Market spotlight

State of the market

What is the current land of the luxury fashion market in your jurisdiction?

Many high-end UK fashion brands accept suffered in contempo years, partly equally a consequence of the rising costs of prime number store locations and contest from online-only retailers, such as ASOS and Boo Hoo. In 2020, the covid-19 pandemic severely added to those woes, with tourism halting and shops closing. Famous department stores, such as Debenhams, and major UK retailers with a significant cardinal London presence, such as Top Store, went into assistants, with the Top Store brand being bought by online retailer ASOS in Feb 2021. However, luxury style brands take adapted quickly to the pandemic and those brands who are able to meet the demands of online shoppers, including for a more personalised experience, are weathering the tempest. The unique challenge for Britain luxury fashion brands for 2021, will at present be successfully adapting to the impact of Brexit. UK businesses will notice more than burdens and restrictions than they have been accustomed to, however trade between the United Kingdom and Eu volition exist duty gratis and quota free provided the goods (including the materials used in production) originate in the United Kingdom or European Union. Luxury brands will now exist hoping for an early recovery from the pandemic.

Manufacture and distribution

Manufacture and supply concatenation

What legal framework governs the evolution, manufacture and supply concatenation for way goods? What are the usual contractual arrangements for these relationships?

Supply bondage for fashion appurtenances comprehend a series of elements ranging from the first conceptualisation of the production, through evolution and production, to the auction of the product, whether online or offline, to the stop purchaser. As a result, there is no overarching legal framework that applies to all aspects of the supply chain or that applies exclusively to the manner manufacture. Any supply chain is fabricated up of a series of buyers, sellers and suppliers of both goods and services all entering into dissimilar types of contract. The bear upon of and application of the legal authorities that applies to the supply of goods or services often depends on whether the transaction is between 2 businesses or a business and a consumer.

Contract law

The applicable contract law in England and Wales encompasses both statute and the common law and applies to all parts of the development, manufacture and supply of manner goods. The basic principle is that contracting parties are free to contract as they wish, subject to some important protections for contracting parties, such as controls on the exclusion and limitation of liability arising from the supply of goods or services. The key sources of exposure to liability in supply chains are breach of contract, tort and breach of statutory requirements. In business-to-concern relationships the Unfair Contract Terms Act 1977 prohibits the exclusion or limitation of liability for death or personal injury to a natural person or their manor resulting from negligence. This prohibition is replicated for business organisation to consumer relationships in the Consumer Rights Deed 2015. Other contractual restrictions on liability may exist subject field to reasonableness or fairness requirements.

In the Summer of 2020 new rules retrospectively inverse the fashion that many contracts, both existing and future, piece of work. The new rules, which came into force on 26 June 2020, are fix out in the Corporate Insolvency and Governance Act 2020 and are designed to protect supplies of goods and services by prohibiting the termination of supply contracts by the supplier if the client enters into certain types of insolvency procedures.   The new rules too introduced a new prohibition on exercising termination rights which pre-appointment sure insolvency procedures whilst the process is ongoing and a new prohibition on the supplier making it a status of continued supply of appurtenances and services during the insolvency period that pre-insolvency debts are paid.

Supply of goods or services

The supply of appurtenances or services between businesses is subject to adequately light regulation. The supply of appurtenances is primarily regulated by the Sale of Goods Act 1979 and the Sale and Supply of Goods and Services Act 1982 governs the supply of services. These statutory regimes cover the core aspects of the supply of goods or services, mainly by filling in any key gaps in supply contracts; for case, with implied terms. Most of the implied terms can be excluded completely or adopted in a modified format, although some are mandatory. For case, a term that tries to exclude or limit implied undertakings of title of goods is unenforceable. In comparison, the supply of goods and services to consumers is much more comprehensively controlled, in particular by the Consumer Rights Human action 2015, although in that location is still some freedom of contract. The consumer police regime likewise fills gaps and implies terms into contracts with consumers as well as providing consumers with statutory protections. These protections include the quality of and fettle for purpose of goods or services and statutory remedies; for case, where goods or services are defective or not every bit described. There is also a broader legal framework encompassing the entire supply chain that gives consumers protection from defective goods.

Contractual arrangements

The arrangements used in the manner industry depend on which aspect of the supply chain is discipline to a contract. Each type of contractual arrangement will usually have some average clauses that are common to many types of contract, some clauses that are specific to the blazon of contract and some clauses that are bespoke to the private deal.

Supply agreements between businesses are often in writing, although they tin can as well exist oral or a mix of both. Ideally, though, these contracts take the class of a written agreement, signed by all parties (whether physically or electronically) that has deal-specific terms and that may also incorporate the standard terms and conditions of the supplier or purchaser. Alternatively, the parties may choose to contract but on the basis of 1 of the parties' standard terms and conditions. Very occasionally the parties may contract on the basis of the statutory unsaid terms merely.

Distribution and bureau agreements

What legal framework governs distribution and agency agreements for fashion appurtenances?

In that location is no dedicated legal framework for distribution agreements, such arrangements instead being subject to the general law that applies to supply agreements. In that location is a mutual law authorities that applies to all agency arrangements and a statutory regime that applies to most commercial agency agreements by and large but there aren't any specific agency laws that use exclusively to fashion goods.

Common law agency rules

These are fairly basic rules that govern the relationship betwixt amanuensis and chief. The principal focus of these rules is to govern the power of the agent to demark and give rights to its principal when dealing with a third party (for instance, when the agent enters into a contract on behalf of its principal). The common constabulary rules tend to protect the principal rather than the amanuensis.

Statutory commercial agency rules

The statutory rules are gear up out in the Commercial Agents (Quango Directive) Regulations 1993 (SI 1993/3053). These regulations apply to commercial agents (both sales and marketing) and give more protection to the agent than the principal, especially in comparison with the common law rules. They only apply to the human relationship betwixt a 'commercial agent' and its principal. A 'commercial agent' is 'a cocky-employed intermediary who has continuing authority to negotiate the auction or buy of goods on behalf of another person (the principal), or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal'. These regulations utilise to agents who sell or purchase goods on behalf of their principal, but non to services. The regulations set out the fundamental duties of the agent and master and provide key protections for commercial agents, such as the right to a payment upon the termination of the agency, minimum termination periods and the timing and payment of commission. Some of the regulations are mandatory and some may be derogated from, provided that it is non to the detriment of the amanuensis.

What are the about commonly used distribution and agency structures for manner goods, and what contractual terms and provisions ordinarily apply?

Selective distribution systems are oft a pop form of supply chain for suppliers of luxury goods such as perfume, loftier-cease cosmetics and beauty products and manner goods. This type of system allows a supplier to take more than control over the resale of its products, minimising whatsoever devaluing of the value of its luxury brand. In a selective distribution organization, the supplier only supplies specified (ie, selected) distributors who meet sure minimum criteria, such as: having financial stability and a minimum level of profitability; an approved concern such equally a retailer of luxury goods; suitable showrooms or sales premises; and the ability to display the appurtenances in a suitable manner. In render, these distributors agree only to supply cease users or other distributors or dealers within the canonical network. These networks usually impose restrictions upon both the supplier and the distributor, primarily to protect the luxury condition of the production, which inevitably can have implications for competition police force.

Import and export

Practise any special import and export rules and restrictions apply to style goods?

There are no special import and export rules and restrictions that apply to mode goods. However, there are full general import and export rules for raw materials, components or finished goods that may apply.

The UK and Eu appear on 24 December 2020 that they had reached a deal, pursuant to the Merchandise and Cooperation Agreement (TCA), that determines the framework for the new UK-European union relationship with result from 1 Jan 2021.  The fundamental elements of the TCA are:

Tariffs

  • Appurtenances 'originating' in the European union-UK free trade surface area will non be subject to import tariffs or other customs duties or quotas.
  • Goods that neglect to satisfy the relevant preferential origin rules will be discipline to normal World Merchandise Organization (WTO) import tariffs (ie, the EU Common Customs Tariff or the Global UK Tariff).
  • Movements of appurtenances (of whatever origin) solely for the purpose of repair will not exist subject to customs duties.

Rules of origin

  • To do good from the no-tariffs provision, a product must originate in the United kingdom of great britain and northern ireland or Eu. This ways that Eu materials used in UK product, and Uk materials used in EU production, will help satisfy the preferential origin rules under the TCA.
  • The TCA provides for a number of ways in which a product'due south origins can be determined, revolving around where a certain proportion of a product's components are made and where it is assembled. Goods wholly obtained in the EU and/or United kingdom of great britain and northern ireland will benefit from tariff-free trade. Appurtenances produced using components originating from outside the EU and/or Britain volition need to meet production-specific origin requirements, which are allocated by tariff custom code in the TCA.

  • Proof of origin can be provided through self-declarations of origin, then there is no demand to obtain origin certificates from customs authorities.

Customs formalities

  • Although import tariffs will not utilise in virtually cases, customs formalities will utilise and declarations will be required for imports and exports.
  • The TCA provides for mutual recognition of Authorised Economic Operator (AEO) status, which means sure simplified procedures volition be bachelor for AEOs.
  • Businesses may utilize a tertiary party, such as freight forwarders or customs agents, to act every bit their representatives.
  • The TCA includes a protocol for United kingdom of great britain and northern ireland-EU cooperation in relation to combatting value added tax, customs, and excise fraud.

Product standards regulation

  • There is no cross-recognition of conformity standards. This means that, with a few exceptions, products will have to undergo ii separate conformity assessment processes so that they tin be placed on both the Eu and UK markets.
  • However, the TCA will allow self-proclamation of conformity with EU product rules for low-run a risk products.

Importers/exporters of fashion goods will need to verify whether or not the goods beingness imported/exported are subject to or exempt from tariffs, quotas, or both, and the rules of origin.  They volition also need to comply with the appropriate and applicable customs formalities and product standards for their goods.

Corporate social responsibility and sustainability

What are the requirements and disclosure obligations in relation to corporate social responsibleness and sustainability for fashion and luxury brands in your jurisdiction? What due diligence in this regard is advised or required?

Corporate social responsibleness and sustainability disclosures (and reporting) past companies are typically undertaken on a voluntary basis in the UK. However, in accordance with Eu Directive 2014/95/European union, The Companies, Partnerships and Groups (Accounts and Non-Fiscal Reporting) Regulations 2016 exercise place obligations on certain large organisations that take at to the lowest degree 500 employees to include disclosures on environmental matters (including the affect of the visitor'southward concern on the surround), social matters and respect for human rights in a Non-Financial Information Statement (NFIS). In particular, this requirement applies to any listed company (or companies that undertake regulated fiscal activities) that is not a small or medium sized enterprise (SME) and has at least 500 employees (or is a parent visitor). The report must contain a description of policies pursued past the company, any due diligence processes implemented in respect of these policies and a description of principle risks in relation to these matters. Where an system meets these requirements, the NFIS for fiscal years commencing on or after i Jan 2017 should be reviewed to ensure compliance. In relation to the environment, in that location are various mandatory reporting requirements in relation to free energy usage, greenhouse gas emissions and carbon efficiency that may be applicable, especially to larger and listed way companies in United kingdom of great britain and northern ireland. Eligibility requirements vary past scheme and demand to be considered co-ordinate to business size, energy usage and operations on a company-past-company basis.

Modern slavery

The Modern Slavery Act 2015 is designed to gainsay modernistic slavery and, as well as imposing specific criminal offences on those direct undertaking modern slavery, human trafficking and exploitation, it also places a mandatory reporting obligation on companies that supply goods or services, accept a global turnover of at least £36m, and comport on their business, or whatever role of it, in the United kingdom. Such companies are required to publish a argument setting out the steps that they take taken to eliminate modern slavery and trafficking in their business organization and their supply chains. The statement must be published on the system'south website with a link to the statement in a prominent place on the homepage. Where this provision applies, the current statement, and previous statements starting from the financial yr ending on or later 31 March 2015, should be reviewed as modernistic slavery is a particular risk within the supply chain of way and vesture brands. As a matter of best practice, information technology should include data about policies in relation to modern slavery and human trafficking, risks and run a risk direction, supply chains and due diligence undertaken on supply chains, and the effectiveness of such measures. The Uk government has indicated that it will ameliorate the Act to make information technology a legal requirement for the statement to cover these particular matters.

What occupational wellness and safety laws should fashion companies be enlightened of beyond their supply bondage?

All organisations in England and Wales are required to comply with the Health and Safety at Work etc Act 1973 (HSAWA) and specific requirements of subordinate legislation (which is oft very industry- or activity-specific, including, for case, working at height and chemic usage). The general duties of the HSAWA place requirements on organisations to ensure an absence of run a risk to their employees and those who may be afflicted by their 'undertaking'. This is interpreted widely and means the business of the organisation. As such, a visitor may be liable for the actions or omissions of its contractors (for example, considering especially high-gamble areas such as textile manufacturing and transportation) which could include those in its supply chain. In addition, any safety issues with products that arise could result in liability through the HSAWA. Potential liability nether the HSAWA would demand to exist considered on a case-by-case basis. Failure to ensure an absence of take a chance then far as is reasonably practicable is a criminal offence liable to an unlimited fine.

Online retail

Launch

What legal framework governs the launch of an online style marketplace or store?

There is no single legal framework that specifically governs the launch of an online fashion market place or shop. Such a launch would be subject to several legal frameworks, taking into account whether it is a market or unmarried online store. Online sales targeted at UK consumers must comply with mandatory United kingdom of great britain and northern ireland consumer laws. In many areas those mandatory laws currently reflect the provisions of EU legislation, including European union Directives 2011/83 on consumer rights, 1999/44 on guarantees and 29/2005 on unfair commercial practices. As a result of Brexit, from 1 Jan 2021 EU law stopped applying in the U.k..  The EU Withdrawal Act 2018, a UK Act of Parliament, has created a new species of UK law to fill the gap where European union constabulary used to be: 'retained European union police'.  This retained Eu police is based on the equivalent European union rules that it replaces, merely the context in which it applies and the rules and principles governing its estimation, application and interaction with other types of UK police volition be new and untested.

The Electronic Commerce (EC Directive) Regulations 2002 forms office of retained European union law and requires information service providers to provide certain information about themselves and about how contracts ended through electronic ways will be made; ensure that commercial communications are clearly identifiable as such and acknowledge receipt of an order placed through technological means without undue delay and by electronic ways; and requite the service recipient appropriate, effective and accessible technical means allowing them to identify and right input errors prior to the placing of the order.

Marketplaces that provide search functionality to customers to find traders and via which third-party traders contract online with consumers are subject to some simply not all of the legal regimes. Marketplaces may accept some protection from the legal government on the basis that they are online intermediaries, but certain acts by the online marketplace (such as promoting, or optimising the presentation of, its customers' advertisements) would result in information technology losing the protection of the intermediary exemption.

Sourcing and distribution

How does e-commerce implicate retailers' sourcing and distribution arrangements (or other contractual arrangements) in your jurisdiction?

E-commerce models do not generate specific sourcing or distribution arrangements. Where an e-commerce platform targets consumers in a specific market, products supplied must comply with mandatory laws in countries where these consumers reside. It is important, therefore, that suppliers are manufacturing and distributing products that are legally compliant with the laws applicative in countries to which products might be shipped.

Lead times tin can likewise be crucial - contractual arrangements with suppliers should ensure that products being supplied volition be received in time to meet whatever delivery dates indicated to customers through the e-commerce platform.

Terms and conditions

What special considerations would you take into account when drafting online terms and conditions for customers when launching an e-commerce website in your jurisdiction?

The Consumer Rights Act 2015 is the key piece of consumer legislation for the supply of goods, services or digital content to consumers. It sets out a consumer's mandatory statutory rights. Although these rights automatically become terms of the contract with the consumer, most traders typhoon their terms and conditions to expressly replicate the statutory rights inside their standard terms. The Deed as well gives the consumer a significant and comprehensive set of tiered remedies if the statutory rights are breached. The trader is prohibited from attempting to exclude or limit its liability for breaching such rights. The Human activity requires that contracts with consumers are fair to the consumer and transparent. Information technology also sets out certain terms that are always accounted to be unfair and other terms that may be seen as unfair when used in a consumer contract. Unfair terms in consumer contracts are unenforceable.

In addition, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 specify a substantial amount of pre-contract information that must be provided to consumers, including the master characteristics of the appurtenances, services or digital content, the identity of the trader and its contact details, the full cost or how it will be calculated and the payment, delivery and performance arrangements. This information automatically becomes office of the contract with the consumer and must be complete and accurate. The regulations also give consumers who buy online a cooling off menstruation during which they accept the correct to cancel the contract if they alter their minds. Information technology is mutual practice to expressly state that consumers have this right and how and when they can exercise it. These regulations also ban traders from charging consumers more than than the basic charge per unit for any trader telephone line used by a consumer to discuss an existing contract.

In that location are also rules that prohibit unfair commercial practices that are intended to make consumers enter into contracts that they wouldn't otherwise enter into and there are also rules that apply to the content and accessibility of an e-commerce website. Equally a result, it is common to accept diverse sets of terms and conditions and policies for websites, in item terms regarding the access to and use of the website, an adequate use policy and a privacy and data protection policy, in addition to the earth-shaking terms and conditions of sale.

Taxation

Are online sales taxed differently than sales in retail stores in your jurisdiction?

In short, they can exist. Trading profits of a Great britain retail store, whether run by a UK or non-U.k. revenue enhancement resident company, are subject to UK corporation revenue enhancement, which currently is levied at 19 per cent. The same applies to trading profits earned from online sales made by a United kingdom tax resident company, or one with a permanent institution in the UK. This is non true, however, for the trading profits of an online retailer that is neither tax resident nor has a permanent establishment in the UK.

Given the in a higher place, a non-UK retailer that just has an online presence in U.k. (other than perchance a warehouse or server) is likely historically to have been in a ameliorate straight tax position than United kingdom of great britain and northern ireland-based retail stores or online retailers. Anti-avoidance provisions may, however, notwithstanding apply (eg, the UK's diverted profits tax). This situation, withal, is changing.

First, the United kingdom of great britain and northern ireland has introduced a 2 per cent digital services revenue enhancement with effect from Apr 2020. This taxation will apply, inter alia, to online marketplaces that host third party sellers of appurtenances, including fashion. Sure thresholds would, however, need to exist met (ie, almanac group global revenues from digital services activities would need to exceed £500 million, and revenues attributable to the UK would need to exceed £25 one thousand thousand). The revenue enhancement will apply to online sales made by a company on its own account. An alternative basis for charging can apply to companies with depression profitability.

Second, the Organization for Economical Co-operation and Development (OECD) is targeting international consensus on a long-term plan for taxing the digital economic system by mid 2021. Blueprints drafted and negotiated past the OECD/G20's Inclusive Framework of over 130 countries were included in a report to G20 finance ministers in October 2020. In a communique, G20 finance ministers signalled their delivery to the program and urged agreement to be reached by the target deadline. The blueprints contemplate a solution based upon two 'pillars'. Pillar One will give countries where users or consumers are located greater taxing rights (applying to tech and consumer-oriented business akin). Colonnade Two would be a belt 'n' braces measure aimed at ensuring that profits are always taxed at a minimum rate somewhere, somewhat in line with measures introduced by the Trump administration in the United states in its Revenue enhancement Cuts and Jobs Act.

Where a consumer buys goods in person in a UK retail shop, the seller will generally be required to charge VAT at a charge per unit of xx per cent. There are sure exceptions, such every bit for children's clothes. Online sales by a Britain seller, from UK stock, to a Great britain customer, suffer the same VAT. Online sales with a non-UK chemical element are treated differently. There is such complexity that this section identifies only some aspects.

Until the cease of the Brexit transition period on 31 December 2020, shipments by not-EU sellers to Britain consumers suffered United kingdom of great britain and northern ireland VAT which was collected with customs duty. Shipments by EU sellers but attracted Britain VAT if that Eu seller made more than £70,000 of sales to the UK. The rules have now changed, with particular touch on for shipments with a value of no more than £135 to UK consumers.  On all such direct sales, the seller must annals in the UK for VAT and charge Britain VAT. If the sale is fabricated via an online market, the marketplace operator must charge the VAT and account for it to the Britain taxation authority. Dissimilar the European union, the UK did not defer these rules until 1 July 2021. In addition, different rules apply in Northern Ireland as compared with the rest of the UK, including for movements of goods betwixt Nifty Britain and Northern Ireland and vice versa.

Finally, until the finish of the Brexit transition period on 31 Dec 2020, non-EU consumers shopping while visiting the Great britain could apply for a refund of VAT charged on their shopping when returning home. This ability, which broadly applies throughout the EU, has now been abolished in the UK.

Intellectual holding

Design protection

Which IP rights are applicative to style designs? What rules and procedures utilize to obtaining protection?

Designs for manner garments and accessories, such as clothes and handbags, are protected past multiple, overlapping intellectual holding rights in the UK. Nevertheless, the nearly relevant right is pattern rights. Following Brexit, the United kingdom is no longer part of the Customs design rights system. However, in that location is connected UK protection for designs already registered as at 31 December 2020.  Consequently, since i January 2021, the UK has five carve up pattern rights: Great britain registered and unregistered design rights; 're-registered' and 'continuing unregistered' pattern rights (derived from Community registered and unregistered designs existing on 31 December 2020) and supplementary unregistered design rights (a new correct equivalent in telescopic and elapsing to Customs unregistered design rights, which applies to all designs first disclosed in the United kingdom later 1 Jan 2021). Registered designs (both Britain and re-registered), continuing unregistered design rights and supplementary pattern rights protect the advent of the product, including the shape and any surface decoration, texture or colour. UK unregistered design rights protect the shape of a design only not any surface ornamentation. Obtaining registered trade mark protection for the shape of a product is possible but difficult. It is necessary to show that the shape is distinctive and so far, the courts take been reluctant to notice a shape mark sufficiently distinctive.

What difficulties ascend in obtaining IP protection for manner goods?

Three-dimensional designs such every bit fashion garments are mostly not protected by copyright. To exist protected as a copyright piece of work the item must fall within the definition of an creative work, specifically a 'work of artistic craftsmanship', and the Britain courts have traditionally been reluctant to find that garments are protectable as artistic works. Surface decoration, such a pattern or print on the garment, may be protected as a copyright piece of work, if it could be reproduced separately on whatsoever other work. However, surface ornament that is integral to the design of the garment, such equally crimson stripes down the sleeves, is not protectable.

The area of overlapping copyright and design protection for iii-dimensional designs is an area where the Great britain may diverge from the EU mail service-Brexit. Nether the TCA, the UK has agreed that UK designs shall be eligible for both design right protection, including unregistered design rights, and copyright protection. Even so, the UK has flexibility nether the TCA over the conditions for copyright protection for designs and the level of originality required.

Brand protection

How are luxury and way brands legally protected in your jurisdiction?

Brand names, including the names of designers, and logos are protectable as registered trademarks in the Great britain. Any sign that is 'capable of distinguishing the goods or services of i undertaking from another' is capable of registration. Unregistered trademark rights are also available through use but depend on establishing goodwill in the UK and on showing that the defendant has misrepresented its own goods and services every bit the appurtenances and services of the claimant, which is difficult. Brand owners tin can also annals their brands as .co.uk domain names in the Uk.

Licensing

What rules, restrictions and best practices apply to IP licensing in the mode manufacture?

There are no specific rules that apply to IP licensing in the fashion industry in the UK. The scope of the licence granted to a manufacturer, for case, will be critical but it volition too be determined by whatever has been agreed on selective distribution.

Enforcement

What options practice rights holders have when enforcing their IP rights? Are there options for protecting IP rights through enforcement at the borders of your jurisdiction?

The UK has a robust enforcement system, with a diversity of specialist IP civil courts. In add-on, the relevant police force enforcement authorities (including the specialist Police IP Crime Unit) and criminal courts are highly sophisticated and very thorough in policing IP crime. Dissimilar in many other loftier-performing jurisdictions, criminal prosecutions in the U.k. are an attractive enforcement method in relation to IP crime: the police and Trading Standards carry out investigations at fiddling or no cost to the rights owner, and their investigations tin deed as a deterrent. Rights holders can besides apply for enforcement of their rights by customs at the Britain edge, to forbid infringing goods arriving in the United kingdom from outside the Britain.

Data privacy and security

Legislation

What data privacy and security laws are virtually relevant to mode and luxury companies?

In many respects, the key legal and regulatory considerations for style and luxury mirror those that affect retail more broadly.

From a Uk perspective, the EU General Data Protection Regulation (EU GDPR) has, post-completion of the Brexit transition flow, been replaced with the 'UK GDPR'. In broad terms the Britain GDPR retains the compliance measures introduced in the EU GDPR, whilst providing certain tweaks to enable the functioning of the GDPR in a UK domestic context (for example, by replacing references to European union entities and concepts with U.k. domestic alternatives). The UK domestic Information Protection Act 2018 (DPA), remains constabulary, and includes certain additional provisions. For multinational organisations, in broad terms a single approach to compliance tin be taken in response to both the UK GDPR and Eu GDPR. In this department, references to the 'GDPR' should be read every bit applicative to both the Uk GDPR and EU GDPR.

In the world of marketing, the EU's e-privacy Directive, implemented in the UK as the Privacy and Electronic Communications Regulations (PECR), remains the standard for electronic straight marketing (read e-mail, text messages, etc) and cookie (and other tracking technologies) compliance. The long proposed and yet to be finalised ePrivacy Regulation will eventually supplant PECR, and is set to substantively impact the world of cookies and marketing compliance. Information technology is unclear at this stage to what extent the Uk will adopt similar provisions (through U.k. domestic law) post implementation of the ePrivacy Regulation in the Eu.

Compliance challenges

What challenges do data privacy and security laws present to luxury and fashion companies and their business models?

Ensuring trust, lawfulness of data processing activities and acting within the expectations of customers represent essential components of compliance. The nature of the luxury customer base of operations in item demands robust (and clearly demonstrated) security measures and user designs that foreground client control. Every bit a business model built on responsiveness, ease and consistency, luxury retail would be well brash to consider how to map its core competencies into key areas of compliance.

Increasingly tech-literate and privacy-conscious luxury consumers desire to both understand how an organisation volition use their data and exist empowered to practise articulate controls over this data. Addressing both obligations mandates careful consideration of technical and organisational measures.

Innovative technologies

What data privacy and security concerns must luxury and fashion retailers consider when deploying innovative technologies in association with the marketing of goods and services to consumers?

Deploying new technologies offers both opportunities and compliance challenges. Bogus intelligence (AI) and similar tools are appearing in both dorsum-cease and consumer facing aspects of the luxury and manner retail experience. From brand-aligned chat bots to AI-driven sales information insights, data-rich technologies are fix to increasingly overlap with the worlds of fashion and luxury. Beyond the online infinite, integrating connected data capture into traditional retail (remember customer demographics modelled through in-store cameras) poses novel compliance challenges. Irrespective of context, ensuring take chances analysis remains part of any chat of innovative technologies helps to ensure a 'baked-in' arroyo to compliance.

The GDPR provides Data Protection Impact Assessments (DPIAs) as a means to risk test new or meaning developments of existing projects. DPIAs should be considered at the start of any major project and are mandatory where a high risk to individuals is probable to ascend as a issue of the project or new technology. An effective DPIA involves balancing an assessment of (non-exhaustively) the nature, scope and necessity of a data processing project confronting the risks such processing might present and documenting any mitigating steps. In addition, at that place is substantial regulatory guidance on the use of AI, both at an European union level and from the UK ICO.

Luxury retail is a sector where the demand for innovation, peculiarly in the context of customer profiling (both online and in-person) is particularly acute. In this context, careful consideration should be given to how DPIAs tin can be built into pattern and development processes. A streamlined and well integrated DPIA process can assist both in meeting compliance and in existence equipped to demonstrate compliance.

Content personalisation and targeted advertising

What legal and regulatory challenges must luxury and fashion companies address to back up personalisation of online content and targeted advertising based on data-driven inferences regarding consumer behaviour?

With luxury retail's continued push toward personalisation and data-driven design, addressing the compliance obligation of transparency is likely to evidence increasingly challenging. The GDPR formalises a detailed set of information that an organisation must brand available on collection of personal data. At the aforementioned time, the ways in which, and purposes for which retail collects and processes and shares customer data cross-channel is set only to develop in both quantity and complexity. In addition, ensuring transparency around the employ of AI technologies is a key focus for the ICO. In this context, innovative approaches to communicating information to customers clearly and compliantly are increasingly a necessity. For luxury and mode, the challenge of ensuring compliance while maintaining a brand-consistent and oftentimes international-friendly tone poses a particular test.

From a digital marketing perspective, the implementation of the GDPR means the importing of the GDPR standard of consent into electronic directly marketing and cookie compliance. Equally a applied impact, retailers volition need to consider whether consents captured are suitably granular and otherwise compliant with the GDPR. In improver, with the ICO currently investigating the AdTech sector, these activities are nether increased scrutiny past regulators and privacy campaigners.

Where data-driven profiling of individual customers results in automated decision making (a decision made by software without human input), further compliance considerations must be addressed. Further rules apply in addition where automated decisions result in a legal or similarly meaning effect for an individual. Equally an instance, the developing trend to offer buy now, pay later options for customers may involve significant automated decisions in relation to offering consumer credit.

Loftier-finish retail provides sure unique challenges effectually aligning privacy compliance with the luxury industry's established strength of truly personalised service. For a luxury retailer used to building a highly detailed preference profile of individual customers, the GDPR's data minimisation principle (in which information held is strictly limited to that necessary) may sit somewhat uncomfortably. In a climate of increasing regulatory interest, and consumer mistrust of behavioural monitoring and similar techniques, luxury retailers will need to advisedly consider how the possible incentives of such activities align with both compliance and customer expectations.

Advertising and marketing

Law and regulation

What laws, regulations and industry codes are applicable to advertising and marketing communications by luxury and way companies?

A cadre focus of the U.k. legal regime that applies to all advertisement and marketing practices aimed at consumers is to ensure that adverts and marketing communications are clearly recognisable as such. In add-on, there are strict information requirements and data protection rules with which advertisers must comply, particularly if the advertisement is targeted or driven past the online behaviour of the recipient of the communication.

The Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277) requires that all advertising, whatever format it uses, must be obviously identifiable as advertising. Key prohibitions that relate to advertising are, amongst others: misleading deportment (such equally publishing an advert that gives imitation information about the existence of a specific price advantage); and misleading omissions (such as publishing an advert that does not state the minimum elapsing of a contract).

Enforcement of these rules is by the UK public authorities and breach of the rules can be a criminal offence.

The Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013) (part of retained Eu police) also require that service providers must ensure that any commercial communication provided past them that constitutes or forms role of an information society service (which would include all advertising) is conspicuously identifiable as a commercial communication. These regulations are considered in more detail elsewhere in this chapter.

The UK advertising industry also has a self-regulating lawmaking, the Great britain Code of Non-broadcast Advertising and Direct & Promotional Marketing (the CAP Code). The code mainly governs online advertising and master responsibility for observing the code falls on marketers. However, others involved in preparing and publishing marketing communications, such as agencies, publishers and other service suppliers are also subject to the code. The remit of the lawmaking is very wide, including:

  • online advertising (including imprint, popular-up and online video adverts);
  • ad and marketing communications by electronic mail, text and Bluetooth;
  • advertorials;
  • adverts distributed through web widgets;
  • adverts on electronic kiosks and billboards; and
  • adverts in electronic games and games that feature in display advertisements.

General principles established by the CAP Code are that all advertisements:

  • are legal, decent, honest;
  • are not materially misleading;
  • tin only characteristic claims that are capable of objective substantiation; and
  • must not exaggerate the adequacy and characteristics of a product.

There are also specific rules governing the employ of comparative claims, advertising aimed at children, promotional activities and sustainability claims. The Advert Standards Authority (ASA) tin can request that advertizement that does non comply with the code is amended or withdrawn and can ask broadcasters and publishers to refuse ad space. It volition also publicise its rulings. The ASA can also refer persistent offenders to Ofcom and Trading Standards Services, which tin bring legal action leading to fines, injunctions and farther bad publicity.

Online marketing and social media

What particular rules and regulations govern online marketing activities and how are such rules enforced?

Advertisers are responsible for ensuring that whatever third-party content that they 'adopt or contain' within their ain marketing complies in full with the CAP Lawmaking and underlying legislation. Adoption and incorporation can range from requesting content from users and placing it on the advertiser's social media aqueduct to retweeting, commenting on or even merely 'liking' a user's post.

Visible responses to questions posed to an advertiser on social media, as office of customer relationship direction, could exist considered within the remit of the CAP Code if they include claims that the ASA would consider to be advertising.

In addition, in 2019 the Contest and Markets Potency (CMA) published new consumer law compliance guidance for social media influencers, following an investigation into this area. Specific suggestions include, among others: disclosing whatsoever relationships with a brand over the past year (equally well as any current human relationship); using signposting such as 'Advertisement Feature', 'Ad Promotion' or #Ad, #Advert plus the 'Paid Partnership' tool on Instagram. The CMA likewise suggests that certain types of signposting should not exist used, including, among others: tagging a brand, business, gift or loan in either the text, film and/or video of a post without additional disclosure; hiding the disclosure (for example #ad, #advert) at the end of or among other text and/or hashtags and disclosing a commercial amalgamation only on an influencer's front, home or profile page. The CMA acknowledges that what works will change as social media evolves and comments that these lists are non prescriptive.

Product regulation and consumer protection

Production safe rules and standards

What product safety rules and standards utilize to luxury and fashion goods?

In general, luxury and fashion goods exercise non have their own specific product safety legal regime. Before the U.k. withdrew from the EU they fell under the EU Full general Product Prophylactic Directive, which applies to all products that are intended for consumers. This production safety legislation was already implemented in the UK as the General Production Safety Regulations 2005 (now amended by the Product Rubber and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019 and other on account of Brexit) and so producers remain bailiwick to a general requirement 'to place only safe products on the market place' (article 5 of the UK Regulations). It is notable that on business relationship of Brexit a key change is that a presumption of conformity with the general rubber requirement will now be granted where a product conforms to a standard of the UK which the Secretary of State for Business organization and Enterprise considers appropriate, as opposed to a European Standard published in the Official Journal of the European Marriage. This general position contrasts for luxury and fashion with the position for other consumer products such as toys, which do accept their own specific regime (eg, under the Toys (Safety  Regulations 2011) also on account of Brexit). There are item prophylactic requirements for children's clothes and footwear, which items may fall inside luxury and fashion appurtenances for children. For case, the Nightwear (Safety) Regulations 1985/2043 prohibit the supply of children's nightwear that does not meet flammability functioning requirements.

Production liability

What regime governs product liability for luxury and fashion goods? Has in that location been any notable contempo product liability litigation or enforcement activeness in the sector?

In the Great britain, product liability claims for luxury and fashion appurtenances are brought under the government applicable to all consumer goods, which does non discriminate between i sector and another. Consumer contracts in the UK are governed by the Consumer Rights Human action 2015 (every bit amended past the Consumer Protection (Amendment etc.) (EU Exit) Regulations 2018); a consumer can brand a product liability claim for breach of contract against the immediate supplier. The European Product Liability Directive 85/374/EEC was implemented in the UK equally the Consumer Protection Deed 1987 (as amended by the Product Safety and Metrology etc. (Subpoena etc.) (Eu Exit) Regulations 2019 and other on account of Brexit), nether which strict liability claims tin also exist brought against the producer of defective products for damage caused by the defect. Further, a product liability claim tin be fabricated equally an action in negligence, typically against the manufacturer of a defective product.

M&A and contest issues

M&A and joint ventures

Are there any special considerations for Yard&A or joint venture transactions that companies should deport in mind when preparing, negotiating or entering into a deal in the luxury fashion industry?

Covid-19 has hit the fashion industry hard. More than so than ever purchasers volition be interested in acquiring knowhow and in consolidating their assets and targets that provide expertise and efficiencies in supply chains, applied science (including east-commerce capabilities) and artistry. It will be vital for purchasers to identify these capabilities and ensure that a target has legal buying of, or appropriate access to, them.

To that end, ensuring that acceptable due diligence is undertaken on the significant assets of the business organisation and beingness able to recognise and retain the talent are central to transactions in the luxury style manufacture. For example, when entering into such transactions, a company needs to think strategically and identify the talent and ensure that they are adequately incentivised so that the company tin maintain, and preferably enhance, the brand. In the context of M&A, common tools used to retain and incentivise talent are earn-outs, deferred consideration and sweetness equity. In the context of a joint venture, providing the talent with equity volition evangelize this objective. The inclusion of these forms of incentives inevitably consequence in the parties discussing what controls the talent will require over the business organization going forwards so that the talent tin ensure delivery of their agreed incentive package. The company will need to strike a balance between the controls they tin can properly cede to the talent and those controls it should retain to enable proper integration of the brand and to ensure that identified synergies with the buyer's current operations are delivered.

The employ of restrictive covenants provided by the talent in the sale documentation will protect the make post-obit the transaction. For instance, imposing a restrictive covenant on a founder of a make who is planning to exit the business entirely following the transaction from competing in the same market place will prevent the founder from replicating what makes the make unique elsewhere. Such restrictive covenants may besides be supplemented by restrictions that safeguard or ringfence IP rights (eg, in the founder's proper noun) and prevent the solicitation of employees (again ensuring talent is retained in the brand), customers, suppliers and manufacturers for an enforceable period of fourth dimension, so that these relationships can be established with the company.

As with any Grand&A deal, the apply of a cloth adverse change (MAC) provision can exist included in sale documentation for the luxury fashion industry. Ensuring that a buyer cannot broadly interpret the MAC to leave the seller exposed is key.  References to certain thresholds, sector specific indicators and known events may exist vital to limit the circumstances giving rise to the right to use a MAC event to terminate an agreement.

Yet, even where the parties have clearly given much thought to the MAC, its estimation and application can crusade difficulties as last twelvemonth's merger of Tiffany & Co with LVMH demonstrated. LVMH claimed that Tiffany'south 'catastrophic' functioning as a effect of covid-nineteen was a material adverse change to the Tiffany business concern sufficient to enable LVMH to cease the merger understanding. By threatening to invoke the MAC clause, LVMH arguably improved its negotiating position for a price reduction post signing. Every bit is common in United states of america agreements, the MAC in the LVMH/Tiffany merger agreement contained specific carveouts to the circumstances giving ascent to a MAC. Carveouts are changes or events that the parties take agreed will non give rise to a MAC. In this instance, the parties had included some general carveouts to the MAC clause, such as change in laws applicable to Tiffany's business and acts of terrorism (including cyberattacks) and besides specific carveouts such as the Hong Kong protests and protests involving the 'Yellowish Vest' movement. If such events were to occur, at that place might be a material alter to the Tiffany business, but LVMH would still be required to close the transaction. What was not specifically contemplated in the carveouts was a global pandemic. As a negotiated settlement was reached by the parties information technology is unknown whether a Delaware Courtroom would take agreed with LVMH, but this does demonstrate that MAC provisions should non be included in sale documentation without careful consideration of their interpretation and potential impact.

Contest

What competition police provisions are peculiarly relevant for the luxury and mode manufacture?

Contest law is applicable to the fashion and luxury goods sector simply as it is to any other sector. UK contest police force governs companies' activities in U.k. markets in relation to mergers, restrictive practices and, where a party occupies a 'dominant' market position, unilateral firm conduct.

EU competition law no longer applies to trade purely within UK markets post-obit the finish of the Brexit 'transition period'. Yet, European union competition police will still exist relevant to many luxury appurtenances and fashion companies that transport and trade goods between the United kingdom of great britain and northern ireland and EU. Even for companies that but merchandise in the United kingdom, at that place remains a keen degree of alignment between the UK and EU contest law frameworks.  Furthermore, the CMA as well every bit the Courts of England and Wales must, in nigh circumstances, interpret UK competition law consistently with European union contest instance law that pre-dates the terminate of the transition menses.

Notwithstanding, insofar as it impacts the fashion industry, there is currently a notable regulatory focus on restrictive distribution and retail arrangements - ones potentially reverse to the EU and UK requirements on restrictive agreements (namely, article 101 of the Treaty on the Operation of the European Marriage (TFEU) and the United kingdom of great britain and northern ireland equivalent, Chapter 1 of the Contest Deed 1998 (CA98)). In particular, in that location is an intense argue about what should (or should not) exist permissible in terms of contractual restraints in an online context, with heightened concerns about the increased utilise of provisions that might hinder cross-border online merchandise or otherwise disrupt the benefits of e-commerce (in ways ultimately detrimental to consumers and EU Unmarried Market imperatives).

From the perspective of the style sector, at that place are a number of problems that are relevant, including: (one) resale price maintenance (RPM) or vertical price-fixing which, on the basis of minimum or stock-still pricing requirements or pressures, which inhibits downstream distributors or resellers from determining their ain resale prices; and (2) restrictions that exclude or limit cross-border trade within the EU Single Market place - a construct that is intended to enable consumers to purchase products in other Eu member states and take reward of cost differentials between them.

Withal, the effect probable of greatest relevance to the mode and luxury product industries is 'selective distribution'. Suppliers and manufacturers typically employ selective distribution to maintain an element of control over how their products are distributed - a system of distribution in which the supplier undertakes to sell the contract goods or services only to authorised distributors who meet specified criteria (which can be 'qualitative' or 'quantitative' in nature). In turn, the authorised distributors undertake not to sell outside of the authorised network other than to stop customers.

The immediate contest constabulary concerns arising from selective distribution are clear: restrictions on selling exterior the arrangement to unauthorised distributors may result in a reduction in intra-make competition, foreclosure of certain types of distributors and facilitation of collusion between suppliers or buyers. Yet despite these concerns, 'qualitative selective distribution' is justified on the ground that it increases competition around non-price, qualitative factors (eg, service quality) as recognised and acknowledged past the EU Court of Justice. Therefore (and nevertheless inherent restrictions of competition within selective distribution systems), purely 'qualitative selective distribution' volition fall outside of competition law rules altogether where certain case law requirements are met; namely, those set out in the 1977 Metro judgment (example 26/76 Metro SB-SB-Großmärkte five Commission and known as the 'Metro criteria').

However, concerns arose following the Metro judgment as to how far suppliers could go in terms of controlling the activities of their authorised resellers; in detail, whether they could restrict them from freely employing online sales channels to resell the contract products and whether use of selective distribution would be justified in the context of luxury products (and the protection of a luxury image). In the 2011 ruling in Pierre Fabre Dermo-Cosmétique (instance C-439/09), the Court of Justice confirmed that an absolute ban on sales over the cyberspace was unlawful. The courtroom's findings in the subsequent Coty case (case C-230/xvi) confirm that suppliers of luxury products, while not permitted to impose accented prohibitions on online resale, are able (whether assessed nether article 101(1) TFEU or the requirements of the EU's Vertical Block Exemption Regulation - the latter 'condom harbour' exemption and its associated guidance currently nether review in accelerate of the regulation'southward death in May 2022) to impose online standards to preserve a luxury brand's image that are equivalent to, or at least consistent with, the kind of requirements they might legally impose offline.

In the 2017 ruling in Ping (Case 50230), the CMA establish that Ping, an upward-market place retailer of golf clubs, had infringed Chapter I CA98 by preventing retailers from selling its golf clubs online. The CMA'due south decision was later upheld by both the Competition Appeal Tribunal and the Court of Appeal.

Employment and labour

Managing employment relationships

What employment law provisions should fashion companies be peculiarly enlightened of when managing relationships with employees? What are the usual contractual arrangements for these relationships?

Labour relationships fall into one of iii different categories: employees, workers and self-employed. Employees have a full set of employment rights, including protection against unfair dismissal, the right to a statutory redundancy payment, and the correct to family related exit such equally motherhood or paternity leave. Workers have more express rights than employees, but are entitled to receive the national minimum wage, statutory annual leave and protection confronting discrimination. The cocky-employed typically take very few rights.

Freelancers and interns will often be classified as workers not employees, particularly if the employer is not obliged to offer work and the private is not obliged to accept work that is offered, every bit volition be the case for those engaged on zero hours contracts. Yet, if freelancers genuinely run businesses on their own account, they could be classified as self-employed.

Labour relationships will typically exist governed by an employment contract (employees), a worker contract (workers) or a consultancy or contractor arrangement (the cocky-employed). However, the type of contract is not determinative of the nature of the relationship. Employment tribunals tin look across the contractual arrangements to how the human relationship operates in practice when deciding whether someone is an employee, a worker or genuinely cocky-employed.

Trade unions

Are in that location any special legal or regulatory considerations for fashion companies when dealing with trade unions or works councils?

There are no special rules relating to fashion companies and their relationships with trade unions or works councils. Nether normal principles, an employer can recognise a merchandise wedlock voluntarily. There is also a complex statutory recognition procedure that an independent merchandise matrimony can utilise to force an employer with more than than 20 workers to recognise it.

An application for statutory recognition is open-door if at least 10 per cent of workers in the proposed bargaining unit of measurement are union members and a bulk of workers in the bargaining unit are probable to favour union recognition. A underground ballot will unremarkably exist held to cheque that there is the necessary level of support. A wedlock will be recognised if a bulk of those voting and at to the lowest degree forty percent of the workers in the bargaining unit vote in favour of recognition. If an application for statutory recognition is successful, the employer volition be obliged to deal collectively with the union on pay, hours and holidays.

Works councils are not mutual in the Uk but an undertaking with l or more than employees can be forced to set i upward if a request is made past two per cent of employees. If an employer has a statutory works quango information technology must inform and consult employees about specified matters, including the development of employment inside the undertaking.

Immigration

Are in that location whatever special immigration law considerations for manner companies seeking to move staff across borders or hire and retain talent?

This is a highly specialised, fast-moving area that volition exist particularly impacted by Brexit. Specific advice should be sought from a specialist firm in relation to any questions on immigration police considerations for fashion companies.

Update and trends

Trends and developments

What are the electric current trends and future prospects for the luxury fashion manufacture in your jurisdiction? Take there been any notable contempo market, legal or regulatory developments in the sector? What changes in law, regulation, or enforcement should luxury and fashion companies be preparing for?

The hereafter prospects of the Britain luxury manner manufacture will depend on both an early recovery from the pandemic and businesses successfully adapting to the touch on of Brexit. The covid-19 pandemic has hit UK luxury retailers hard, with sales going downwardly and prime number location stores closing as a result of lockdowns. It remains to be seen, when restrictions ease, how quickly customers will revert to buying in-shop. Whilst the experience of buying in high-end luxury London boutiques cannot easily be matched online, Uk luxury brands, forth with all luxury brands globally, will have to be prepared to arrange to the shift to online shopping and consumer demand for an increasingly personalised experience online, in the post-covid globe. Unlike the rest of the world, even so, Uk businesses also have to adapt to the UK leaving the EU. While the Great britain did finally agree a bargain with the EU governing trade, exporters of loftier-cease goods from the United kingdom of great britain and northern ireland are facing increased burdens and restrictions when trading with the European union, equally a consequence of Brexit. As the world starts to recover from the pandemic, the UK luxury brands will too be facing increased competition from United States and China, where the luxury industry has fared better than Europe during the pandemic.

Coronavirus

Coronavirus

What emergency legislation, relief programmes and other initiatives specific to your practice surface area has your country implemented to accost the pandemic? Take whatever existing government programmes, laws or regulations been amended to accost these concerns? What all-time practices are advisable for clients?

The regime'south Coronavirus Task Retentiveness Scheme (CJRS) supports the wages of employees and workers who are not able to work their normal hours considering of coronavirus restrictions. Employers can place employees and workers on 'furlough', on a full time or part time basis. Employers are responsible for paying 80 per cent of wages for periods of furlough, to a maximum of £2,500 per calendar month, which they can reclaim from the government. Employers take to pay employer National Insurance Contributions and employer auto-enrolment pension contributions. The cap on wages is pro-rated for employees on part-time furlough. The authorities has confirmed that CJRS will be available until the stop of September 2021. From July 2021, employers will take to make a contribution to the wage costs of furloughed employees. This will exist 10 per cent in July, rising to xx per cent in August and September.

The government publishes the names of employers who claim under the CJRS, along with an indication of the amount claimed (by reference to bands). Employers who have non been badly affected financially by covid-19 should take the potential reputational considerations into account before making a claim.

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