Video
Tune in to ThinkHouse - another way to keep up to date with the legal issues and developments affecting in-house lawyers
Wragge & Co experts take a look at topical issues in contract law. Covering everything from competition law and boilerplate, to trends in liability law and how to terminate a contract, they outline the main issues in-house lawyers should consider.
Competition
Competition law can be a bit of a minefield. Nicola Lynch will be asking Bernardine Adkins how we can steer a safe path through that minefield.
Nicola Lynch: What are the competition laws that in-house lawyers need to know when drafting a contract?
Bernardine Adkins: The main one is what we call Article 101 of the Treaty of the Functioning of the European Union. For you, that's the old Article 85 of EC Treaty, which then became Article 81.
Nicola Lynch: How does Article 101 work?
Bernardine Adkins: It's got the three elements to it. The first is a basic and rather crude prohibition that applies to agreements which have restrictions of competition within them, which have to affect trade between EU member states, and which also must affect competition to what we call an appreciable degree. Once a prohibition applies, the contract, or parts of the contract, will be unenforceable. And the way you pull yourself out of that prohibition is either the agreement may benefit from block exemption - we have block exemptions for what we call vertical restraint, such as distribution agreements - or, for example, technology transfer agreements.
Nicola Lynch: Bernardine, you mentioned that rule numbers have changed. What substantive changes have there been?
Bernardine Adkins: Well, in recent years the commission have adopted what they call the new approach. And it really is about appreciating the application of the contract in the economic context, in which we find it. And simply to look at a contract nowadays in the abstract, you only get half a picture, if that. It's a little bit like a patient, you're showing the doctor a pimple and saying, what disease have I got doctor? That's simply not enough. You have to appreciate the whole context of the contract in order to ascertain whether there will be an issue with the competition laws.
Nicola Lynch: So what do people need to be looking out for now?
Bernardine Adkins: People must be careful not to be complacent about the application of the competition rules. Experienced lawyers will remember the old days with the block exemptions where those block exemptions really crafted how contracts looked, where you would - cut and paste what they called the white clauses. Things have changed a good deal. There's a good deal more flexibility now as to whether the competition rules apply in the first place, whether or not they actually do restrict competition to an appreciable degree. If it's not the case then the competition rules don't apply.
Nicola Lynch: So what tips do you have for in-house lawyers?
Bernardine Adkins: I would really say to in-house lawyers, take a pragmatic and commercial approach to competition law. Obviously avoid hardcore restraints, but it's a bit of a cliché but I think it applies: don't let the competition law tail wag the commercial dog.
This video may contain information of general interest about current legal issues, but does not give legal advice.
