In 2014, the cheese industry saw a record surge in exports including £77 million of sales to France and £19 million of sales to Italy. This business represented a third of the overall dairy exports of £1.5 billion. With such rising demand, it is important that cheese makers consider obtaining “protected name” status not only to prevent poor imitation, but also to encourage tourism and increase business revenue.

There are estimated to be over 700 distinct varieties of cheese produced in the UK. However, only 16 of these having been awarded protected status. In comparison, Italy and France respectively have 49 and 51 of their cheeses currently protected. Please see the British Cheese Boards website for more background information, including the differing types of protection which are available in this context.

11 of the UK’s 16 protected cheeses are located in the South West and include household names such as: Single Gloucester; Dorset Blue; and Westcountry Farmhouse Cheddar. Despite this, there are many producers both across the South West region and the rest of the country that could capitalise on the advantages of protected food name status.

Such protected status creates an element of exclusivity surrounding produce and could arguably be seen as a contributing factor in the surge of international cheese exports.

The Environment Secretary Elizabeth Truss, recently urged cheese makers to register a protected food name status over their goods commenting that:

“Growing our British cheese industry will help to bring greater investment, jobs and tourism to local communities. And by trademarking our best-loved cheeses we are not only celebrating our rich heritage of cheese making, but also protecting them from pale imitations.”

These are clearly important benefits for businesses to protect their brands and in particular consider whether their products that may be capable of obtaining protected status. A list of the products which have protected status can be found here.

One word of warning. Undoubtedly the application process for the protected status is not for the faint hearted. By way of example, the campaign to protect Melton Mowbray pork pies took 11 years to complete. However, the benefits to be reaped can be considerable, particularly when trading in products with a wider national or international appeal.

For more information, please contact David Thompson, Head of Food and Drink, Michelmores LLP on 01392 687656 or at david.thompson@michelmores.com

Regulatory investigations are an increasingly common part of corporate life, particularly in the financial services sector. In addition to large fines, civil claims may also be launched off the back of public criticism from a regulator in the knowledge that whistle-blowers or sensitive documents from the investigation already exist. Therefore, what is good strategy on the one hand may not be good strategy on the other.

Risk management is made more complex by the fact investigations can emanate from overseas regulators across jurisdictions – particularly the US.  Since 2010, the volume of requests from the US Securities Exchange Commission (SEC) for co-operation from foreign regulators has increased by 59% and the volume of requests received by the Financial Conduct Authority (FCA) from foreign regulators has increased by 36%.

This throws up a number of difficult issues to navigate.  Do you turn yourself in to the regulator and self-report in return for a lower fine and immunity?  The price to pay for public acknowledgment of wrongdoing might be increased levels of civil claims.  If so, do you categorise and volunteer all relevant emails and data, in a timely fashion instead of opting for a ‘document dump’?  Co-operating with the regulator means claimants will more easily be able to find and identify the most sensitive evidence and courts will decide if an attempted selective waiver of legal privilege is effective.

Deutsche Bank is a case in point.  It received a record $2.5bn of fines following an admission of guilt under a deferred prosecution agreement (DPA) with US authorities relating to alleged Libor rigging.  The FCA said that the Bank repeatedly misled it during Libor investigations, took too long to produce relevant documents and was slow to fix inadequate systems and control which contributed to an enhanced fine.  The two joint Chief Executives of the Bank are also to stand down.

This is all grist to the mill for civil claims being played out in the High Court.  Unitech Global is pursuing Deutsche Bank for damages, and resisting enforcement of $150m of loans, relating to the alleged mis-sale of interest rate swaps linked to Libor.  In the wake of regulatory sanction, it was able to successfully amend its claim to allege that the bank impliedly represented that it would not falsely or fraudulently manipulate the benchmark.   The courts have compared the case to a diner sitting down at a restaurant who makes an implied representation that he or she can pay for their meal – a reasonable person in either scenario would not infer or suspect dishonesty.

Similarly, and having been fined £290m by UK and US authorities in relation to Libor fixing, Barclays is defending a £50m damages claim brought by its customer Rhino Enterprises, which claims false Libor submissions undermined various swap arrangements which triggered administration.  It has also alleged the bank engaged in anti-competitive behaviour by colluding with other banks to manipulate Libor.  This is separate to the $2.43bn of fines Barclays received for allegedly rigging Forex and Isdafix benchmarks.

In a further lawsuit brought by Property Alliance Group against RBS relating to swaps for damages of £30m, RBS has been ordered to handover documents setting out its negotiations with the FCA over its £390m fine for Libor manipulation and which are also kept confidential under seal as a condition of its DPA with US regulators.  The papers will be inspected by a Judge before ruling on whether they are admissible.  This case re-affirms the general approach of the English Courts – that confidentiality does not trump a litigant’s obligation of full and frank disclosure or the principle of open justice.

The disclosure of papers handed over in confidence or inadvertent waiver of privilege is problematic where it forms part of negotiations with regulators, duties to statutory auditors must be discharged, conflict of interests arise with directors or senior managers who are implicated and internal audit, risk and compliance functions generate significant levels of detailed analysis and guidance.  Governance protocols and training programmes can help identify those with authority to liaise with counsel and the allocation of tasks during an investigation.

Technology also has to be understood as IT infrastructure and software which underpin data storage and security systems are a target for investigators.  A leading provider of data recovery, forensics and e-disclosure services recently carried out a survey in which 44% of UK respondents had been involved in an internal investigation and 33% in a regulatory investigation during the last 12 months.  Where are your servers or data managers based?  Are they backing-up data in multiple jurisdictions where the rules on confidentiality, privilege and disclosure are different?

“Wire Fraud” is a US federal crime which includes devising a scheme to obtain money on false pretences in communications sent via e-mail servers.  This has been relevant to traders engaged in Forex manipulation who became infamous for the use of online chat-rooms to exchange confidential client information.  From a legal point of view, the boundary between a legitimate exchange of publically available information and market manipulation is the element of collusion and dishonesty, which is not always easy to evidence but has been dredged from servers.  Traders facing disciplinary action may look for whistleblowing angles or state that a number of practices, such as “layering” or “front-running”, were commonplace and an accepted part of the culture.

There is no indication of any let-up.  The Governor of the Bank of England Mark Carney has promised a crackdown on rogue traders and declared the “age of irresponsibility is over“.  The outcome of the Fair and Effective Markets Review published on 10 June 2015 recommends more wide ranging regulation of derivatives and Forex markets and longer jail sentences for financial crime to correct “ethical drift“.  This is on top of tougher regulatory rules already on the way for senior management on boards, operating committees, in-house lawyers and those with “Significant Influence Functions”.  The Senior Managers Regime (SMR) will enable regulators to fine individuals and ban them from working in the industry.

These are very complex inter-related issues to grapple with.  In terms of setting priorities, managing cross-border privilege whilst undertaking an internal investigation, possibly as a pre-cursor to self-reporting, is high up the list.  In particular, because US regulators still hold a certain fear factor where co-operation is advisable if non-criminal outcomes are to be negotiated.  Legal counsel can also be used to devise pre-emptive risk management strategies or when necessary, to avoid misunderstandings about the basis on which employees or ex-employees co-operate with an internal investigation or a regulatory fact-find.

In relation to civil actions, regulators have paved the road and litigants pursuing Libor related misrepresentation claims in the High Court have sign-posted the way for others to follow (even if they never get to trial).  Libor, Forex and Isdafix manipulation all have the potential to cast a very long shadow by virtue of the fact claims based on fraud will not be time barred, settlements based on fraud can be revisited and documentation from regulatory fact finds or negotiations is available to call upon.  For example, it is now known that the former Chief Operating Officer of Barclays Capital once described the Libor curve as being based on “fantasy rates”.  It remains to be seen whether the current litigation climate is the beginning of the end or the end of the beginning.  In the meantime, the line between regulatory investigations and civil claims has never been more blurred.

In our increasingly digital age, where a rapidly growing number of people in the UK are purchasing smartphones, laptops and other mobile devices, the average person now owns more and more digital assets.

A digital asset is any digitally stored content which is owned by an individual, including images, music and online accounts such as social networking profiles.

This increase in digital assets is creating complications when the owner dies, leaving their Personal Representatives (PRs) to deal with these assets.  Often, PRs will not have regard to digital assets at all, let alone give proper consideration as to how they should be distributed.

The Current Legal Standpoint

Pursuant to the Administration of Estates Act 1925, PRs have a duty to collect and administer the assets of the Deceased’s Estate, this includes digital assets.  Failure to dispose of digital assets correctly could amount to a breach of that duty.  Aside from the legal requirement to administer these assets in the proper fashion, PRs will want to protect the Deceased’s information which could otherwise be easily deleted or lost.  Understanding the importance of distributing these assets in the correct way is key.

The issue of digital assets is made even more complicated by the fact that there is currently no legal protocol in place to assist PRs with the correct way to examine and distribute these assets.

The Society of Trust and Estate Practitioners (STEP) are currently drafting a protocol.  STEP intend to create a best practice policy for online providers to adopt.  In the meantime, PRs often turn to their solicitors for advice on how to administer these assets.  Below is a checklist which will assist in explaining how to deal with different types of digital asset.

Checklist for administering Digital Assets

Whereas computer usage and internet access used to be largely confined to desktop computers, increasing numbers of other devices are now being used in the average UK household to access and store digital assets.  According to OfCom, in 2014, 61% of adults in the UK were using smartphones and over four in 10 households owned a tablet. These figures have risen 10% and 20% respectively since 2013, showing a steady increase in the ownership of devices capable of storing such assets.

PCs, Laptops, Mobile Phones and other devices

• Firstly, check the ownership of the device itself.  If it was supplied to the Deceased by his employer, you will need to contact the employer to find out how to return the device as it may contain confidential information.  This is of vital importance as a PR may infringe the employers’ rights if he disposes of a device which contains confidential information.
• If the Deceased owned the device, check what digital assets are stored on it.  For example, music downloaded from the iTunes Store or digital images downloaded from a website.  Although the Deceased owned the device, this does not necessarily mean he owned the rights attached to the information stored on it.
• Determine whether the Intellectual Property (IP) rights associated with the digital asset are owned by the Deceased.  It is useful to check the terms and conditions of the digital assets to determine the protocol following death of the account holder.  For example, if the digital asset is music downloaded from iTunes, Apple restricts the use of the content solely to Apple devices used by the account holder (the Deceased).  The right to use the content is lost upon death.
• Take any appropriate action before distributing the device, which will usually include copying the information stored on the device before wiping the hard drive.  For mobile phones, PRs should download any information, such as images and remove the SIM card.  It is also important to check with any relevant mobile phone contract provider to see whether the contract terminates on death or any outstanding payments need to be paid.

Intellectual Property created by the Deceased

• Check whether the Deceased personally owned the rights associated with the digital assets on his device.  This may be because the Deceased created the work and it was protected with IP rights.  For example, the Deceased may have created literary or artistic work that he then copyrighted.
• Ascertain whether the Deceased created the work in the course of his employment.  If so, the PR will need to check whether the employer owns the IP rights, pursuant to the Designs and Patents Act 1988.
• If the Deceased owned the rights, the PR will need to create a secure backup copy of the work before deleting it from the device which is to be distributed or sold.  The PR should always check the terms of the Will as the Deceased may have explicitly provided for a gift of the digital asset to a beneficiary, separate from the device itself.
• In the absence of an express reference in the Will, digital assets with little or no IP value are likely to form part of the residual Estate.  It is important to note that where the Deceased died intestate, digital assets will not fall within the statutory definition of ‘personal chattels’. Therefore, digital assets will not automatically pass to the surviving spouse under the intestacy rules.

Online Accounts

Digital assets are often accessed through the online accounts set up by the Deceased, such as email and social networking accounts.

• Check what online accounts the Deceased held.
• If the PR does not have the login details to the accounts, the relevant Internet Service Provider (ISP) such as Google, Apple or Twitter may be able to assist in allowing the PR to gain access to the accounts and download any information needed to administer the Estate.
• The ISP will also be able to provide information on what happens to the digital assets stored on an account after the death of the account holder.  Often, the account will be terminated and permission granted to the authorised PR to access the content.
• Another option which is often used for social networking profiles is “memorialisation”, whereby the ISP preserves the online content created by the account holder to honour the memory of the holder following their death.  Facebook profiles are often memorialised to allow friends and family to post comments on the Deceased’s profile before it is permanently removed.

Conclusion

When a PR is faced with distributing or selling a Deceased’s personal belongings, it is likely this will include digital devices.  Clearly a brief inspection of the devices’ contents before simply disposing of it will not suffice.  Rather, it is essential that a full and proper inspection of the digital assets is carried out and any appropriate action taken depending on the individual IP rights associated with the assets.

PRs have an overriding duty to exercise “reasonable care and skill” when carrying out the administration of the Deceased’s Estate (Trustee Act 2000).  Seeking guidance on the correct actions to take when faced with the Deceased’s digital assets is undoubtedly a reasonable step that all PRs should take.

For more information, please contact Tony Cockayne, Partner and Head of the Disputed Wills and Trusts team at Michelmores LLP.

An appeal brought by the Hong Kong based PCCW Group against Sky for passing off was dismissed by the Supreme Court (“the Court”) on 13 May 2015.

Interestingly, this is the first ‘passing off’ case heard by the highest court of England since the iconic Jif Lemon case in 1990.

The PCCW Group (referred to in the judgment as “PCCM”) has operated the internet television service known as “NOW TV” in Hong Kong since March 2006.  The service is not available in the UK but a number of Chinese speaking residents (both permanent and temporary) were aware of the NOW TV service and the Court considered it was possible for UK residents to be aware of it via You Tube or PCCM’s  own websites.

In March 2012 British Sky Broadcasting Group (“Sky'”) announced its intention to launch a new internet based television service ‘NOW TV’. Shortly after this announcement PCCM issued proceedings against Sky on the basis that its use of “NOW TV” amounted to passing off.

The Court affirmed the earlier decisions at first instance and the Court of Appeal. The Court considered that PCCM did not have actual goodwill in the jurisdiction. The existence of such goodwill is a key ingredient in the context of a passing off action. Mere ‘reputation’ was held to be insufficient.

The Court considered both the importance of protection from unfair competition and the public interest in free competition in making its decision. Lord Neuberger commented:

“In my view, a claimant who has simply obtained a reputation for its mark in this jurisdiction in respect of his products or services outside this jurisdiction has not done enough to justify granting him an effective monopoly in respect of that mark within the jurisdiction.”

The Court held that PCCM could not make out a case of passing off in this instance as PCCM’s business was based in Hong Kong and the availability of NOW TV service via websites in the UK was intended to promote the business in Hong Kong only. Whilst PCCM had developed a small reputation in the UK, no goodwill had attached to PCCM’s NOW TV service in the UK as there were no UK customers.

For traders, the message from the Court is that the traditional approach continues to apply. The English Courts will not protect traders who do not enjoy custom in the jurisdiction who are seeking to restrain their competitors by reference to passing off. Given the reach now afforded through the internet, the Court’s view is that ‘reputation’ can easily be acquired and to allow this to form the basis of a passing off claim would tip the balance in favour of unfair competition. Traders therefore still need to demonstrate sufficient goodwill to acquire this form of protection and this should be carefully considered when bringing or defending passing off claims.

Read the case in full

The winners of the 2015 Michelmores Property Awards have been announced, celebrating ten outstanding property and construction projects across the region.

Torquay-based architects Kay Elliott were the big winners of the night, taking home the prize for ‘Building of the Year’ for its work on the town’s iconic Abbey Sands building – on the site of the former Palm Court Hotel which was destroyed by a fire in 2010. The firm also won the coveted ‘John Laurence Award for Professional Firm of the Year’, recognising its strong performance in the South West and beyond.

The Dawlish Emergency Project, to re-establish the railway line and sea wall destroyed after severe storms in February 2014, was awarded a ‘Special Infrastructure Prize’. The project team, comprising Network Rail, engineering and development consultancy Mott MacDonald and other contractors, successfully restored the railway line back to use in just eight weeks.

Holland Park, by Exeter-based Heritage Developments, was named ‘Residential Development of the Year 40 Units and Under’, for its collection of stylish, Zero Carbon homes. Meanwhile, Linden Homes’ Home @ Heartlands development near Pool, won ‘Residential Development Project of the Year 41 Units and Over’.

Two Plymouth-based projects were also recognised – including Help for Heroes Personnel Recovery Centre, Plymouth, submitted by Interserve Construction and Plymouth University’s Marine Station, submitted by Balfour Beatty.

Other winning projects include joint winners for ‘Heritage Project of the Year’ – Exeter Mathematics School, and Samuel Jones Smoke & Ale House. Whalesborough Farm, near Bude, Cornwall was awarded ‘Eco Project of the Year’.

Emma Honey, Head of Real Estate at Michelmores, said:

“This year we received the highest number of entries in the last five years of the competition − signaling a strengthening property and construction sector in the South West. The quality of the entries has been very impressive with tough competition in each category, so many congratulations to all the winners on their fantastic achievements.”

The Michelmores Property Awards − now in its 13th year, celebrates excellence in the property and construction industry, across the commercial and residential sectors in Devon, Cornwall, Somerset and Dorset. The Awards Dinner was hosted by comedian and writer Rory McGrath at Exeter’s Sandy Park Conference Centre, on 19 May.

The 2015 Michelmores Property Awards winners in full:

Commercial Project of the Year with a Value Over £5million

• Help for Heroes Personnel Recovery Centre, Plymouth – submitted by Interserve Construction

Commercial Project of the Year with a Value Under £5million

• Marine Station, Plymouth University – submitted by Balfour Beatty

Building of the Year

• Abbey Sands, Torquay – submitted by Kay Elliott

Heritage Project of the Year

• Exeter Mathematics School – submitted by Kier Construction
• Samuel Jones Smoke & Ale House, Exeter – submitted by St Austell Brewery

Eco Project of the Year

• Whalesborough Farm, Bude, Cornwall – submitted by Trewin Design Architects

The John Laurence Award for Professional Firm of the Year

• Kay Elliott, Torquay

Residential Project of the Year 41 Units and Over 

• Home @ Heartlands, Pool, Cornwall – submitted by Linden Homes

Residential Project of the Year 40 Units and Under (but more than 6)

• Holland Park, Exeter – submitted by Heritage Developments

The Special Infrastructure Award

• The Dawlish Railway Project – submitted by Network Rail and Mott MacDonald

The latest figures from DECC for the deployment of ‘standalone’ solar PV systems in the UK are almost certain to lead to a reduction in the level of the feed-in tariffs (FITs) for such schemes, down to under 4.5 pence per kilowatt hour. This so-called ‘super degression’ – equating to a reduction in support of 28%  – has been triggered as a result of almost 100MW of new, standalone solar schemes coming on stream in the first quarter of the year. The change would come into effect for the second half of 2015. Alongside the early curtailment of support for ‘big solar’ via the Renewables Obligation (i.e. ROCs rather than FITs) from March 2015 and the shaky start for solar under the new, Contracts for Difference support mechanism, there are clearly challenges ahead for developers of large, ground-mounted schemes. Taking a step back, though, the industry in the UK has achieved remarkable progress in a relatively short period of time; especially when one considers that the FIT stood at over 30p / kWh for generation by large, standalone solar schemes less than four years ago.

The ability of developers to control their costs and/or work within shrinking margins is finite, however, and the increasing shortage of economically-viable grid connections is pulling in the opposite direction.

Among our developer clients, there is still considerable optimism, although once the current crop of pre-accredited schemes is built out, there does appear to be something of a fallow period looming.  The enthusiasm for smaller (sub-5MW) and/or community schemes with shared connections is not universal and does not appear to us to be likely to result in a sufficient volume of schemes to keep the trend line on an upward trajectory.  But it’s worth keeping in mind that grid parity has already been achieved in several parts of the world – typically and unsurprisingly those with lots of sun, good demand and comparatively high prices for traditional sources of energy. Perhaps the relatively small leap now required for solar PV to reach utility-scale grid parity in the UK is within sight.

For more information please contact Ian Holyoak, Partner and Head of the Energy & Renewables team at ian.holyoak@michelmores.com or 01392 687682.

Michelmores LLP has advised renewable energy company TLS Hydo Power on a £2.5m bond issue − the first for the UK-based energy provider.

TLS Hydro Power is part of the TLS Energy Group that owns and operates several hydropower sites across Scotland and England.  Funds raised from the bond issue will finance new energy schemes, including a 1MW project in the Perth and Kinross district of Scotland.

The bond issue was launched in conjunction with ethical bank Triodos, offering investors 7% interest a year, for five years. The offer has since oversubscribed, closing just three weeks after opening.

Alexandra Watson, Associate, who led the Michelmores team, said:

“It was a real pleasure to advise TLS Hydro Power through its first bond issue, giving investors the opportunity to support the future UK’s renewable energy industry. The bond issue proved very popular with investors and will provide TLS with the capital to finance new renewable schemes.”

For further information please contact Ian Holyoak, Partner and Head of the Renewable Energy team at Michelmores, by telephone on 01392 687682 or by email at ian.holyoak@michelmores.com.

The new Regulations replace the Public Contracts Regulations 2006 (as amended) in their entirety.  The Regulations transpose the Public Sector Reform Directive 2014/24/EU of 26 February 2014. The Government had stated that these would be transposed last autumn, but they were finally transposed with little fanfare on Thursday, 26 February 2015 and, in the main, apply to all procurements started on or after 26 February 2015. The old rules apply to procurements started before that date. The Regulations apply in England, Wales and Northern Ireland.  The Scottish Government has not yet transposed the EU Directive into Scottish Regulations.

A Prior Information Notice (“PIN”) issued on or after 26 February 2015 will fall within scope of the PCR 2015. The new Regulations will not apply to any health services contracts that are within the scope of the NHS (Procurement, Patient Choice and Competition)(No.2) Regulations 2013 (the “NHS Regulations”) until 18 April 2016.

Change to Procedures

You will be aware that there were previously four procurement procedures:

• The Open Procurement Procedure
• The Restricted Procurement Procedure
• The Negotiated Procurement Procedure with and without advertisement
• The Competitive Dialogue Procedure

Changes to the Competitive Dialogue Procedure

There are some subtle changes to some wording. For example, tenders received after close of dialogue may now be “clarified, specified and optimised” rather than “clarified, specified and fine-tuned”. In that context changes must now not be made to the “essential aspects of the tender” rather than the “basic features of the tender” as was previously the case.

The Negotiated Procedure with advertisement has been abolished. There are two new procedures:

• The Competitive Procedure with Negotiation

The CPN is a more heavily regulated procedure than the previous competitive negotiated procedure. It requires contracting authorities to specify award criteria and minimum requirements up-front in the procurement documents. Initial tenders (to be submitted within 30 days) then form the basis for negotiations. The minimum requirements must not be the subject of negotiation and there are controls on the conduct of the negotiations. It is permitted to reduce the number of tenders during the course of negotiations. Importantly, no negotiation is permitted after receipt of final tenders.

• Innovation Partnerships

Innovation partnerships are a new concept in EU procurement law. They are intended to be long term partnerships which allow for both the development and subsequent purchase of new and innovative products, services or works.

The term “partnerships” is not used in a technical sense to mean legal partnerships as defined under UK law. The term is used to indicate the partnering type approach to working together.

The Innovation partnership procedure allows for a single procurement process for: 1) the appointment of one or more innovation partners; 2) parallel innovative development work as well as permitting the number of partners to be reduced; and 3)  an option for the contracting authority to purchase the innovative supply, service or works developed as a result of the Innovation partnership.

The Regulations define “innovation” as “the implementation of new or significantly improved” products, services or processes. The non-exhaustive definition covers:

• production
• building and construction
• a new marketing method
• a new organisational method in business practices
• workplace organisation or external relations

This broad definition will cover a wide range of procurements, from development of a single specialist product to, potentially, major outsourcing arrangements.

The new or significantly improved products, services or processes should be implemented with the purpose of helping to “solve societal challenges” or to support the Europe 2020 strategy. From a practical perspective, contracting authorities will need to have a clear audit trail demonstrating how the proposed arrangements achieve this objective and fall within the definition of “innovation”.

Selection criteria for innovation partnerships are to include capacity in R&D and developing and implementing innovative solutions.  The contracting authority must invite a minimum of 3 economic operators to participate in the innovation partnership procedure, provided that there are 3 suitably qualified economic operators.

Time limits

The minimum timelimit for the PQQ stage for all of the procedures is now to be 30 days from dispatch of the OJEU Contract Notice.

The minimum timelimit for the ITT stage under the Restricted Procurement Procedure is now to be 30 days.

OJEU Contract Award Notices must be dispatched within 30 days of contract award, rather than the current 48 days limit.

New Light Touch Regime

Under the current rules, services are classified as either “Part A” services, which are fully regulated, or “Part B” services, which are only regulated lightly. The new Regulations abolish this concept. All services are subject to full regulation unless they fall within the list of services which are subject to a new “light touch regime”.

The new light touch regime requires contracting authorities to advertise contracts for light regime services, worth €750,000/£625,050 (the equivalent value in £ is fixed until 31 December 2016 and will then be revised along with the other financial thresholds) or more, in the OJEU. The way in which the procurement process is run is not regulated in detail in the new Regulations.  EU Member states are required to implement their own rules on procurement processes for light regime contracts, subject to complying with transparency and equal treatment principles.

Light touch regime services are listed in Schedule 3 of the Regulations. In practice the list of services covered by the “light touch regime” looks very similar indeed to the current list of Part B services (certain health, educational/vocational services and social services)!  There are, however, some services which were Part B services but which are now fully regulated and so you have to check the list very carefully.

Light touch regime contracts at or over the threshold must be advertised in the Official Journal of the European Union (OJEU), using standard form notices. All contracting authorities may use either a Contract Notice to advertise in the OJEU or an enhanced Prior Information Notice, which can be published a year or more in advance and which can cover multiple contracts.

The Light Touch regime will not apply to any health services contracts that are within the scope of the NHS Regulations until 18 April 2016.

Changes to benefit SMEs

Division into Lots: Regulation 46(2), as part of the drive to encourage smaller suppliers, requires a contracting authority deciding not to divide a contract into lots to explain why this decision was taken in the Regulation 84 report (see paragraph 14 for more information on this). In order to encourage contracting authorities to “share out” lots amongst bidders, Regulation 46(4) allows a limit to be set on the number of lots that may be awarded to one particular supplier. However, Regulation 46(5) also requires contracting authorities setting such a maximum to provide details of the objective criteria they intend to use to decide how a lot should be awarded if the winner of that lot has already won the maximum number of lots permitted. This may prove to be difficult to do in practice.

The division into lots could be of particular interest to the construction industry, lots could potentially be used where a contracting authority wants to tender for the entire project under a single contract notice but then breaks that down into separate lots for perhaps site remediation, demolition, construction, or perhaps specialist works packages are required but the contracting authority wants to retain particular control.  Similarly with consultancy contracts, the contracting authority may wish to procure all of its professional team under one contract notice and then split each discipline into lots for the architect, engineer, surveyor, project manager etc.

Maximum of two times turnover: Regulation 58 limits the maximum turnover requirements that contracting authorities may set to a maximum of twice the contract value, unless due to the particular risks a greater turnover requirement is justified.

European Standard Procurement Document (ESPD): Regulation 59 requires contracting authorities to accept the ESPD, which is a standard EU form of self-certification available for use by a supplier, to demonstrate it is not within the exclusion criteria and that it meets financial standing and technical capability criteria. The contracting authority may request supporting documentation or evidence at any stage (Regulation 59(8)); however, if the evidence needed is directly obtainable (e.g. through central databases) then this route must be taken (Regulation 59(5)). In simple terms, it is intended that suppliers are unlikely to be requested to provide financial reports and accounts etc. unless they are appointed as preferred bidder, saving SMEs money and time.

Selection stage

New grounds for mandatory exclusion include those under the Counter Terrorism Act 2008 and the Serious Crime Act 2007. In addition, for example, where a supplier has failed to pay taxes or social security contributions and there has been a binding judgment or decision in the case, that supplier must be excluded.

There are new grounds for discretionary exclusion which contracting authorities will need to address, for example, where the supplier has:

• failed to pay taxes or social security contributions and the contracting authority can demonstrate this by ‘appropriate means’ even in the absence of a formal ruling; or
• performed poorly on previous contracts, resulting in termination or damages or the equivalent; or
• exerted undue influence on procurement decision making process; or
• various other circumstances which would distort competition e.g. conflicts of interest, collusion, prior involvement (where the impact of this is incapable of being neutralised by dissemination of information to other bidders).

Duration of exclusion: Regulation 57(11) states that for a mandatory exclusion offence a bidder shall be excluded for a period of five years, and for a discretionary exclusion, a period of three years. In addition, Regulation 57(13) sets out a “self-cleaning” mechanism where a supplier may provide evidence that, despite the existence of mandatory or discretionary grounds, it can demonstrate its reliability and that it has taken compensatory measures to prevent the issue happening again (see Regulation 57(15)). There is an obligation on the contracting authority to evaluate the evidence in the light of the gravity and circumstances of the misconduct, and to provide reasons to the supplier if it considers the “self-cleaning” to be insufficient and it wishes to proceed to exclude in any event (Regulation 57(17)).

Public Sector Mutuals: Reserved contracts for mutually-owned entities and sheltered workshops

The Regulations contain new opportunities for contracting authorities to further social and community policies by reserving contract opportunities to certain types of supplier.

Regulation 77 allows contracting authorities to reserve contracts for certain health, social and cultural services to employee mutuals without having to subject the contract to the application of the Regulations in full. (Note that health services which fall under the NHS Regulations are not covered by Regulation 77).

An organisation will qualify under regulation 77 if:

• its objective is the pursuit of a public service mission linked to the delivery of those services;
• profits are reinvested and/or are distributed on participatory considerations;
• ownership of the organisation is based on employee ownership/participatory principles or requires the active participation of employees, service users or stakeholders;
• the organisation has not had a contract for the services concerned reserved to it by this contracting authority in the previous three years;
• the contract term is no longer than three years; and
• the call for competition/advertisement makes reference to Article 77 of the Directive (from which the provisions of Regulation 77 are derived).

In addition, Regulation 20 allows contracting authorities to reserve the right to compete in a procurement process to sheltered workshops, provided that the OJEU Contract Notice references Article 20 of the Directive and at least 30% of the employees of the workshop are disabled or disadvantaged.

Under-threshold contracts

Regulations 109 to 112 of the PCR 2015 regulate contracts that fall under the threshold; this is part of the so-called “Lord Young reforms” aimed at encouraging smaller suppliers.

Regulations 110 and 112 require that:

• contracts as low in value as £10,000 (or £25,000 for ‘sub-central’ contracting authority procurements), if advertised at all, must be advertised on the government’s “Contracts Finder” portal; and
• unless one of the exemptions at Regulation 112(2) applies, details about contract award must also be sent to Contracts Finder.

Maintained schools and Academies are exempt from these requirements, as are contracts for health services covered by the NHS Regulations. In addition, Regulation 111 brings in a new ban on use of a selection (PQQ) stage for under threshold contracts and a statutory obligation to have regard to Cabinet Office guidance around this.

Codification of in-house exemption and material change case-law

Previously European case law (particularly, the Teckal and Hamburg cases) was authority on when an in-house contract or joint co-operation arrangement fell outside the scope of the 2006 Regulations. The new Regulations now sets out these exemptions in statute for the first time.

Previously European case law, especially the Pressetext case, was authority on the extent to which a public contract could be modified without triggering a requirement to run a new procurement process. Regulation 72 now sets that test out in statute for the first time and clarifies it to a certain extent.

Regulation 72(1) states that a modification which is provided for in the original contract in “clear, precise and unequivocal” terms will not trigger a new procurement process.

There is now a formal safe harbour where the change in value is relatively small – the lower of the value of the relevant threshold applying to the procurement or under 10% (services & supplies) or under 15% (works) (Regulation 72(5).

There is also no need for a new procurement where there has been a replacement of the supplier following a corporate restructuring, insolvency or merger, and the new supplier still meets the original selection criteria. This exemption is only available where there is no other substantial modification to the contract (Regulation 72(1)(d)(ii)).

Framework agreements

There is little new law in relation to frameworks, save that Regulation 33(5) confirms what guidance and case law have previously required; i.e. only contracting authorities who are identified as customers in the call for competition are entitled to call off contracts from a framework agreement.

Reports

There is now a need to provide a comprehensive procurement report for each tendering exercise.

Payment of Invoices

Regulation 113 was another late addition to the final version of the PCR 2015 and applies to all public contracts other than those for health services under the NHS Regulations and those awarded by a maintained school or Academy. It puts onto a statutory footing what previously had been the subject of guidance only; an obligation on contracting authorities to pay valid and undisputed invoices within a 30 day period (Regulation 113(2)(a)). There is also a requirement to ensure that invoices are considered and verified in a timely fashion – undue delay will not be a justification for failing to treat an invoice as valid and undisputed (Regulation 113(b)). Finally, there is an obligation on contracting authorities to ensure that suppliers abide by these conditions in relation to their own sub-contractors, such that the 30 day payment term is passed down the supply chain (Regulation 113(2)(c)).

Where a public contract fails to include these provisions, Regulation 113(6) will “deem” them to be included in any event, meaning there is no possibility of opting out of these obligations.

New Directives

There are two more Directives to implement, one on utilities and one on higher value concessions.

A concession contract is a contract under which a contracting authority or a utility outsources works or services to a contractor or provider, who then has the right to commercially exploit those works or services in order to recoup its investment and make a return. The key feature is that the contractor/provider bears the operating risk of the arrangement and so has no guarantee of recouping its investment or operating costs. Common examples of concessions might include: running catering establishments in publicly owned sports and leisure facilities, provision of car parking facilities and services; or the operation of toll roads.

The new concessions regime will mean that all concessions above € 5,186,000 will have to be advertised in the EU’s Official Journal. Purchasers will still be able to determine how their tender procedure runs, subject to certain minimum rules on mandatory/discretionary grounds for bidder exclusion, time limits for expressions of interest and tenders, and award criteria.

The above article contains a summary of complicated areas of law and is not legal advice.

Receiving negative feedback is never pleasant but as long as it is can be pinned to a genuine act or omission that a customer found unsatisfactory, there is an opportunity to use the feedback constructively and correct business practice where necessary. We have considered what can be done about negative feedback in our blog “All publicity is not good publicity: how to handle negative online reviews” but what can a business do if it finds itself at the receiving end of a false or malicious online review?

A Legal Solution

This question was recently put to the test by Colorado-based law firm which successfully sued 20 year old British internet troll Jay Page in the High Court for posting a libelous false review on the firms’ Google Maps profile (see: The Bussey Law Firm PC  v Page [2015] EWHC 563 (QB)).

The review read as follows:

“A Google User received 10 months ago
Overall Poor to fair
Scumbag Tim Bussey, pays for false reviews, loses 80% of his cases.
Not a happy camper
3 out of 3 found this review helpful”

Mr Page had no previous relationship with the Claimant firm but the Claimants established that Mr Page had advertised on Twitter as being willing to post “feedback” for $5 via the Fiver.com website.

In a decision that gives no concession for false reviewers, whatever their motive and seemingly whatever their means, the court sent a clear message that a remedy is available for victims of malicious and false negative reviews. The court awarded the two Claimants (the law firm and Mr Bussey, the individual lawyer embroiled in the review) £50,000 in damages and the Defendant was ordered to pay more than £100,000 in damages and costs combined.

Had the Claimants not already agreed a voluntary cap on damages, the figure would have been higher and the court was minded to award damages on a punitive basis (with the aim of punishing the Defendant) as well as damages for hurt feelings and distress and for injury to reputation.

The Practical Reality

The good news for businesses faced with false negative reviews is that a remedy is available in theory, though obviously the cost of litigation will be very high.  Even where litigation is not a viable option, the current predicament of Mr Page should encourage reviewers to remove false review, or, preferably, not post them in the first place.

The bad (and disappointing) news is that the publicity resulting from the judgment appears to have done the Claimant firm no favours. At the time of writing, there has been a 77% increase in reviews on the Claimant firms’ Google Maps profile. That’s 10 reviews in the last two weeks alone out of a total of 23 posted over a 3 year period.

The 13 reviews that existed before March 2015 all have a five star rating.

Each of the 10 reviews received since March 2015 received one star.

This serves as a reminder that the ‘legal’ solution may not always be make the most commercial sense. The publicity from this case has seemingly made the Claimant firm a target of revenge reviews, or perhaps they are genuine reviews, who knows? That is precisely the problem. As a result, the Claimants may be left asking “Was it worth it?”.

For further information, or if you or your business has been subject to malicious or false reviews, please contact Jayne Clemens, Solicitor in the Commercial & Regulatory Disputes team and defamation specialist with a particular focus on the removal of libellous material from websites and social media on jayne.clemens@michelmores.com or 01392 687724.

According to a 2014 survey by Deloitte, an estimated 81% of UK consumers read customer reviews/ratings1 and 40% write their own reviews. With common practice being to carry out internet searches in respect of a business before you engage its services or buy its products; having a favourable online presence is more important than ever.

The saga trending on Twitter at the beginning of March as #chavgate is an example of how not to handle negative online reviews. After receiving a disgruntled review on the restaurant’s Facebook page from a bride-to-be dining with friends on her hen do, a Manchester restaurant responded with a tirade of abuse, referring to the party as ‘chav cheap trash’, ‘peasants’ and ‘the bottom of the barrel of Society’. Understandably, this response attracted heavy criticism and the restaurant now appears to have deactivated its social media accounts.

Poorly handled reviews can land businesses in hot water but so can attempts to evade or mask negative reviews, either by attempting to counteract the damages with false positive reviews (a practice which has led to several search engine optimisation companies (SEOs) being fined in the USA) or by imposing terms and conditions which strictly prohibit the posting of negative reviews. Trying to control customer opinion often will compound negative publicity, as seen in the case of the Tripadvisor couple “fined” £100 for describing a Blackpool hotel as a “filthy, stinking hovel”.

Whilst prevention is always better than cure, it is almost inevitable that at some point a customer will feel dissatisfied. Negative reviews can be damaging to business so it is important that they are handled effectively.

1. Knowledge is key: The internet moves rapidly and a passive approach to your online business presence is not enough. By the time you find out about a negative review it may be too late to make a meaningful difference. Internet alerts such as Google Alerts and Social Mention can be set up to notify you as soon as your business is mentioned online, giving you the best chance to mitigate the damage.
2. Respond promptly: Assess what action needs to be taken and try not to ignore negative feedback. Even if the response is simply to thank the customer for their feedback and acknowledge the complaint (“thank you for your feedback, we are sorry to hear…”) it shows potential customers that you care about what your existing customers think.
3. Do not respond emotionally: As highlighted by the Manchester restaurant fiasco, it is important to respond professionally remembering that your response will be viewed by other existing and potential customers. Take a moment to look at the feedback from the position of a third party observer before responding.
4. Do not argue: Rather than try and justify your position publicly, it is often best simply to thank the customer and acknowledge the complaint (see point 2). Whilst some businesses think that they need to publicly defend their position, this can come across as petty and argumentative. If the matter needs further resolution, invite the customer to contact you. They may not take up the offer but viewers will see that you are actively trying to resolve the issue.
5. Ask for removal if the review is false or malicious: If the review goes further than a difference of opinion and is actually misleading then you may ask the website administrator to remove it under the website policy. If the post is defamatory, a legal remedy may be available (see our update “Malicious or fictitious: hope for victims of false online reviews?“) but we would advise a balanced approach, taking into account the potential backlash as a result of an over-aggressive stance. That being said, if reviews are extreme, you may wish to consider civil actions for defamation or malicious falsehood. If there are personal attacks on staff; you may wish to consider contacting the police as an offence of harassment may have been committed.
6. Train staff to use social media responsibly: It is important that any employee purporting to represent the views of the business online is trained to interact responsibly with the public. Remember that employers may be identified on employees’ social media pages. Whilst you cannot police the behaviour of employees outside of work, you can make sure they are receiving the necessary guidance to represent your business appropriately.

Michelmores can help your business develop a social media policy for use by the business and its employees. If you are the subject of extreme negative reviews, we can help you explore the options for legal challenges.

Finally, don’t take offence to negative reviews. Where possible, view criticism as constructive and address your business practices accordingly. Someone has taken time out of their day to provide honest feedback at no additional expense to you and highlighted issues you may not otherwise have been aware of. Negative reviews are an opportunity to improve.

For further information on any of the issues raised here, please contact Jayne Clemens, Associate in the Technology, Media & Communications team at jayne.clemens@michelmores.com

1 Deloitte, The Deloitte consumer review – The growing power of consumers, 2014

In recent years, cyber hacks on large corporates and even governments have become an almost daily occurrence. Despite this, a significant number of UK businesses are failing to adequately protect themselves from such attacks and face potentially significant losses as a result. According to new research from the government’s “Cyber Streetwise” campaign, so-called SMEs (small and medium sized businesses) are particularly at risk due to a misperception that they are not likely to be targeted by cyber criminals. The research found that two thirds of SMEs do not consider themselves to be vulnerable to attack and just 16% are prioritising their cyber security in 2015. This is worrying in light of findings by the Department for Business, Innovation & Skills (BIS) in late 2014 that 60% of small businesses in the UK had suffered a malicious cyber breach in the previous year.

High profile hacks

From large retailers like Sony and Target to celebrities Rihanna and Jennifer Lawrence, over the last few years there have been numerous high profile cyber attacks. These have usefully highlighted the growing risk of cyber crime but have left many with the impression that cyber criminals only go after large, global corporates or high profile individuals. In reality, anyone who holds data is a potential target.

In 2014 Symantec estimated the chances of a large company being the subject of a so-called “Spear Phishing” attack as 1 in 2.3 (or 39%), with the chance of a small business being attacked as 1 in 5.2 (or 30%). These statistics show that cyber crime is just as much of a threat to SMEs as it is to global corporates like Sony. Importantly, whilst large companies may have the resources to monitor and better manage cyber security through technology, systems and controls, SMEs are unlikely to have those same resources, making them an easy target.

How can SMEs protect themselves?

According to BIS, the most common problems faced by SMEs come from “internal threats”, staff exposing IT systems to malware by plugging in external devices, opening infected emails or using unsafe websites. Taking certain, seemingly obvious, steps can protect an SME from a cyber attack, for example: training staff; keeping software secure by installing updates; using anti-virus software; using complex passwords; and encrypting data. Even if SMEs adopt all of these best practices, however, the sophistication of cyber threats and the fact that cyber criminals continuously adapt and develop new ways to attack, means it is likely if not inevitable that these companies will suffer breaches.

Should SMEs have dedicated cyber insurance?

Many SMEs think that their traditional insurance covers will adequately protect them in the event of a cyber attack but in reality that is not the case:

• PI policies usually provide third party cover only and do not cover the costs of reputational damage, PR, customer care, regulatory investigations etc.
• Fidelity or “crime” policies typically require both a loss to the company and a corresponding gain to an identifiable individual, whereas it is usually impossible to identify the cyber criminal behind an attack.
• Fidelity policies also do not extend to a business’s lost income or reputational damage.

In 2014 the New York Supreme Court held that Sony’s insurers were not obliged to indemnify the company under its general commercial liability policies, whereas Target was said to recover approximately $90 million under its dedicated cyber liability policies.  In our view, a similar decision would be likely in the English courts.

Taking out cyber cover – a health warning!

There are a number of things which policyholders should bear in mind when purchasing cyber cover.

1. Don’t underestimate the true cost of an attack

Many businesses misjudge the amount of business interruption costs which they may suffer following an attack, particularly where the company has a significant online presence and may have to cease trading altogether while it investigates a breach.

2. Negotiate the retroactive date and extended reporting period

Cybersecurity firm Mandiant recently reported that the average number of days attackers were present on a victim’s network before they were discovered was 229 days, over 7 months. In our experience, many new cyber policies offered by the London market are written on a claims-made basis with a retroactive date that is the same as the policy inception date. The result is that coverage is only available when both the hack and the resulting loss occur during the policy period, and policyholders will not be covered when:

• Their network is breached weeks or months before the policy has incepted but the loss only arises after policy inception; or
• Their network is breached during the policy period but the resulting loss only arises after the policy has expired.

We see no reason why, when insurers have carefully assessed a company’s cyber risk profile (including sometimes using an independent IT consultant), the retroactive date should not be 1 year, preferably two years, before the inception date.

Similarly, in our view insurers should be willing to offer an extended reporting period, which extends the period of coverage beyond the policy’s expiry date thereby providing cover for losses which occur after expiration as a result of a breach during the policy period.

Conclusions

Cyber crime has become an unfortunate inevitability for many UK businesses. Despite increased awareness and improvements in technology, there is only so much a business can do to protect itself through infrastructure alone. SMEs are particularly vulnerable as they may not have the resources to prevent an attack or the financial stability to withstand one. Insurance is an important way for these businesses to protect themselves, although policy wordings need to be reviewed carefully to ensure that cover is sufficient and the policy properly responds in the policyholder’s hour of need.

The Renewable Energy team at Michelmores LLP has acted for award-winning Spanish-headquartered engineering firm, Gamma Solutions SL on its sale of Wilton solar farm.

The Michelmores team, led by associate Alexandra Watson with support from trainee solicitor Kieran van Bussel, acted on the sale to a renewable energy fund, having previously advised on the acquisition of this 9.4MW site near Liskeard. Gamma is the main contractor for the project, which is expected to be commissioned in mid-March.

Alexandra Watson commented

“It was a pleasure to work with Gamma again on another large-scale solar PV plant in the UK, which is well under way in the construction phase.  Collaborating with Gamma’s in-house team, we worked to a very tight timetable in order to ensure that the 31 March ROCs deadline was achievable.”

Cesar Gonzalez, CEO at Gamma said

“We are thrilled with the outcome on this project. Gamma is very active in the UK solar PV market and we are grateful for the support provided by the Michelmores’ team in getting this project over the line”.

For further information please contact Ian Holyoak, Partner and Head of the Renewable Energy team at Michelmores, by telephone on 01392 687682 or by email at ian.holyoak@michelmores.com.