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Tuesday, 30 June 2015

Government considers targeting hands-free phone use

Government considers targeting hands-free phone use, reports Fleet News. It must be good news, and the argument that it will remove responsibility from fleet operators is a powerful one, but wouldn't it  be nice to make the ban on using hand-held devices (note: it is not only telephones) work before trying to extend it? Surely experience shows that sweeping bans are rarely effective, and among certain types of person serve only to justify ignoring the law.

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Saturday, 27 June 2015

Ford can pursue lawsuit after Explorers wound up in China

Automotive News reports that Ford has been allowed by a court in California to pursue a fleet customer which it alleges fraudulently purchased vehicles for use in the US, then exported them to China. Its fraud secured for it an $823,000 discount. The defendant's president apparently admitted exporting some or all the cars (Explorers) to China, but argues that the export prohibition in the sale agreement is an illegal restraint of trade. Good luck with that one, but Ford might be heading for problems with the Chinese authorities, which are already showing a lot of interest in the price of imported cars. Indeed, as we reported not long ago, parallel imports are being actively encouraged by the Chinese government.

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Thursday, 25 June 2015

German cartel office says fines automotive suppliers 75 mln eur | Reuters

German cartel office says fines automotive suppliers 75 mln eur | Reuters: "Germany's cartel office said on Wednesday it has imposed about 75 million euros ($84.12 million) of fines on automotive suppliers for price fixing."

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European Commission - PRESS RELEASES - Press release - Fighting cartels - Commission sanctions retail food packaging cartel and sends Statement of Objections in suspected car battery recycling cartel

European Commission - PRESS RELEASES - Press release - Fighting cartels - Commission sanctions retail food packaging cartel and sends Statement of Objections in suspected car battery recycling cartel: "Today we have sent statements of objections to five companies that we suspect of having operated a cartel in the market for recycling lead from used car batteries.
The statements of objections allege that, from 2009 to 2012, these five companies agreed on prices for scrap lead-acid batteries in Germany, France, the Netherlands, and Belgium.
Unlike in most cartels where companies usually conspire to increase their sales prices, the companies in this case appear to have colluded to reduce their purchase prices.
This may seem like desirable outcome, as the companies' purpose was to cut input prices and to reduce price volatility. However, the preliminary conclusion of our investigation is that the main goal of the cartel members was in fact simply to maintain higher profit margins. The cartel members may have lowered the prices paid to scrap dealers, many of which are small and medium-sized companies. This would then feed through in lower prices for used batteries sold for scrap, ultimately to the detriment of sellers.
The result, the Commission alleges, was the same as in any price-fixing cartel: disrupting the normal functioning of the market and preventing competition on price.
Artificially fixing the price of lead from recycled batteries, as the Commission suspects, is a very serious matter because it interferes with the effective functioning of the recycling market.
Around 80% of lead scrap comes from waste lead-acid car batteries and practically all car batteries undergo recycling at their end of life. Recycling companies process the batteries in various steps to produce pure lead or lead alloys, most of which is used for making new car batteries.
The concept of the ‘circular economy’ refers to re-using, repairing, refurbishing and recycling existing materials and products. Car battery recycling essentially functions in a closed-loop cycle but the behaviour of these companies would interfere with this loop and affect the circular economy.
If the existence of the cartel were to be confirmed, putting an end to such price fixing would make the market for recycling lead from car batteries more efficient.
The parties now have the opportunity to reply to the Commission's allegations in the statement of objections.""

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Ireland: FTA backs Supreme Court motor tax appeal

FTA backs Supreme Court motor tax appeal: "Freight Transport Association Ireland (FTAI) is backing an appeal in the Supreme Court today against prosecutions for motor tax offences by one Irish firm."

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CMA statement following completion of criminal cartel prosecution - News stories - GOV.UK

The CMA has published a statement on the conclusion of a criminal cartel prosecution - the goods invoved being galvanised steel water tanks. Two defendants were acquitted because the jury took the view that they did not enter into the arrangement dishonestly, a threshold requirement which has made the cartel offence difficult to prosecute (as, arguably, it should be), and which has therefore been removed for prosecutions after 1 April 2014.

One defendant had already pleaded guilty, so on the face of it there was a cartel with one member ... Actually the way the law works, the better view (nay, the correct view) is that there was a cartel with at least three members but only one of them was going about price-fixing, market-sharing and bid-rigging dishonestly. No, I don't understand either, and perhaps that change in the law is not as nonsensical as it looks. Or, at least, a one-person cartel is a bigger nonsense than an offence with no requirement for dishonesty, and perhaps price-fixing etc are simply not activities that can be undertaken honestly - though what about "crisis cartels" which have been permissible under general competition rules? The dishonesty requirement would have been a get-out for a crisis cartel, but now that helpful safety valve has been closed.

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Tuesday, 23 June 2015

Spain: CNMC penalises price-fixing cartel (with more still to come)

La CNMC multa con 41,1 millones de euros a 95 concesionarios de automóviles Audi, Volkswagen y Seat, dos empresas consultoras y dos asociaciones del sector, is the title of the press release announcing the imposition of substantial penalties following investigations that Motor Law reported in Spetember 2013. This forms part of a wider investigation into the car market, involving six sets of proceedings against distributors and one against a number of manufacturers.

In the present decision, the CNMC identified seven different geographical cartels involving the three marques. Their illegal conduct included  fixing maximum rebates and commercial conditions, and exchanging sensitive information. There were also enforcement mechanisms, imposing sanctions on dealers who failed to stick to the cartel rules: two firms of consultants who were involved in imposing sanctions and collecting 'fines' were also penalised.

SEAT and 11 dealers benefited from the authority's leniency programme and were not penalised. Four companies were investigated but not found to have broken the law.
The companies involved have two months in which to file an appeal.

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New online vehicle recall search tool to help motorists - SMMT

The SMMT has announced a new web portal to enable consumers to check whether a car in which they have an interest is subject to a recall. The system, which uses the VIN to identify the car unambiguously, can also put the consumer in touch with a dealer who can attend to the safety problem which gave rise to the recall in the first place.

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In California, Uber driver is employee, not contractor: agency | Reuters

Reuters reports that the California Labour Commissioner has decided that Uber drivers are employees, not contractors. That could do a lot of damage to their business model in the 10th largest economy in the world (2012 figures) let alone if it were repeated elsewhere.

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CMA acts to maintain trust in online reviews and endorsements

According to its press release the CMA has published its report into online reviews and endorsements, highlighting that some reviews are false, bad reviews are sometimes suppressed and businesses pay bloggers and other writers for websites for endorsements without this being made clear. (No-one has ever paid me for an endorsement - or even offered ...).

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First ever motorist convicted for 'lane hogging' - Crime - UK - The Independent

The Independent reports what is thought to be the first conviction for 'lane hogging' - though there is no new offence, rather it's a journalistic explanation of how a driver came to be convicted of careless driving (five penalty points and a fine of £500, which should give other careless drivers pause for thought) for cruising along at 60 mph in the middle lane when there was ample opportunity to move over to the left. Six other road users reportedly had to brake before overtaking his van.

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Friday, 19 June 2015

Another trip down memory lane: Richard Cound v BMW, Clover Leaf Cars v BMW

While I am on the topic of old law which we should not forget (a couple of weeks ago it was the Supply of New Cars Order), I thought it worth mentioning these two important Court of Appeal cases on the block exemption. The first one, that is, but potentially still relevant. The trouble is I don't have complete reports, but on the basis that something is better than nothing and I want to have a readily-accessible note of the cases I thought it worth writing as much as I could here.

Richard Cound Ltd v BMW (GB) Ltd [1997] Eu. L.R. 301 was decided on 10 May 1995. The judges in the Court of Appeal were Balcombe LJ, Pill LJ, and Sir Roger Parker. Clover Leaf Cars Ltd v BMW (GB) Ltd [1997] Eu LR 53 was decided in the Court of Appeal (Staughton LJ and Thorpe J) on 28 December 1995 (and at first instance in the Chancery Division, apparently on 20 December that year, by Rattee J). Given that the termination of the dealer agreement in the second case was to take effect on 31 December, one can see perhaps why the courts dealt with it so urgently. (I don't at present have information about the situation in the Cound case, but as I recall the same facts applied - BMW terminated the agreement from 31 December 1995 - but the case was brought a bit more promptly.) In the Clover Leaf case, and (subject to confirmation) in Cound too I think, the key fact was that the dealer had been taken over by a PLC and BMW did not want too many of them in its network, so it gave (as it was entitled to do) 12 months' notice.

In each case, the important matter was not really whether the restrictions in the agreement on ownership were prohibited by Article 85(1) (as was, and in my mind often still is) and, if so, exempted by Regulation 123/85: the manufacturer's freedom to terminate without having to state a cause (to terminate for convenience) on 12 months' notice was enough to make the termination lawful. What was really interesting was the contention by the plaintiffs that the allegedly prohibited and therefore void provisions of the contract could be severed and the rest of the contract enforced without them. The court held that the issue of severance was governed by English law, following Chemidus Wavin Ltd v Societe pour la Transformation et l'Exploitation des Resines Industrielles SA [1978] 3 C.M.L.R. 514. The judge in Cound had been right to conclude that the effect of severance would have been to alter the character of the agreement and that the agreement did not permit the excision of void terms such as to alter its scope and intention entirely: Hinton & Higgs (UK) Ltd v Murphy 1988 S.C. 353. In Clover Leaf, the court was able to follow the judgment in the earlier Cound case.

Also noteworthy, I think, is the court's holding (in both cases) that the termination was to be viewed as unilateral conduct by the manufacturer, not as something that constituted an agreement.

Consumer Prepayments on Retailer Insolvency - Law Commission

Consumer Prepayments on Retailer Insolvency - Law Commission:

"In a consultation paper published on 18 June 2015, the Law Commission considers whether prepaying consumers should be better protected in the event of company insolvency, either through improved voluntary mechanisms or required by law."

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Wednesday, 17 June 2015

London Taxi Maker Cries Foul Over Rival’s Green Cab Designs - Bloomberg Business

Bloomberg reports (15 June) that the manufacturers of classic black London taxis, now owned by Chinese manufacturer Geely, is taking exception to a new environmentally-friendly rival, Metrocab. One of the partners in the Metrocab company, which like The London Taxi Corporation is based, as any respectable British vehicle manufacturer should be, in Coventry (or Abingdon, of course, or Malvern), is Frazer-Nash research: so are the new cabs to be chain-driven?

So far there appears only to have been a preliminary hearing, The London Taxi Corporation Ltd. v. Frazer Nash Research Ltd. & Anr, High Court of Justice, Chancery Division, HC14B01502. (It turns out, now that the judgment is available - see below - that it was an application relating to survey evidence, which the judge Spearman J was not inclined to allow.) Bloomberg reports that London Taxi alleges that Metrocab "breaches its trademarks", which they would not have written had they paid attention. The verb is "infringe" not "breach" and trade mark is two words ... But London Taxi Corporation has several registered trade marks covering the shape and appearance of their product (for example this one), so potentially there is infringement. Are the trade marks vulnerable to attack on the grounds that the design is generic, I wonder? And is the Metrocab similar enough for there to be a likelihood of confusion? It certainly looks significantly different to me, but I might not be an average user of London cabs.

Update: The London Taxi Corporation Ltd (t/a the London Taxi Company) v Frazer-Nash Research Ltd & Anor [2015] EWHC 1840 (Ch) (03 July 2015)

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Trading Standards sting leaves Halfords Autocentre site with £32,000 fine

Fleet News reports (15 June) that a sting operation by South Gloucestershire Trading Standards has resulted in a £32,000 fine for offences under the Consumer Protection from Unfair Trading Practices Regulations, and nearly £15,000 costs for Halfords Autocentres (I'm not sure precisely which company was the defendant). Of 20 deliberate faults in the Astra they submitted for a £235 service, the technician missed 11.

Nothing new there: in fact, even the story is rather old because the sting took place in March last year and has taken this long to get to court - where Halfords unsurprisingly pleaded guilty. They also argued (though it doesn't help, except in the media I suppose) that their technician picked up a couple of faults (unspecified in the report) that Trading Standards hadn't been aware of, and that the faults that the technician missed were not "overtly dangerous". (Surely it's the "covertly dangerous" ones that are worst anyway?) The court was told that the missed faults (brake fluid level, missing or broken bulbs, faulty windscreen wipers, oil leaks, irregular tyre pressures) should all have been picked up during the "major service": and of course understanding what is and what is not included, and the garage's duty to go beyond what might be on the menu, is key to getting it right.

It does seem to me that there ought to be better ways to go about putting these things right. The defendant here was not a railway arch operation, although by the same token one might say that the consumer should be able to expect more of Halfords than the guy under the arch. Perhaps the most important lesson is the damage that one unreliable employee can cause to a respectable business.

Postscript: Auto Express adds to the story that two other garages hit in the same operation did significantly better, though quite properly we are not told their identities as they seem to have done well enough to avoid prosecution. The trading standards department identified three garages which seemed from their data and that of the old OFT to be disproportionately complained about.

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15 June 2015: Patents: Has Tesla Motors changed down a gear? - Reddie & Grose LLP

Reddie & Grose LLP, patent attorneys (not, whatever they say on their website, "attorneys"), more specifically Ben Palmer of that firm, asks Has Tesla Motors changed down a gear? The article provides interesting background information against which Tesla's dedication of its patent portfolio to the public domain can be assessed. The company's patent filings have tailed off significantly in the recent past, suggesting that perhaps they aren't being as generous as might at first seem to be the case - and of course there is always the suspicion that the rider, to the effect that others are free to use the patented technology in good faith - provides an escape route should the company wish to change its policy.

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USA: N.Y. targets dealerships' sale of credit-repair, identity-theft products

N.Y. targets dealerships' sale of credit-repair, identity-theft products:

"High-volume New York dealership Paragon Honda and its two sister stores have agreed to a $13.5 million settlement with the New York attorney general’s office over the alleged unlawful sale of credit-repair and identity-theft prevention products."
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Ford's Patent Announcement Not so Groundbreaking | DuetsBlog

DuetsBlog explains that Ford's much-vaunted policy of allowing others to use its electric vehicle technology is not as radical as it looked, and doesn't stand up to comparison with Tesla's making their patented technology freely available (often referred to as 'open-sourcing', which not only confuses different parts of speech but also misses the important point that there is no source code involved, and it is the publication of source code that is the defining feature of open source licensing strictu sensu). In fact, Ford are doing nothing more than offering commercial licences, which (while it might be a radical departure for Ford: remember the Competition Act investigation into the UK company's refusal to grant licences to make repair panels?) isn't at all unusual for patent owners. Indeed, for many, granting licences to people better-placed to exploit the technology is the only way to make a patent pay.

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Sunday, 14 June 2015

PCP clocking rise | Auto Retail Network

PCP clocking rise | Auto Retail Network: "Retailers and the wider automotive industry need to be aware that clocking by private individuals is expected to rise as more and more private buyers buy on PCPs and then exceed the contracted mileage, according to Rupert Pontin, head of valuations at Glass’s."

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Friday, 12 June 2015

Supreme Court holds against VAT scheme

In Commissioners for Her Majesty's Revenue and Customs (Appellant) v Pendragon plc and others (Respondents) - The Supreme Court (Lord Neuberger (President), Lord Sumption, Lord Reed, Lord Carnwath and Lord Hodge) held that a VAT scheme on demonstrators operated by Pendragon and devised by KPMG was an abuse of law - which, VAT law coming from the EU, is enough. EU tax law takes a very different approach from that of UK tax law.

As Lord Sumption remarked, it is a very technical matter, so I take that as reason enough not to do more than reproduce the Supreme Court's Press Summary here ...

Normally, when a car distributor buys a demonstrator car from the manufacturer, it pays VAT on the full wholesale price (“input tax”). Then, when it eventually sells the car to a customer, it collects VAT on the full retail price (“output tax”). It accounts to HMRC for the output tax it has collected less the input tax it has paid. The Pendragon Group, the largest car sales group in Europe, used a scheme devised by KPMG to reduce its VAT liability on two occasions in late 2000 and early 2001. The KPMG scheme exploited three exceptions to the normal incidence of VAT so that Pendragon would only have to account for VAT in respect of the difference between the wholesale purchase price and the retail sale price of its demonstrator cars. The scheme worked as follows.  
 Step 1: Pendragon bought cars from a wholesaler, then sold them to four captive leasing companies (“CLCs”). Pendragon paid input tax on the wholesale purchase price but recovered it by accounting for output tax received when the cars were sold to the CLCs.
 Step 2: The CLCs immediately leased the cars to Pendragon dealerships. The CLCs paid input tax on the purchase of the cars from Pendragon but recovered it by accounting for output tax paid by the Pendragon dealerships on their rental payments under the leases. 
 Step 3: The CLCs then assigned the leases and their title in the cars to the offshore bank Soc Gen Jersey (“SGJ”). They received approximately £20m (financed by SG London, which received a further assignment of the assets as security). The assignment to an offshore bank was not a supply for VAT purposes and so no VAT was payable. 
 Step 4: Some 30 to 45 days later, SGJ transferred as a going concern the lease agreements and title in the cars to Captive Co 5. It also sold as a business the hire of cars said to have been carried on by SGJ. The total consideration exceeded £18m, with £100,000 in respect of goodwill. The sale of the business as a going concern was not a supply for VAT purposes and so no VAT was payable. 
 Step 5: The demonstrator cars were sold to customers by the dealerships, acting as agents for Captive Co 5. Customers paid VAT only on Captive Co 5’s profit on the sale, rather than on the total sale price, under the “profit margin” scheme, which is available under domestic law where the goods were acquired as part of a business transferred as a going concern. 
It is common ground that the scheme technically worked, in that the transactions at steps 3 and 4 satisfied the conditions for exemption from VAT, and the transaction at step 5 satisfied the conditions for the application of the margin scheme. However, VAT is an EU tax (governed at the time by the Sixth Directive) and subject to the EU law principle of abuse of law. The First Tier Tribunal held that the scheme was not abusive. The Upper Tier Tribunal held that it was. The Court of Appeal restored the decision of the First Tier Tribunal. HMRC now appeals to the Supreme Court. It argues that the scheme was abusive and that Pendragon should have to pay to it the VAT avoided under the scheme.

The Supreme Court unanimously allows the appeal and holds that the scheme was abusive. Lord Sumption, with whom all members of the Court agree, gives the leading judgment. Lord Carnwath adds further comments on the role of the Upper Tribunal.

In Halifax plc v Customs and Excise Commissioners (Case C-255/02) [2006] STC 919, the Grand Chamber said that, in the sphere of VAT, an abusive practice can be found to exist only if two conditions are met. [7] 
The first condition is that it must be shown that the transactions concerned result in a tax advantage which would be contrary to the purpose of the conditions laid down in the relevant EU Directive and implementing national legislation. One must assume that it is the purpose of the VAT Directives to accommodate normal commercial transactions. [11] This condition is satisfied. The purpose of VAT is to tax consumption. The direct purpose of the margin scheme is to grant relief to traders who have acquired goods from a supplier who had no right to deduct input tax in respect of their own acquisition of them. The indirect purpose of the margin scheme is thereby to avoid double taxation, since second-hand goods may already have been the subject of a net VAT charge at some earlier stage in their history. [14-20] In this case, a system designed to prevent double taxation has been exploited so as to prevent any taxation at all. [30] 
The fact that the margin scheme will sometimes apply in cases where there was no earlier net VAT charge is simply the consequence of designing a workable scheme. [22-23] Even if the margin scheme is made available by domestic rather than EU law, the underlying purpose of the margin scheme remains the same, and general principles of EU law, including the abuse of law principle, still apply; in any event, it must have been intended that the abuse of law principle should apply even as a matter of English domestic law. [24-29] 
The second condition is that it must be objectively apparent that the essential aim of the transactions is to obtain a tax advantage. Even if a transaction has a legitimate commercial purpose, it is open to challenge if the accrual of a tax advantage constitutes its principal aim. [12] The scheme should be assessed as a whole. [13] This condition is also satisfied. It is not in itself objectionable that Pendragon chose to enter into a transaction with an offshore bank. However, it was essential to the scheme that Captive Co 5 acquire the cars as part of a business as a going concern, and for that to be possible, it was essential that the transferor of the business have acquired the cars by assignment. These steps were manifestly included for the sole purpose of reducing VAT liability. [31-34] 
Abusive transactions must be redefined so as to re-establish the situation which would have prevailed absent the abusive practice. [8] This transaction should be redefined by stripping out the five captive companies, so that the dealerships will be accountable for VAT on the full second-hand price. [41-42] 
The Court of Appeal held that the Upper Tribunal exceeded its proper appellate role by substituting its own decision for a decision of the First Tier Tribunal based on an evaluation of competing factors. In Lord Sumption’s opinion, the Upper Tribunal was entitled to intervene because the First Tier Tribunal erred in law. [35-40] Lord Carnwath adds that the Tribunals, Courts and Enforcement Act 2007 now provides that, where the Upper Tribunal finds that the First Tier Tribunal has erred in law, it may itself remake the decision, including by making further findings of fact. It was appropriate for the Upper Tribunal to do so in this case in order to give guidance on the abuse principle. It was their decision rather than that of the First Tier Tribunal which should have been the main focus of the Court of Appeal’s consideration. [44-51]
References in square brackets are to paragraphs in the judgments

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Heavy fines for car dealers who sold a dangerous vehicle - Car Dealer Magazine

Car Dealer Magazine reports (12 June) that two car dealers have each been fined £5,000 by Truro Magistrates after selling a dangerous vehicle. The Western Morning News also has the story, here. Nigel Rees and Ian Lewis were convicted of selling a dangerously unroadworthy car, contrary to the General Product Safety Regulations 2005.

Rees would buy salvage vehicles from insurance firms and sell them on. Lewis was sometimes involved in carrying out repairs and helping to make the sale. The case related to a Mitsubishi Pajero, which had been advertised for sale on the side of a road. It was sold for £650 but later found to have ‘serious defects’. It had to be scrapped after a several serious faults were discovered, including defective brake hoses and severe chassis corrosion.

The defendants were also ordered to pay costs of £3,400, compensation of £400 and a £200 victim surcharge.

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Heavy fines for car dealers who sold a dangerous vehicle - Car Dealer Magazine

Heavy fines for car dealers who sold a dangerous vehicle - Car Dealer Magazine: "Two car dealers have each been fined £5,000 after selling a dangerous vehicle."

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72% of London parking fine appeals won, says FTA

Fleet News reports that 72% of London parking fine appeals are successful, according to the  FTA.

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Google agrees to disclose autonomous car collision reports - Automotive World

Google agrees to disclose autonomous car collision reports - Automotive World: they were all the other driver's fault, of course - the report sounds a little alarmist but the autonomous seem to be doing their job quite well. As with human drivers, it's usually a matter of watching out for the fools with whom you share the road.

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Thursday, 11 June 2015

Trade marks: reference to the Court of Justice relating to continuing use of VM's trade mark in advertising for former authorised repairer

A trade marks case of interest to the motor industry is being referred to what the Intellectual Property Office website calls, not entirely inaccurately but could do better, the Court of Justice of the European Union. (The link is to the relevant page on the IPO website, which is now inconveniently part of the colossus.) The reference comes from a court in Hungary, the Fővárosi Törvényszék (which apparently means "municipal court"), and the case, C-179/15, involves Daimler. What is the reference about? The IPO says:
 "A request for a preliminary ruling in a case which concerns the unauthorised use of online advertisements as confirmation of an official commercial relationship beyond the termination of the parties contracted period, where the advert was not placed on the internet by the person featuring in it and the person featured took steps to remove it."
According to a Dutch government website,, which is inviting people to suggest an intervention, but in greater detail than the IPO is, Együd Garage was a Mercedes repairer until 31 March 2012. Advertisements (both in print and on the Internet, it seems, but Google Translate has struggled a bit with the Dutch and I am hardly qualified to second-guess it - I will try to find a suitably qualified friend to help) indicated that the garage was still a member of the Daimler franchise, but the information was published (including being placed on the Internet) by third parties. The garage had asked them to remove or change the adverts, but evidently without success. It seems that the operator of a website where the information was found said that they had taken over someone else's business and the offending ad was included, which is hardly a convincing excuse. It seems pretty clear that had the garage run the ads it would have infringed Daimler's marks, but is it an infringement by the garage if the ads are under the control of a third party? One would hope that the garage would not be held liable, especially if it has tried hard to put matters right. (Hat tip to the Class 46 blog and the IPKat for telling me about the reference: if you want to comment to the IPO, urging the UK to intervene in the case, you must contact them by 15 June. Instructions are at the far end, as it were, of the link above.)

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Motor Law volume 14 no 9

The latest edition of the newsletter is finished and on its way to subscribers - indeed, by the time you read this those who receive their copies electronically will already have it (so if you don't already get it that way, you might like to think about changing!). Unfortunately, I am a little behind in producing it - the latest edition is dated March, but please bear in mind that we have always given it the date of the month it covers, not the month of publication, so it could be worse. April will follow very shortly and May after that, and then we will be back on track: but this blog should keep you up to date in between.

Here are links to documents referred to in the newsletter.

Consumer Rights Act:
CMA final order on motor insurance:
Federal Trade Commission and Mini warranties
European Commission and credit charge fees: press release
Court of Justice on unfair contract terms
German case on termination of FIAT network

Friday, 5 June 2015

Google Will Now Tell Everyone When its Driverless Cars are in a Crash | TIME

TIME reports that Google is now going to report every accident involving its self-driving cars, of which apparently there have been 12 already (in six years). So much for the argument that autonomous cars will be accident-free (barring defects in the cars themselves) - but none of the 12 was the car's fault, apparently, so perhaps after all they are demonstrating that they are safer than when humans are in control.

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Court of Justice clarifies the rules on consumer guarantees

A press release yesterday from the Court of Justice informs me of the Judgment in Case C-497/13, Froukje Faber v Autobedrijf Hazet Ochten BV. Because I have too many other demands on my time right now, I am resorting to cutting and pasting the text of the press release - lazy, but effective, and I assume that this is what the press department had in mind. I'll come back to it to add some value later.

The headline is: 'Any lack of conformity which becomes apparent within six months of the delivery of goods is to be presumed to have existed at the time of delivery.' That might tell you all you need to know!
On 27 May 2008, Ms Froukje Faber purchased a secondhand vehicle at a garage. On 26 September 2008, the vehicle caught fire during a journey and was completely destroyed. It was towed to the seller’s garage by a breakdown lorry and then, at the request of that garage, to a scrapyard to be kept there. Ms Faber maintains, in contrast to the garage, that, on that occasion, the parties spoke about the accident and about the possible liability of the garage. By letter of 11 May 2009, Ms Faber gave the seller’s garage notice that she was holding it liable. A technical investigation into the cause of the vehicle fire could not take place as the vehicle had been scrapped in the meantime.
As the seller disputed that it was liable, Ms Faber brought legal proceedings. The Gerechtshof (Regional Court of Appeal) Arnhem-Leeuwarden, Netherlands, before which the dispute was brought on appeal, decided to refer questions to the Court of Justice for a preliminary ruling.
As regards whether the national court is required to examine of its own motion whether, in the present case, Ms Faber is to be regarded as a consumer within the meaning of Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees  (OJ 1999 L 171, p. 12), even though she has not relied on that status, the Court replies, in its judgment delivered today, in the affirmative. Whether the consumer is assisted by a lawyer or not cannot alter that conclusion.
In the same vein, the Court confirms that the national court may of its own motion raise Article 5(3) of the directive in the context of an appeal. That provision provides that, unless proved otherwise, any lack of conformity which becomes apparent within six months of delivery of the goods is, in principle, to be presumed to have existed at the time of delivery. In view of the nature and importance of the public interest underlying the protection which that provision confers on consumers, it must be regarded as a provision of equal standing to a rule of public policy within the domestic legal system.
The referring court also asks whether the principle of effectiveness precludes a national rule which requires the consumer to prove that he informed the seller of the lack of conformity in good time. According to Netherlands law, it is in principle for the consumer, if there is a challenge by the seller, to furnish evidence that he informed the seller of the lack of conformity of the goods delivered within a period of two months after the discovery of the lack of conformity.
The Court points out in that regard that Art. 5(2) of Directive 1999/442 on certain aspects of the sale of consumer goods and associated guarantees permits Member States to provide that the consumer must, in order to benefit from his rights, inform the seller of the lack of conformity within a period of two months from the date on which he detected such lack of conformity.
According to the travaux préparatoires in respect of that directive, that option reflects the aim of reinforcing legal certainty, by encouraging ‘diligence’ on the part of the purchaser, ‘taking the seller’s interests into account’, ‘but does not establish a strict obligation to carry out a detailed inspection of the good’.
The Court explains that the obligation imposed on the consumer is limited to that of informing the seller that a lack of conformity exists. The consumer is not required, at that stage, to furnish evidence that a lack of conformity actually adversely affects the goods that he has purchased or to state the precise cause of that lack of conformity. By contrast, in order for the notification to be of use to the seller, it must include a certain number of particulars, the degree of precision of which will necessarily vary depending on the specific circumstances of each case.
Lastly, the referring court asks how the apportionment of the burden of proof functions and, in particular, which matters it is for the consumer to establish.
The Court states that if the lack of conformity has become apparent within six months of delivery of the goods, the directive relaxes the burden of proof which is borne by the consumer by providing that the lack of conformity is presumed to have existed at the time of delivery. In order to benefit from that relaxation the consumer must nevertheless furnish evidence of certain facts.
Firstly, the consumer must allege and furnish evidence that the goods sold are not in conformity with the contract in so far as, for example, they do not have the qualities agreed on or even are not fit for the purpose which that type of goods is normally expected to have. The consumer is required to prove only that the lack of conformity exists. He is not required to prove the cause of that lack of conformity or to establish that its origin is attributable to the seller.
Secondly, the consumer must prove that the lack of conformity in question became apparent, that is to say, became physically apparent, within six months of delivery of the goods.
Once he has established those facts, the consumer is relieved of the obligation of establishing that the lack of conformity existed at the time of delivery of the goods. The occurrence of that lack of conformity within the short period of six months makes it possible to assume that, although it became apparent only after the delivery of the goods, it already existed ‘in embryonic form’ in those goods at the time of delivery.
It is therefore for the professional seller to provide, as the case may be, evidence that the lack of conformity did not exist at the time of delivery of the goods, by establishing that the cause or origin of that lack of conformity is to be found in an act or omission which took place after that delivery. 
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Thursday, 4 June 2015

USA: Toyota Settles BB King Guitar Case

American University Intellectual Property Brief reports how Toyota Motor Sales USA had reached an out-of-court settlement with the author of a book the story of which it had adopted without permission in a TV advert. The books author, Eric Dahl, had alleged that the advertisement infringed his copyright by taking the story of someone finding a guitar associated with the famous (since deceased) blues guitarist BB King and returning it to him - with minor variations (the sex of the protagonist, where the guitar was found). After arguing in court that they had taken nothing more than unprotectable facts so there could be no infringement of Mr Dahl's copyright, the parties reached a confidential settlement the following day (24 April). Perhaps the costs were disproportionate to the value of the claim, or perhaps the manufacturer sensed a PR disaster in the making (courtesy of its advertising agency and co-defendant, Saatchi & Saatchi North America). Mr King died on 14 May, and had the case still been going on then there might have been a huge amount of negative PR.

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Monday, 1 June 2015

Salesman escapes jail after faking service histories - Car Dealer Magazine

Car Dealer Magazine reports that a salesman who sold cars with false service histories at his roadside dealership has escaped jail. Gordon Angelo, who traded as Part X Motors in Gosport, Hampshire, was told by the judge at Portsmouth Crown Court that he showed ‘little remorse’. The case is also reported in The News, the local Portsmouth newspaper, here and earlier here.

He pleaded guilty to two offences of using an instrument, six vehicle service histories, which he knew to be false with the intention of somebody accepting it as genuine under the Forgery and Counterfeiting Act 1981, and received an eight-month suspended sentence. A Renault Scenic had three fake stamps and was sold for £4,780 while another, a Ford Fusion, had false stamps put in for 2010, 2011 and 2012. A Saab sold for £2,926 but it suffered faults and when the buyer returned it she received just £200. A Hampshire Trading Standards investigation found another customer bought a car with three stamps reported by the previous owner to be false. There was no suggestion that he had sold cars in a dangerous condition.

Recorder Atkinson sentenced Angelo, of Pettycot Crescent, Gosport, to 12 months, reduced to eight months for his early guilty plea. He was also sentenced to complete 84 hours’ unpaid work and to pay £100 victim surcharge.

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Trip down memory lane: The Supply of New Cars Order 2000

The Supply of New Cars Order 2000 came up in conversation over lunch the other day. We lawyers know how to enjoy ourselves. It actually impinged on my consciousness as recently as April this year albeit in the form of a story which by then was rather old.

The Order, I remind you, was the legislative response to the Competition Commission's report on New Cars, which had found that prices to private consumers were some 10 per cent higher than they would be in a competitive market (a finding which the manufacturers, unsurprisingly, disputed) and came into effect on 1 September 2000: it remains in force today, as I noted in April.

Aimed at some of the abuses identified in the New Cars report, it sought to prevent unjustified discrimination by suppliers between dealers and fleet purchasers in the discounts offered for the outright purchase of cars. It also prohibited suppliers from discriminating against dealers because of their (the dealers') advertised resale prices, and from preferring dealers who did not supply new cars obtained from dealers elsewhere in the EU.

The block exemption got most of the blame for the problems identified by the Competition Commission, of course. Back then it was Regulation 1474/95, block exemption v2 (or perhaps v1.2 would be more accurate: it bore a strong resemblance to Regulation 123/85, and radical changes only appeared with Regulation 1400/2002). The Competition Commission took the view that virtually all the restrictive features of selective distribution systems (e.g. showroom brand exclusivity, standards of presentation, the requirement to provide servicing and repair facilities, and the prevention of sales to resellers) worked against the public interest. It was only in 2002 that the new block exemption introduced multifranchising and broke the sales-service tie that had underpinned the first two iterations of the regulation. The Competition Commission, reckoning that these practices were partly responsible for increased prices to consumers, recommended they be outlawed - though it couldn't actually do that itself, so it had to talk to the European Commission about that because the block exemption actually permitted them.

The Order was directed at the issues that the government was able to deal with, while vague threats were heard about removing the benefit of the block exemption in the UK under Article 8 of the regulation, something that the government hoped to persuade the European Commission to do: or, more controversially, for the UK government itself to seek unilaterally to disapply the block exemption. Neither of these ideas ever bore fruit, although the 2002 changes to the regulation had a very similar effect.

The Competition Commission had found that there was a substantial discrepancy in the way the fleet market and the dealer market operated, with fleet buyers able to negotiate competitive discounts for bulk purchasers and dealers only being able to get supplies at a single basic prices regardless of volume, but on sale or return terms. Hence the remedy in the order of allowing dealers to buy supplies outright on terms similar to those offered for comparable volumes to fleet buyers. It used the power of the competitive fleet market to drive down prices in the uncompetitive dealer market - or so the government hoped.

It would not, of course, be as simple as it looked. Nothing in the car market ever is. Dealers are intermediaries and fleet customers end-users, though they also had an important role (especially the daily hire companies) as manufacturers of 6-month old used cars, the supply of which was a huge distorting factor with a major impact on the new car market. Dealers had other benefits from their relationship with the manufacturer, too, and the Order allowed the value of benefits offered to dealers but not to fleet customers to be taken into account when comparing prices.

Manufacturers would also have been aware that when they negotiated in future with fleet purchasers, any discounts they gave them would have an effect on the discounts they would have to offer to dealers. The more competitive fleet market might have become less competitive as a result of the Competition Commission's activities, which would be ironic to say the least.

The Order also contained an information remedy, without which it is hard to see how it might ever have worked. Suppliers had to notify dealers, at regular intervals, of the discount terms on which they were prepared to supply various volumes of cars: and those terms had to reflect those offered to fleets in line with the non-discrimination remedy. The Competition Commission had rejected the idea of recommending that wholesale prices be published because that might well have restricted competition in the fleet sector.

Suppliers also had to publish information about the number of pre-registered cars supplied, and the gross income received by the supplier from those sales. Pre-registrations were seen as another major distorting factor, and of course were never very popular with dealers. As recently as 2012, KPMG were reporting that car sales seemed to be holding up very well and attributing this to pre-registrations, which it suggested were not being reported as candidly as the legislation required. (Perhaps the manufacturers had forgotten the Order existed?) In 2011, AM reported an employment tribunal case in which allegations about unlawful pre-registrations played a part. And only last autumn, Fleet News revealed that leasing companies were being offered different terms according to whether the car would go to an individual or business customer. So we forget this obscure little piece of legislation at our peril!