EU Retail News - November 2017

by Bryan Cave Leighton Paisner

UK Rules on Sexualised Imagery of Under-18s in Advertising Are Getting Stricter

The "Photoshop" Decree in France: Fashion and Cosmetics Companies Must Label Photographs As Retouched

The Court of Turin Identifies Circumstances Giving Rise to Breach of Contract in Franchising Agreements

Online Businesses Beware: Courts Continue to Weigh in on the Issue of Website Accessibility

Unlocking the Potential: A Push for Part-time Managerial Roles in Retail

Is Your Slavery and Human Trafficking Statement Complete and Compliant?

UK Rules on Sexualised Imagery of Under-18s in Advertising Are Getting Stricter

From 2 January 2018, the rules on how you can portray under-18s in advertising will get stricter. Marketing communications in non-broadcast media (including newspapers, direct marketing communications, posters, online advertisements, etc.) and advertisements in broadcast media (including tv and radio) "must not portray or represent anyone who is, or seems to be, under 18 in a sexual way". Any sexual portrayal of someone under 18 (however mild) in advertising (regardless of the target audience) will be deemed by the UK's Advertising Standards Authority ("ASA") to automatically breach either the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (the "CAP Code”)1 or the UK Code of Broadcast Advertising (the "BCAP Code")2.

The new rules have been produced following a public consultation which ran from November 2016 to January 2017, which revealed support from a significant majority of respondents representing a cross-section of the advertising industry and interested charities. Notably:

  • Children's Society highlighted the need for companies to market their products in a responsible way and to cease encouraging adults to view children in a sexualised manner and children to regard themselves as sexual objects;
  • Girlguiding revealed research that sexualised images of girls and women has a negative impact on young girls' body confidence and makes them feel disempowered;
  • Zero Tolerance expressed concern that young women being depicted as sexual objects encourages boys and men to see them as such, which in turn promotes gender inequality in society and attitudes which justify and normalise violence and abuse.
  • As a result of the consultation, CAP and BCAP have opined that the new rules are necessary and proportionate to protect the welfare of under-18s. (It should be noted that the rules contain an exemption for advertisements which promote the welfare of under-18s or which are aimed at preventing harm to them; for example advertisements which focus on sexual health or family planning.)
  • The new rules are an explicit signal to exclude sexual imagery of under-18s in your marketing and advertising efforts. Before the new rules take effect in January 2018, you need to review your existing and planned marketing and advertising materials and make any changes necessary to ensure compliance with the Codes. Non-compliant parties will be forced by ASA to withdraw or amend the prohibited advertisements, and may also find themselves subject to adverse publicity resulting from ASA rulings or further sanctions including the denial of media space. 

The "Photoshop" Decree in France: Fashion and Cosmetics Companies Must Label Photographs As Retouched

[co-author: Emmanuelle Mercier]

In January 2016, the French Health System Modernization Act was adopted, providing in particular for several measures in order to prevent eating disorders amongst teenagers. Such measures include the obligation for models to provide a medical certificate confirming that they are fit to model, in particular with regard to their weight. Another key measure is the obligation to disclose retouching of commercial photographs. The decree implementing this disclosure obligation was issued on 5 May 2017 (the "Decree") and came into force on 1 October 2017, thus impacting companies in the fashion and cosmetic business.
In January 2016, the French Health System Modernization Act was adopted, providing in particular for several measures in order to prevent eating disorders amongst teenagers3. Such measures include the obligation for models to provide a medical certificate confirming that they are fit to model, in particular with regard to their weight. Another key measure is the obligation to disclose retouching of commercial photographs. The decree implementing this disclosure obligation was issued on 5 May 20174 (the "Decree") and came into force on 1 October 2017, thus impacting companies in the fashion and cosmetic business.

Which advertisements are concerned?
The obligation to label photographs as "retouched" applies to photographs of models whose body appearance has been thickened or refined by image processing software.

The obligation concerns photographs which are to be used in France for commercial purposes (i.e. photographs used for editorial purposes, for a magazine cover for example, do not need to be labelled as "retouched"). Retouching must be disclosed for advertisements in the press, on the internet, on billboards and on printed advertisements, whether for the public or sent to individuals.

What does the disclosing obligation entail?
The commercial photographs referred to above which are subject to the Decree must be labelled as "photographie retouchée", i.e. "retouched photograph". The Decree specifies that the label must be easily accessible and readable, and clearly distinguished from the advertising message.

Fashion and cosmetics companies shall be held accountable...
The Decree provides that the entity which is responsible for complying with the obligation to disclose the retouching of photographs is the "advertiser", that is the company which advertises its products. Therefore, fashion and cosmetics companies are directly concerned, but all companies that feature models in their advertisements have to ensure compliance with the new rule.

...and face a €37,500 fine and up in case of non-compliance
Failure to comply with the obligation to disclose retouching of photographs is punishable by a €37,500 fine. The Decree further provides that the amount of this fine may be increased up to 30% of the company's advertising expenditures!

Tougher laws that inspire luxury companies to act to protect models and raise awareness on body image
French luxury groups LVMH and Kering have on 6 September issued a voluntary code of conduct on the working conditions of models which goes even further than the statutory provisions. For instance, while French law now requires models to provide a medical certificate dating from less than two years to be able to work, the code of conduct provides that models must present a medical certificate attesting to their good health, obtained less than six months before fashion shoots or shows.

Furthermore, sizes under 34 (UK 6) and models under 16 years old are now banned from the brands of these two groups, which include Gucci, Saint-Laurent, Dior and Vuitton amongst others.

Kering's CEO has declared that he hopes this code of conduct will help encourage other players in the fashion industry to take similar commitments.

The Court of Turin Identifies Circumstances Giving Rise to Breach of Contract in Franchising Agreements

The Court of Turin (the "Court") recently issued a decision ruling about the criteria required by the Italian law to lawfully terminate immediately a franchising agreement.

The case referred to two wellness centers, managed by two companies Francesco Curletto S.r.l. (the "Franchisor") and Bellezza e Benessere S.a.s. (the "Franchisee"), entering into a franchising agreement (the "Agreement").

After many years of commercial relationship, the Franchisee suddenly terminated the Agreement without just cause and, shortly after, the Franchisor discovered that the Franchisee was carrying out the same activity in cooperation with another company.

The Franchisor challenged the termination alleging that it was in breach of the Agreement, and therefore brought a claim before the Court, seeking damages from the Franchisee.

The Court upheld Franchisors' requests, founding that the Franchisee was in breach of the Agreement on the following grounds:

  1. The termination by the Franchisee was ineffective as the Agreement did not provide the right for the parties to terminate it unilaterally without just cause;
  2. The Franchisee did not pay royalties for three years before terminating the Agreement and did not perform such obligation upon Franchisor's request, after the termination;
  3. The Franchisee was operating in the same sector and carrying out the same activity of the Franchisor, in cooperation with another company, in violation of competition rules.

Furthermore, the Court stated that the company that was working in cooperation with the Franchisee could not be held liable for the contractual breach, as it was not aware of the content of the Agreement's obligations in force between the Franchisor and the Franchisee.

In our opinion, this decision is remarkable as it set forth some criteria that can help interpret and rule events relating to contractual breach in franchising agreements, which is a type of contract lacking of important judicial doctrine in Italy.

Online Businesses Beware: Courts Continue to Weigh in on the Issue of Website Accessibility

Courts across the country continue to weigh in on the issue of website accessibility. Earlier this month, the U.S. District Court for the District of New Hampshire denied a Motion to Dismiss filed by online food delivery servicer Blue Apron. In denying the motion, the court found that Blue Apron's website is a place of public accommodation — despite the fact that Blue Apron operates only online and has no traditional brick and mortar locations. Access Now, Inc. v. Blue Apron, LLC, Case No. 17-cv-00116, Dkt. No. 46 (D. N.H. Nov. 8, 2017). In so finding, the court relied on binding precedent in the First Circuit, and noted that other Courts of Appeals, namely the Third, Fifth, Sixth and Ninth Circuits, have held that in order to be considered a "public accommodation," an online business must have a nexus to an actual, physical space. Id. at pp. 9-10. This decision highlights that the issue of website accessibility, especially as it applies to online only businesses, remains a contested issue.

The New Hampshire federal court also found that despite the lack of regulations from the Department of Justice (“DOJ”), “Blue Apron must still comply with Title III’s more general prohibition on disability-based discrimination….” Id. at pp. 14-15. The court noted that there might have been a due process violation if plaintiffs had “attempt[ed] to hold Blue Apron liable for failure to comply with independent accessibility standards not promulgated by the DOJ, such as the WCAG 2.0 AA standards….” Id. at p. 20. This was not a concern, however, because plaintiffs relied on Title III of the ADA as governing potential liability and only invoked compliance with WCAG 2.0 AA standards as a “sufficient” but not “necessary” condition. Id. at p. 21.

The Court also took up the issue of primary jurisdiction and held that because “the potential for delay” was “great,” it would not invoke the primary jurisdiction doctrine and dismiss or stay the matter until DOJ issues regulations concerning website accessibility. This holding is in direct contrast to the holding in Robles v. Dominos Pizza, LLC, where the United States District Court for the Northern District of California held that it would violate Domino’s due process rights to find that its website violates the ADA because the DOJ still has not promulgated regulations defining website accessibility. See Robles v. Dominos Pizza LLC, No. 16-cv-06599, Dkt. No. 42 (N.D. Cal. Mar. 20, 2017). Further analysis regarding the Robles case can be found in this blog post.

As we have previously reported, the DOJ recently placed the website accessibility regulations on its inactive list. With the absence of government regulations governing website accessibility, courts have been filling the void with a patchwork of conflicting decisions.

Demand letters and lawsuits typically demand compliance with the Web Content Accessibility Guidelines (WCAG) 2.0 level AA guidelines. WCAG 2.0 is based on four principles: Websites should be (1) perceivable, (2) operable, (3) understandable, and (4) robust.

As a practical matter, this means the following:

  1. Perceivable: Disabled users should be able to perceive website content using their available senses.
  2. Operable: Websites should be operable using a variety of assistive technologies or adaptive strategies.
  3. Understandable: Users should be able to easily understand not only the content, but how to operate the website.
  4. Robust: Websites should be accessible using a variety of assistive technologies, and continue to be compatible as technology improves.

Unlocking the Potential: A Push for Part-time Managerial Roles in Retail

[co-authors: Millie Webb]

On 28 September 2017, the British Retail Consortium (BRC), a trade association for retailers in the UK, and Timewise, a leading flexible recruitment specialist, announced their new partnership aimed at improving career progression opportunities for part-time workers in the retail sector.

According to the BRC's report "Retail 2020", many highly-skilled part-time employees in retail (the majority of whom are women) are currently limited to roles on the shop floor due to a lack of flexible working practices in more senior or managerial roles. This has created a glass ceiling, an abundance of overqualified employees in front-line roles, and a talent drain in store management roles.

The new BRC/Timewise partnership aims to integrate a five-stage process of flexible job redesign across the retail sector. In summary, organisations are expected to:

  1. acknowledge that enabling talent progression through flexible working makes good commercial sense;
  2. utilize their own operating culture and capabilities to design flexible working at different job levels and open up progression pathways;
  3. identify which job design options are most appropriate in light of particular staffing needs and operational constraints;
  4. set up pilot projects and measure the impact and efficiency; and
  5. implement change and maximize benefit to both employers and employees.

From a legal perspective, employees with at least 26 weeks' continuous employment have a statutory right to request flexible working. Employers are obliged to deal with such requests in a reasonable manner, and may only refuse a request for one of eight reasons prescribed by the legislation. From a social and cultural perspective, a proactive approach to flexible working is ever more pressing for retailers because of changes in consumer behaviour as they move away from the high street and towards online shopping, and also in the context of narrowing costs margins. Further, the high value placed on flexible working arrangements by many employees encourages loyalty and increases diversity in the workplace by increasing the number of women in senior positions.

In light of this new initiative, retailers should now be taking steps to review their existing flexible working policies and assess their current operating capabilities with a view to implementing the five-stage process (or similar) towards flexible working arrangements and job redesign.

Is Your Slavery and Human Trafficking Statement Complete and Compliant?

Certain commercial organisations are required under The UK Modern Slavery Act 2015 (the "Act") to publish an annual Slavery and Human Trafficking Statement (a "Statement") describing what steps (if any) they have taken to combat slavery, servitude, forced and compulsory labour, and human trafficking in their businesses and supply chains. Every eligible company5 is required to publish a Statement as soon as reasonably practicable after its fiscal year end.

Does your Statement contain the required detail?
There are no set rules on what to present in a Statement, and the information included will depend on the organisation's industry, the complexity of its structure and supply chains, and the particular sectors and nations its suppliers are working in. However, the Guidance to the Act6 suggests that a Statement should include information on:

  • the organisation's structure, its business and its supply chains;
  • its policies in relation to slavery and human trafficking;
  • its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
  • the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk (note: if no steps have been taken then the Statement must state this);
  • its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
  • the training and capacity building about slavery and human trafficking available to its staff.

Has your Statement been "approved" and published?
The Statement must be "approved" and published on the company website with a prominent link to it on the homepage. The requirement for "approval" can be satisfied in accordance with the Guidance as follows:

  • if your business is a body corporate other than a limited liability partnership, it must be approved by the board of directors (or equivalent management body) and signed by a director (or equivalent);
  • if your business is a limited liability partnership, it must be approved by the members and signed by a designated member;
  • if your business is a limited partnership registered under the Limited Partnerships Act 1907, it must be signed by a general partner; and
  • if your business is any other kind of partnership, it must be signed by a partner.

What are the risks of non-compliance?
The Secretary of State has the power to seek injunctive relief in the High Court which would force publication of a Statement, and to impose a fine for contempt of court where a company fails to comply with the Act. Non-compliant companies may also be subject to name and shame campaigns from pressure groups, and thereby risk reputational damage.  

1. Created and enforced by the Committee of Advertising Practice ("CAP")

2. Created and enforced by the Broadcast Committee of Advertising Practice ("BCAP") 

3. Loi no. 2016-41 of 26 Januart 2016 on modernisation de notre système de santé

4. Décret no. 2017-738 of 4 May 2017 on photographies à usage commercial de mannequins dont l'apparence corporelle a été modifiée

5. The Act applies to all companies (wherever incorporated) and partnerships across all industry sectors which supply goods or services, carry on a business or part of a business within the UK, and have a global annual turnover equal to or greater than £36 million ($51 million). 

6. Issued under section 54(9) of the Modern Slavery Act 2015.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bryan Cave Leighton Paisner | Attorney Advertising

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