crime Unit emphasised that the police will continue to crackdown on those that are found to have "exploited government schemes for their own monetary gain".
In this article, we review the potential offences and also the impact that these allegations have for all businesses, including those operating in the retail sector, making applications under the BBLS.
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Platform to Business Regulations: what rights do consumer brands have when selling through online platforms?
The Platform to Business Regulation ("P2B Regulation", officially Regulation 2019/1150 on promoting fairness and transparency for business users of online intermediation services) comes into force on 12 July 2020.
The primary purpose of the P2B Regulation is to regulate how operators of online platforms and search engines interact with businesses that want to use those platforms and search engines to reach consumers. The success of online platforms and search engines has led to many being considered as 'gatekeepers' to consumers, and the European Union has, through the implementation of the P2B Regulation, sought to level the playing field between operators of online platforms/search engines and businesses seeking to sell to consumers.
Much has already been written about the requirements that operators of online platforms and search engines must satisfy from 12 July 2020. This brief article is written from the perspective of consumer brands that use online platforms to reach consumers in the European Union. What are their new rights?
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Introduction of e-warranty cards and new product warranty terms in Hungary
As of 1 January 2021 new rules are entering into force affecting the statutory warranty rules for durable consumer goods. This is not an entirely new law, but are amendments to the standing Government Decree No 151/2003. The Decree applies to new products and B2C sales.
As it is currently applicable, Government Decree No 151/2003 (“Decree”) inter alia sets out the statutory warranty term for durable consumer goods as being one year; and the Annex to the Decree specifies which consumer goods the Decree applies to. The specific listed goods are generally identified as having a sales price of over HUF 10.000 which is approx. EUR 30.
The new rules affect the statutory warranty terms by introducing a new approach, where the mandatory term depends on the sales price; extends the Decree’s scope to new products, i.e. complementing the list of goods in the Annex; introduces electronic warranty cards (e-warranty cards); and sets out specific time frames for repairs and replacements. Let’s see what these mean.
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Product placement with influencers is "obvious" marketing and does not require disclosure, according to the Higher Regional Court of Hamburg
In a decision contrary to the current climate on influencer marketing, the Higher Regional Court of Hamburg decided that Instagram posts of influencers containing product placement do not need to be disclosed as “advertisement”. The full decision is not available yet, but the court has published a press release due to the public’s interest.
In this case, an influencer with 1.7 million followers, an average of 55.000 likes and highly professional pictures had published Instagram posts containing product placement. The posts were neither marked with the Instagram feature “Paid Partnership” nor did the text mention that the post were an ad. The Hamburg based influencer, active in the areas of beauty, fashion, lifestyle and travels, only discloses posts as advertisement if they are paid, but not for product placement.
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Restructuring & Insolvency
Corporate Insolvency and Governance Act 2020: an overview of the main changes and how companies can use the reforms to their best advantage
The Corporate Insolvency and Governance Act 2020 (the "Act") represents big changes to the current insolvency legislative framework and potentially to companies who may be affected by an insolvency within their supply chain. It will introduce new protections for insolvent companies against creditors wishing to exercise termination rights within supply contracts and against more aggressive creditor action.
The Act introduces reforms which are intended to be both temporary (as a response to the global coronavirus pandemic) and permanent. These new provisions will be especially welcomed by those in the Retail & Consumer and Hospitality sectors, as these sectors have been particularly affected by the pandemic.
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Sustainability in the supply chain
Sustainability is undeniably a hot topic in the retail and consumer sector, and this is especially pervasive in the supply chain space. It is also a hugely broad term which covers a span of environmental, social and economic issues. Many companies are well attuned to the fact that consumer choice is no longer solely governed by quality and brand reputation, but also by alignment with personal values and responsible practices. The demand for sustainable brands, products and services is ever-growing, with 88% of respondents in a recent US/UK survey stating that they wanted brands to help them become more environmentally friendly and ethical in their daily lives.
There are many promising and imaginative sustainability initiatives in the retail market. However, retailers are also vulnerable to criticism for not clearly defining their sustainably policies and marketing strategies. Added to this challenge is the complex nature of supply chains and the variety of interesting sustainability questions that are raised at each avenue, including carbon emissions, packaging, air pollution, water pollution, loss of biodiversity, waste, human rights, deforestation and energy consumption.
In light of this, we discuss below several ways in which some retailers are successfully addressing these questions to help enhance their brand image.
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News & Events
Webinar series: Food e-commerce & the biting legal questions around selling food online
Starting in September 2020
Online shopping – we've been doing it for years, but the coronavirus pandemic has shifted consumer behaviours. Online shopping overall has increased between 20 to 70 percent since the pandemic began, according to McKinsey. The additional demand has accelerated transformation in supply chains, putting strains on retailers' capacity and generating innovative solutions for companies to sell their products online.
Particularly in the food sector, companies are developing new business models, new supply chains and new platforms to meet the demand for online orders. In the rush of getting to the market, legal questions will arise or may be overlooked entirely.
Our Food & Beverage team has compiled some of the biting legal questions around food e-commerce, available here. You can also join us in September for a series of webinars dedicated to this topic: sign up here.
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Webinar: Competition law and product regulations - avoiding pitfalls when joining forces in the food and beverage sector
16 September 2020, 17.00 - 18.00 CEST
As a general rule, companies are required to self-assess whether any cooperation or agreements they enter into are antitrust compliant. This is particularly true when it comes to cooperation with competitors, which finds itself in the cross-hairs of competition law enforcement around the world. The rules are strict and assessment can sometimes be difficult, often requiring specialist knowledge to avoid the pitfalls and being labeled as a cartel.
The COVID-19 outbreak has, in certain cases, made more cooperation possible and getting legal certainty easier.
This webinar, structured as a Q&A session, will cover topics such as platforms, cooperation when introducing new products and the impact of COVID-19, to provide examples and help guide you in your potential collaboration with competitors.
We welcome your questions in advance, during and after the session. To send us your questions ahead of the broadcast, please use the question box on the registration page.
Head of our Hotels & Leisure team, Karen Friebe, is welcomed to the Women in Hotels leadership team
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Founded in April 2020 to drive parity across the hotel sector, not-for-profit Women in Hotels is growing from strength to strength to make a positive impact in the sector. Head of Bird & Bird's Hotels & Leisure team, Karen Friebe, has been welcomed to the Women in Hotels 2020 leadership team alongside other best-in-class industry experts. Karen will be part of the Senior Committee, leading working groups on key Women in Hotels initiatives, and will work closely with the Advisory Board and Ambassadors to guide strategic direction and represent the values of Women in Hotels in the sector.