Retail & Consumer

The Levelling-up and Regeneration Act 2023 introduced the controversial mechanism allowing local authorities to auction off leases of vacant high street premises. The legislation will also amend the time limits for enforcement action in the Town and Country Planning Act 1990. The following article explores the new legislation in more detail and assesses its impact on the retail and consumer space.

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The prohibition on letting commercial property with a substandard EPC rating of F or G is now in force. Meanwhile, the Government’s proposal to increase the minimum energy efficiency standard from the current E to B for domestic and non-domestic properties in England and Wales is to be implemented in 2030. It was later announced that the proposals for domestic property would be abandoned but no further announcements have yet been made in relation to non-domestic (commercial) property. With the future position for commercial properties remaining uncertain, property owners and renters will want to stay up-to-date on the Government’s plans.

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Timetable for implementation is unclear, but some measures will come into force in 2024. Overseas entities will be required to disclose and verify their title numbers for their qualifying estates and give details about their trust structures.

The ICO warns all organisations to proactively make advertising cookies compliant with data protection law after the positive response to their November call to action. The ICO is also developing AI technologies to help proactively identify websites using non-compliant cookie banners. Privacy practitioners should therefore be making their website cookie banners a priority.

The Data Protection and Digital Information Bill should receive Royal Assent this year. It is the UK’s business friendly, less burdensome version of the EU GDPR. The Bill includes, amongst others, clarifications regarding legitimate interests, scientific research and automated decision-making. Affected organisations – who only do business in the UK and do not plan to expand to the EU/EEA, and multinational organisations that comply with the current UK data protection regime – may find it easier to comply with the new pragmatic approach when the Bill becomes law, although the Information Commissioner’s Office (ICO) has indicated that organisations’ compliance with GDPR would be considered sufficient under UK data protection laws. Affected organisations should monitor the Bill’s progress and consider any practical changes when it becomes law.

With the rapid influx of AI, the ICO has warned businesses to address the privacy risks associated with generative AI technology before adopting it, stating that it will be taking action against businesses who fail to do so. Businesses looking to invest in generative AI must ensure that data privacy risks are carefully considered and addressed before any investment is made and stay proactive rather than reactive and risk hefty ICO fines and subsequent damage to reputation.

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The ICO continues to issue fines to companies who have sent marketing communications to customers that have not opted-in to such marketing – organisations must ensure early steps are taken to ensure compliance with data protection legislation, to avoid fines for being in breach of such legislation when marketing to customers.

The protection of children’s data remains in the regulatory spotlight this year. The ICO is promoting the safeguarding of children through responsible data sharing through partnering with education, law enforcement and social service organisations to raise awareness, creating a toolkit of free resources to promote responsible data sharing, and launching a practical guide outlining how organisations can safely and lawfully share information to safeguard children from physical, emotional or mental harm. Organisations will need to consider risks to children’s data protection and follow such guidance to ensure protection.

The ICO will continue to monitor the evolution of live facial recognition technology to ensure its use remains lawful, necessary, for a legitimate interest, and proportionate – the threshold for collecting personal information in the form of facial image data. In the meantime, organisations looking to implement these technologies – including retailers as a means to tackle retail crime – should consider data protection and privacy issues upfront at the design stage and throughout the lifecycle of the system, to ensure that the high threshold is met. The ICO has stated that each new application will be considered on its own merits, balancing the privacy rights of people with the benefits of preventing crime.

As the bodies responsible for regulating data protection and online safety in the UK, the Information Commissioner’s Office (ICO) and Ofcom are both committed to protecting people online. Ofcom has set out its plans for putting online safety laws into practice now that the Online Safety Act has passed. The Act makes companies that operate a wide range of online services legally responsible for keeping people, especially children, safe online.

Ofcom will give guidance and set out codes of practice on how in-scope companies can comply with their duties, in three phases, as set out in the Act.

2023 saw a significant uptake on rooftop solar installations and it is expected that this will continue throughout 2024 due to the favourable environment produced by the relaxation of planning rules for rooftop solar installations last year.

With retail outlets, warehouses, distribution centres and manufacturing sites, the trend for rooftop solar is a continued opportunity for the Retail and Consumer sector given the advantages of generating on-site renewable energy via rooftop solar amid consumer attitudes valuing sustainability.

Retail and Consumer sector businesses can use their considerable presence as property owners but also as tenants in the commercial property market to tap into the benefits brought by on-site solar of reduced energy costs, decreased reliance on fluctuating grid prices and cushioning from potential energy shortages. Tenants have an opportunity to lead discussions with their landlords to push forward their sustainability strategies in this favourable environment for solar installations in 2024.

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As the importance of sustainability to consumers has risen in recent years and businesses focus on improving their environmental impact, a note of caution in promoting green credentials and net zero transition progress.

The Advertising Standards Authority (ASA) has increasingly singled out environmental claims as breaching advertising rules. It is expected this scrutiny will continue as part of ASA’s aim to ensure consumers are not being misled by “green” claims.

The general requirement is that the basis of environmental claims must be clear and that any unqualified claims omitting significant information could be found to be misleading for consumers. Absolute claims made must be backed up with a high degree of substantiation. The rules state that “comparative claims such as “greener” or “friendlier” can be justified, if the advertised product provides a total environmental benefit over that of the marketer’s previous product or competitor products and the basis of the comparison is clear.”

This fits with the wider context of cracking down on greenwashing outside of the UK. Building on the recent EU ban on greenwashing, the EU Parliament’s Internal Market and Environment committees are progressing with the Green Claims Directive. This Directive rules how firms can validate their environmental marketing claims and includes a verification system and penalties. It is expected that the Directive will continue through the European Parliament this year and indicates that closer scrutiny of green claims is here to stay.

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COP28 saw key direction setting on Net Zero for the road transport network of interest to the Retail and Consumer Sector particularly regarding supply and distribution. The ‘Global Zero Emission Vehicle Transition Roadmap’ was launched as the first of an annual publication by the Zero Emission Vehicles Transition Council (ZEVTC). The Roadmap aims to assist governments and international partners to bring about growth and target catalytic change across the road transport sector.

In support of this the UK government launched at the COP28 Transport Day a £70 million pilot scheme to improve rapid electric vehicle (EV) charge points at up to 10 trial sites in England.

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The UNEZA was launched by 31 partners including 25 global utilities and power companies with the pledge to advance electrification and renewables-ready grids, and increase the deployment of clean energy.

UK organisations such as EDF, the National Grid, Octopus Energy joined the collaboration which aims to overcome obstacles to the net zero pathway set out by the International Renewable Energy Agency and cited in the 2030 Breakthroughs led by the UN Climate Change High-Level Champions.

UNEZA will develop an action plan to address supply chain de-risking, capital mobilisation and skills development, and facilitate policy and regulatory support.

Greenwashing is becoming increasingly prevalent in falsely empowering consumers to make more informed choices. The emphasis on being ‘green’ has led to companies promoting how environmentally friendly they are, or at least claim to be. Many consumers select companies based on the impact that the business has on the environment. The result of this is an increase in false statements made by businesses in order to lure in customers that are ‘green-conscious’. Although not enforced in the UK yet, some decisions have been made across Europe relating to this, for example in the case of Alcantara whereby an Italian court ordered the company to stop making “vague, false and non – verifiable green claims”

There is a continuing general rise in collective actions being brought before the Competition Appeals Tribunal (“CAT“), driven largely by the 2020 Supreme Court ruling in Merricks v Mastercard (which confirmed that the complexity of assessing damages, or the diversity of a ‘class’, should not be a bar to certification/ allowing a matter to proceed to trial), as well as a growth in the availability of third-party litigation funding. This puts any large business in a position of dominance at risk of facing claims for significant damages, with tech companies and finance providers being particular targets (and finding themselves facing claims for billions of pounds). In 2023 we also saw the first environmental collective action brought against Severn Trent Water (with further claims against other water companies threatened), the result of which will likely determine whether or not we will see a rise in similar cases centred on breaches of environmental law being issued.

As a general rule, claims with a value of less than £1 million should not be commenced in the Commercial Court. Any cases erroneously commenced in the CC will be transferred out as soon as a judge becomes aware, no matter how close the case is to a hearing. It is the responsibility of all parties to ensure that the claim is dealt with in the correct court, so both parties open themselves up to criticism from the judge if the claim is commenced or continued in the wrong court. The reasoning for this is the finite resources of the CC and the tight time pressures imposed on the CC, meaning that the CC needs to be putting the resources where they are needed the most, i.e., claims valued over £1 million.

In the last year, the Economic Crime and Corporate Transparency Bill (ECCTA 2023) has received Royal Assent with details of the new rules surrounding transparency over corporate entities illustrating a modernisation of Companies House operations.

Companies House will now have more effective investigation and enforcement powers and be able to proactively share information with law enforcement bodies if they have evidence of anomalous filings or suspicious behaviour.

There is a particular focus on the requirement for all new and existing directors, people with significant control and those filing information to verify their identity through a new Companies House portal. Many companies will need to reform their internal policies and procedures in order to ensure compliance with the new regime and current practices relating to company secretarial tasks will need to align with

Companies are now expected and, in some cases, required to report on issues surrounding ESG to stakeholders. In relation to investment decisions, risk categories for companies which fail to adequately address ESG can lead to action from groups holding power outside of the organisation (including consumers and potential investors) and risks of non-compliance with future legislation and regulation soon to be introduced.

There is a greater focus on companies using IOT, AI and other technologies within their factories and subsequently across the supply chain. Smart Assets, such as devices that can track and monitor shipments – communicating the location and other characteristics such as temperature via blockchain, will be increasingly developed.

Sustainability efforts will be more essential in 2024. Eco-friendly practices such as recyclable packaging, sustainable transportation methods, and responsibly sourcing of materials will be adopted more widely. These practices will reflect the consumer desire for more sustainable products and a greater concern for the environment.

Data is an increasingly valuable business asset. Throughout 2024 companies will streamline their operations and improved their offerings in a revamped strategic approach. Companies like John Deere, using a model of selling data from its sensor-laden farm equipment back to farmers and Mastercard Advisers using extensive transaction data to offer data driven insights to financial institutions will be increasingly democratizing AI driven analytics data. We can expect SMEs and new sectors to adopt these strategies in the year to come.

Advances in AI including neural networks, new ways of storing data and AI marketplaces  Navigating the AI Landscape of 2024: Trends, Predictions, and Possibilities | by Vincent Koc | Jan, 2024 | Towards Data Science

In May 2023 the Government confirmed plans to limit non-compete clauses, which seek to prevent an employee working in competition with the business for a period of time after they have left, to 3 months. However, the Government has not confirmed when this intended legislation will be drafted or come into effect.

The draft Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024 have been laid before parliament. The draft regulations propose to extend the period of special protection from redundancy for employees who are on maternity leave, adoption leave or shared parental leave such that those on such leave should be offered priority right of any suitable alternative employment available in a redundancy situation.

The Neonatal Care (Leave and Pay) Act 2023 has made provision for a right for parents whose babies spend time in neonatal care units to:

• Statutory neonatal care leave of 1 to 12 weeks.
• Neonatal care pay set at statutory rates.

The specific rules relating to neonatal care and pay are due to be clarified in future statutory instruments, with the new neonatal leave and pay entitlements expected to be delivered in April 2025.

The Supreme Court decision in Lifestyle Equities v Amazon concerning Amazon’s liability for trade mark infringement relating to infringing goods being sold on Amazon.com has recently been handed down.

The Supreme Court unanimously dismissed Amazon’s appeal of the Court of Appeal’s decision which placed the burden on the marketplace operators to monitor and address purported infringement issues. Ultimately, the Supreme Court confirmed that Amazon targeted consumers in the UK by displaying the USA goods on its USA website and by making them available for shipment to the UK, which in turn infringed the UK/EU Marks. The decisions are useful to determine what and when such operators are liable for trade mark infringement.

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There are ever-increasing judgments and decisions where brand-owners are taking action against supermarkets, like Aldi and Lidl, offering for sale lower priced own branded ‘lookalike’ products. In the past year alone, for instance, we encountered the judgments in Thatchers Cider Company Limited v Aldi Stores Limited [2024] EWHC 88 (IPEC), Lidl v Tesco [2023] EWHC 873 (Ch) and [2024] EWCA Civ 262, Marks and Spencer plc v Aldi Stores Ltd [2023] EWHC 178 (IPEC), to name a few. In the more recent cases, there has been a mixed reliance between trade mark infringement, passing off and registered design right infringement claims.

We expect to see more in this activity in 2024. It will be interesting to see the pattern of the claims made, particularly if the increasing reliance on unfair advantage claims following the decision in Lidl, and whether the court stick by their recent approach in Thatchers. In Thatchers, notwithstanding finding that Aldi using Thatchers’ product as a ‘benchmark’ for its own ‘new’ products and asking a design team for a hybrid of its own product with Thatchers’, there was no passing off or trade mark infringement. This rested largely on Aldi being found not to have the intention to take unfair advantage of Thatchers’ reputation and that there was no identifiable detriment; therefore suggesting the court still upholds its historic approach that the mere lookalike being named something different is proving enough to bypass infringement.

As to whether or not Thatchers appeal the aforementioned judgment is awaited.

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We are still awaiting the outcome of the Sky v Skykick appeal where the Supreme Court will decide whether filing broad trade mark specifications can amount to bad faith. The judgment will also evidence whether UK law will have much divergence to EU law post-Brexit.

Bad faith following Sky v Skykick was recently considered in the judgment in Lidl v Tesco. In the latter decision, the Court of Appeal upheld the High Court’s finding that Lidl’s wordless trade mark registrations were filed in bad faith.

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Continuing clarity by way of an increasing amount of decisions on NFTs, the metaverse and virtual goods is likely to continue in 2024.

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