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Commercial

What is the Light touch regime?
Wednesday 7th October 2015

The Public Contracts Regulations 2015 (the ‘2015 Regulations’) has removed the familiar distinction between Part A and Part B services, which previously existed under the Public Contracts Regulations 2006 (the ‘2006 Regulations’), and has replaced it with a new light touch regime.

Under the 2006 Regulations, Part A services were deemed to have cross-border nature, i.e. a company in Croatia would be as interested in providing the services as a company from Coventry. Consequentially, Part A services had to comply with the full public procurement law regime.

Part B services being more suited to local operations were considered not to have a cross-border interest and, therefore, did not need to comply with the full extent of the 2006 Regulations.

When the European Commission updated public procurement law, it wanted the full regime to apply to all services and remove the distinction between Parts A and B. However, Member States were resistant to this and therefore a compromise was reached. The Part A/B distinction has been removed, however a new regime has been introduced for certain health, social and other services (listed in Schedule 3 of the 2015 Regulations), which has been dubbed the ‘light touch regime’. The services listed in Schedule 3 reflect, to a certain extent, the old Part B services and include services such as hotel and restaurant services, social services, health services and cultural services.

The light touch regime (implemented through regulations 74 - 77 of the 2015 Regulations) applies to Schedule 3 services if the value of that contract meets the Official Journal of the European Union (OJEU) financial threshold of EUR 750,000 (roughly £625,050, although this rate of exchange is not officially set and will likely require calculation for each proposed procurement until it is officially set along with the other financial threshold in January 2006).

The health educational social services are the most important of the services falling into the light touch regime and there is recognition in the recitals to the original directive that these services have limited cross border appeal, particularly as there are different cultural traditions influencing how they are provided across different Member States. Indeed, there is a presumption that services below the OJEU financial threshold will not be of cross border interest unless there are concrete indications to the contrary. Above the threshold, given the important cultural and social sensitive context of the services, Member States still have a wide discretion to organise the choice of service provider in the way they consider most appropriate.

It appears therefore that there are two categories of services that fall into the light touch regime. In the first category, there are those that have some features which make them inherently unsuited to cross-border trade, such as health and social services. In the second category, there are those services which for practical reasons are unlikely to be of cross-border interest until they are a certain size. This could potentially mean services subject to the light touch regime may be below threshold but yet should carry some consideration whether they are of cross-border interest and therefore should be subject to public procurement law anyway.

Under the light touch regime, above threshold contracts must issue an OJEU notice, which contains details of the conditions of participation, time limits and a description of the award procedure that will be applied, and an award notice. Also, the contracting authority is required to advertise the contract/award on Contracts Finder. Other than these limited requirements, contracting authorities are free to determine the procurement procedure used, so long as it ensures that it adheres to the EU principles of equality and transparency.

The procurement should run in the way the contracting authorities set out in its notice, however the 2015 Regulations allow contracting authorities to change their minds. It will be interesting to see how this provision is applied in practice, especially when the principles of fairness and transparency must still apply.

The new light touch regime offers greater flexibility to contracting authorities. However, this flexibility is constrained by other provisions in the 2015 Regulations that still apply. For example, all procurement documents must still be available electronically when the procedure begins. Most particularly, the standstill requirements should be observed by contracting authorities as the full force of the remedies regime will apply to light touch regime procurements.

Contracting authorities should be aware that recent Crown Commercial Service guidance, while encouraging the contracting authorities to take advantage of the new flexibility afforded by the light touch regime and not routinely use standard procedures, also states that transparency, equal treatment and a clear process are fundamental requirements, and that application of at least the mandatory and discretionary exclusion grounds available elsewhere in the 2015 Regulations “is sensible business practice”.

Whilst contracting authorities will no doubt welcome this increased flexibility, they should be aware fo the downside that accompanies such flexibility.  No matter how the contracting authority decides to use the flexibility of the new regime, it needs to get the process right from the beginning or it may be challenged in court. This, therefore, potentially means that contracting authorities may find it difficult to comply with the 2015 Regulations with any degree of certainty.

If a contracting authority is considering undertaking a light touch regime procurement, or a bidder has any queries regarding such a procurement, we recommend they seek legal advice at the earliest opportunity. 


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Stop Press: Changes to copyright law – Exceptions to copyright
Monday 29th September 2014

New Exceptions to Copyright Law

The government are making a series of changes to copyright law to modernise the current legislation.  The changes are intended to introduce greater freedoms to allow third parties to use copyright works for a range of “economically or socially valuable purposes” without the need to seek the original owner’s permission.  The changes will therefore have an impact on how the contents in books, music, films and photographs can be used.

These changes have derived from a long consultation process (following both the Gowers (2005/6) and the Hargreaves (2010/11) IP reviews) and the government has laid out five draft statutory instruments.  Three of these – Research and Private Study, Public Administration and Accessible Formats for Disabled People - have now been approved by parliament and came into force on 1 June 2014.

The government has placed a lot of emphasis on their belief that the exceptions will enhance economic growth including the benefitting both consumers and rights holders in creative industries.  However, arguably the new provisions ultimately unduly favour users at the expense of rights owners.

The Exceptions

  1. Personal Copies for Private Use

The draft regulations permit people to make private copies of media they have bought (such as CDs and eBooks), for the purposes of formant shifting or back up.  This will allow someone to transfer their own CDs onto their mp3 players but will not allow people to make copies and distribute them to other people.

The draft regulations also give rights holders freedom to deploy restrictive measures to prevent copying of their works for private use.  Consumers could then raise a complaint about the restrictive measures with the UK’s Business Secretary who would have the power to a order rights holder to exercise their right to a private copy of the works.  The Business Secretary would need to consider “whether other copies of the work are commercially available on reasonable terms…,in a form which does not prevent or unreasonably restrict the making of personal copies.”  The effectiveness of the complaints procedure will depend on whether consumers will be aware of its existence.

In general, despite its implementation being delayed, this is a widely welcomed amendment which reflects modern practices.

  1. (a) Caricature, Parody or Pastiche

Works of caricature, parody or pastiche will often involve some level of copying from another work.  The new exception allows use of someone else’s copyright work for these purposes so long as the use is fair and proportionate.

The government refers to the need for a fair dealing with the original work, so as to minimise the potential harm to relevant copyright owners.  Fair dealing suggests that it is only permitted to make use of a limited moderate amount of someone’s work.  This may not go as far as some users would like but generally the exception is welcomed by those who produce such creations.  However, the exception may understandably not be welcomed by rights owners.

In addition, whether something qualifies as a permitted caricature, parody or pastiche, and/or constitutes fair dealing, is likely to be a heavily argued issue.  There are therefore concerns that this exception will cause more disputes and litigation until the case law on the issues become settled.  It is unlikely to stop rights holders alleging infringement where they feel their work has been unfairly copied but is likely to give rise to defences (both genuine and spurious) based on this exception.

It is perhaps less surprising that the implementation of this exception also has been delayed.

(b) Quotation

Greater freedom is being given to quote the works of others.  It will be possible to take quotations from copyright works without the permission of the owner as long as it is fair and proportionate.  Quoting the title or a short extract of an academic article may be considered fair, however, to copy a long extract from a book without justifying the context would not be permitted.  Although this exception does not seem of itself to be problematic its implementation has been delayed as it is part of the same statutory instrument as the Caricature, Parody and Pastiche exceptions.

  1. (a) Research and Private Study

The regulations will permit reasonable copying of sound recordings, films and broadcasts for non-commercial research and private study without permission from the copyright holder.  Institutions like libraries and universities will be able to offer access to copyright works on the premises for research and private study.   Students will therefore have greater access to content in various fields.

(b) Text and Data-mining

The changes will allow computer-based analysis of copyright material for non-commercial research without having to obtain specific permission from the rights holders.  This allows researchers the ability to copy materials for the technical process of data mining, as long as they have the right to access the works in question.  This exception would only apply if the research was carried out for non-commercial purposes only.

(c) Education and Teaching

The exceptions are widened for educational bodies allowing greater use of copyright materials in conjunction with educational licensing schemes.  Restrictions on the use of copyright for more modern teaching methods such as distance learning materials will be removed.    The changes will allow for minor acts of copying for teaching purposes.  For example, teachers will be allowed to display webpages and quotes on interactive whiteboards without seeking permission.

(d) Archiving and Preservation

The new regulations will make it easier for libraries, archives and museums and galleries to preserve their respective collections.   They will be able to make copies of all types of creative works in order to preserve them for future generations when it is not reasonable practicable to purchase a replacement.

  1. Public Administration

The copyright laws relating to public administration will be extended to allow more public bodies to proactively share third party copyright material online such as material submitted for the purpose of maintaining a public register.  The existing rules only allow public bodies to issue paper copies or make the material available for inspection at their premises.    Widening the scope to the internet will enable greater public access to information and provide greater transparency and will save time and expenses for both the public bodies and individuals.

  1. Accessible Formats for Disabled People

Individuals will be allowed to make a single copy of copyright works in accessible formats for the personal use of a disabled person.  Furthermore, charities will be able to make multiple copies of copyright work for disabled people.   Therefore, if any type of copyright work is not available commercially in a format that can be accessed by a disabled person, the individual or charity may make an accessible copy for them.

Implementation

The Research and Private Study, Public Administration and Accessible Formats for Disabled People statutory instruments were implemented on 1st June 2014.

The Joint Committee on Statutory Instruments had further questions about the Private Copying and Parody exceptions and wanted to spend more time considering them.  This has meant that the implementation of these two statutory instruments has been delayed and at the time of writing the exact date of their implementation is unknown.

 

STOP PRESS: New Exceptions to Copyright Law

 Three instruments for the exceptions for research and private study, public administration and accessible formats for disabled people came into force on 01 June. However the Joint Committee on Statutory Instruments had additional questions on further exemptions.  These were later approved by Parliament on 29 July and came into force on 01 October 2014. They are as follows:

  1. Personal Copying for Private Use

Personal copies strictly for own private use is now allowed as long as the user owns the original themselves.

  1. Caricature, Parody or Pastiche

Use of someone else’s copyright work for these purposes so long as the use is proportionate and fair will now be permitted.As mentioned in our previous article it is likely that there will still be significant dispute as to what constitutes caricature, parody or pastiche and what is fair and proportionate use and each case will have to be judged on its merits.

  1. Quotation

This extends the existing exception for ‘criticism or review’ and is permitted as long as there is sufficient acknowledgment of the quotation and the use is fair.


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Remote gambling industry set to roll with the changes
Monday 22nd September 2014

Gambling (Licensing and Advertising) Act

On 1 October 2014, the provisions of the Gambling (Licensing and Advertising) Act 2014 (the “Act”) are due to be implemented. However the Gibraltar Betting and Gaming Association has challenged the Act via judicial review as it argues the new Act will breach European Law. A full hearing is scheduled for 23-24 September 2014, if successful, this could significantly delay the implementation of the Act.

What will it do?

The Act will bring in a number of regulatory changes to ensure that all remote gambling operators who offer services to British consumers are subject to consistent regulation.

Any gambling operator who holds remote gambling equipment in Great Britain will have to obtain an operating licence from the Gambling Commission. In addition, any gambling operators who advertise remote gambling to consumers in Great Britain via a British facing business will also be required to hold an operating licence.

Alongside the above reforms, which will be effective as of 1 October 2014, there are further amendments proposed which will alter the taxation treatment of remote gambling operators. Under the new proposals, from 1 December 2014, remote gambling operators will be subject to the same taxation conditions as operators based in Great Britain. This amounts to a 15% tax on gross profits on bets and a further levy on gross profits taken on horse racing bets.

Why is it being implemented?

The intention of the Act is to achieve greater transparency and consistency for both operators and consumers.

As the licensing and taxation regime will now be based on the ‘point of consumption’ rather than where the operator is based it should become easier for consumers to understand their rights when using online gambling sites.

The greater regulatory consistency provided by the Act will ensure that both consumers and operators are easily able to report suspicious activity directly to the Gambling Commission which will provide a higher level of protection against match fixing.

Finally, advertisers and marketers will easily be able to check whether a remote gambling operator holds a licence and so whether it is permitted to advertise in Great Britain.

What is going to change?

Currently, approximately 85% of online gambling operators who provide remote gambling to consumers in Great Britain are unlicensed by the Gambling Commission. These operators will now be required to apply for and hold a gambling licence in order to continue providing those services. These licences must be renewed with the Gambling Commission on an annual basis.

Following implementation of the Act only operators licensed by the Gambling Commission will be able to advertise and market their services to consumers in Great Britain. Those licensed operators will be required to display a link showing their licensed status on all pages used to access gambling. This link will be supplied by the Gambling Commission as the licence is issued.

Unless the operator qualifies for a small scale operator exemption certain key individuals at the operator will be required to apply for a personal management licence. Applicants will be required to demonstrate past and present integrity in order to be considered suitable. A number of concerns have been raised about the extent of the personal disclosure required.

Consequences

The cost of obtaining a licence from the Gambling Commission, combined with the additional taxation planned from 1 December 2014 may have some impact on smaller operators as these extra costs will have a proportionately heavier impact on their margins. There is a concern that this could make the gambling industry less competitive if smaller operators are forced out of the market.

There are further concerns that this legislation effectively means the Gambling Commission will have to police operators based all around the world. This poses a number of logistical challenges which will need to be overcome. There are also concerns that if the legislation is not enforced universally, consumers may turn to unregulated ‘grey’ markets. A study conducted by Deloitte on behalf of William Hill has estimated that as many as 40% of consumers could enter the grey market. The legitimacy of the Gambling Commission’s role as enforcer has also been criticised as this would mean there is no separation of the compliance function from the licensing function.

As of 18 September 2014, 161 operators had applied to the Gambling Commission for licences, a higher take up level than expected, it remains to be seen how the new licensing regime will work in practice and it is likely that a truer picture will emerge once the taxation reforms are implemented on 1 December 2014.

STOP PRESS!

Following the judicial review instigated by the Gibraltar Betting and Gaming Association (“GBGA”), the hearing of which was on 23-24 September, steps are now being taken by the Department for Culture, Media and Sport to delay the implementation of the Act. This is to allow the judge presiding over the judicial review adequate time to consider the arguments put forward by the GBGA and come to a judgment without the increased pressure of a 1 October deadline. The Act is now due to come into force on 1 November 2014.


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