Commerce & Law: what to expect in 2021
The negotiations for a trade agreement between the EU and the UK concluded on 30 December with the UK-EU trade and co-operation agreement (TCA). It will provide for tariff-free trade in goods, limited commitments to facilitate trade in services, and level-playing field commitments on state aid, labour and environmental standards, and other matters. The provisions in the TCA do not govern trade in goods between the EU and Northern Ireland, where the Northern Ireland Protocol will apply.
The challenges associated with the COVID-19 pandemic look set to continue for months yet. The entire UK is now in Lock-down III. The COVID-19 pandemic may also prompt customers and suppliers to revisit their supply contract drafting. Customers may insist on enhanced monitoring and governance provisions to ensure their suppliers are managing unforeseen difficulties satisfactorily. They may be more insistent on the flexibility to source from third parties where necessary or convert an exclusive relationship into a non-exclusive one more readily. Suppliers may be more reluctant to commit to absolute obligations, and may offer less flexibility on payment terms. And, if corporate insolvencies continue in 2021, suppliers may start to appreciate the full effect of the new section 233B of the Insolvency Act 1986. Introduced by the Corporate Insolvency and Governance Act 2020, section 233B restricts a supplier's ability to exercise its rights to terminate a contract (along with certain other rights) if a corporate customer enters into insolvency proceedings.
Online advertising & digital marketplaces
Away from Brexit and COVID-19, supply chain compliance issues and the regulation of online advertising and digital marketplaces are likely to be key areas of activity in 2021.
Companies doing business in the UK face increasing pressure from governments, regulators, investors and consumers to develop and maintain effective corporate social responsibility (CSR) policies and mandates, and to integrate CSR considerations and objectives into their business operations. Initiatives that may bear legislative fruit in 2021 include proposals to reduce illegal deforestation in UK supply chains, improve the quality of modern slavery reporting, and expand the powers of the Small Business Commissioner to help small businesses recover late payments.
2021 should also see regulators making long-called for interventions in the online advertising market. The UK government has committed to introducing a code of conduct to govern the behaviour of platforms funded by digital advertising that are designated as having strategic market status, and intends to set up a new Digital Markets Unit within the Competitions and Markets Authority by April 2021 to develop and administer the new code. In addition, online platforms serving the EU (and advertising intermediaries working with them) face the prospect of the new Digital Services Regulation, which will require transparency for users about the adverts they are being shown and why and, for very large platforms, the creation of a publicly accessible repository of information about adverts and targeting practices.
Consumer law continues to develop at pace in the EU and as such expect divergence between EU and UK law to be a live issue in 2021, which will require the UK government to decide the extent to which it wishes to reflect changes to the EU rules in order to ease the burden on UK businesses who offer goods or services to consumers in the EU.
Those trading with the EU will also have to take note of the changes made by the Enforcement and Modernisation Directive (expected May 2022), which includes new requirements for online traders to be transparent about ranking practices, verify reviews and provide certain other information upfront. Other key changes address dual quality products, give consumers rights of redress and require that a reference price used to indicate a discount must have been in use for at least a month. However, perhaps most significantly member states will have to be able to fine traders up to at least 4% of the trader's annual turnover in the member state(s) concerned. The UK has not indicated whether these rules will be duplicated in the UK.
Supply of goods
UK businesses will have to apply customs procedures to goods traded with the EU. The government's border operating model sets out a phased introduction of customs procedures for movement of goods from the EU to Great Britain. Different customs rules will apply for movement of goods between Northern Ireland and the EU and Great Britain in accordance with the adopted decisions relating to the implementation of the Northern Ireland Protocol.
We will soon discover whether the warnings of delays at borders, with implications for contractual delivery times, will turn out to be well founded. There have also been suggestions that haulage costs will rise, with implications for contract pricing. It is currently unclear what level of access UK hauliers will have to the Continent, and vice versa.
Lastly, cybersecurity and data protection law look set to remain hot topics for 2021 and beyond.
This blog incorporates material originally published on www.westlaw.co.uk and is reproduced with the permission of Thomson Reuters.