Government consultation on Copyright & Anti Competition

The Government’s consultation on copyright, addressed the regulatory impact and costs to business of the proposals to impose statutory codes on collective licensing societies, and to introduce new exceptions.

The initial assessments will be reviewed in the light of evidence collected during the consultation process. SBID participated in this process and is pro-active in the Government’s continuing research programme. The consultation published in December 2011 was accompanied by a set of initial impact assessments; the public outcome to date is available from the Intellectual Property Office website.

Great British companies such as British Airways, Shell, Unilever, the Co-op, Tesco, and Balfour Beatty have been investigated over several years for alleged price fixing, fined nearly a quarter of a billion pounds by the OFT, only for each case to collapse because there was no basis in fact, law or economics to support them. The net result is a huge bill for the taxpayer to pay the legal fees. There are 600 employees at the OFT costing us £60 million per annum, let alone compensation to the companies that have been improperly charged so a review is very much needed.

Last year, the Government consulted on proposals to reform the competition regime including merging the Office of Fair Trading and the Competition Commission to create a single Competition and Markets Authority. Among other things, the consultation sought views on proposals to improve the enforcement of the anti-trust prohibitions. The Government will announce their conclusions following the consultation shortly.

One reason why the review looked at merging the Office of Fair Trading and the Competition Commission is to make sure that they are right and fit for purpose for our times and that there are the right resources needed for the world that we live in today. There is no doubt about it that the Office of Fair Trading has had a wonderful reputation in the past, and we would like to think that the new merger, if it goes forward, will take forward the very best of the OFT and the very best of the Competition Commission.

The Government’s aims is to build on the best of the OFT and the best of the Competition Commission in the creation of a world-leading Competition and Markets Authority. The Government recognise that the system for the enforcement of the anti-trust prohibitions is not working as well as it should. Cases take too long and a strong challenge to decisions is often mounted on appeal. It is worth remembering that Britain has a reputation in the world as being one of the best places in which markets work. They are open and fair. We have to make sure that we have timely and effective enforcement. That is what the consultation has been about.

The government Ministry for Fair Trade agrees that whatever reorganisation of the competition authorities is to take place in the future, adequate resources must be made available to ensure that there is effective combating of price-fixing cartels and other anti-competitive practices. The record shows that, on the matter of liability as distinct from the precise amount of penalty, the OFT has been upset on appeal to the Competition Appeal Tribunal only relatively rarely. It has admittedly been told by the Competition Appeal Tribunal that the amount of penalty is sometimes too large and has been reduced. Last year, and I think the year before, the OFT brought in some £60 million to the Exchequer from fines. Fines that had been upheld by the Competition Appeal Tribunal! SBID has been actively involved in the programme to review and reform faults in the current system of interior design and propose methods for improvement over the past three years. The SBID report has been submitted.

The Office of Fair Trading is of course an independent body and is best placed to balance the work that it does; it is not the Government’s place to tell it what to do. However, it is almost impossible for the ordinary consumer trying to deal with the combination of the OFT, Consumer Focus, Consumer Direct, the CBA and the Competition Commission to know where to go when there is an issue and this requires further clarity.

With the restructuring coming, the department must decide where change will take place. It will shortly put some real clarity on its website to direct people under the current structure and with some clear indication where restructuring is going to take us.

The Government will reveal their conclusion in the next few weeks after the finalisation of the consultation…… watch here!

Vanessa Brady comments on SBID’s latest campaign, the Fair Trading Policy in Interior Design. © Copyright SBID 2012

Trade discount is for trade, not retail, and mixing the two is unfair to all parties. The SBID Fair Trading Policy does not recommend, support or promote passing on trade discounts to the public.

Historically some interior decorators and designers passed on their trade price to potential clients to obtain work. That is desperation, not a design commission. Such designers and decorators cause mass damage to the overall industry: they undermine the retailers’ position and they betray the supplier’s price structuring integrity. In doing so, they create grey billing procedures where the customer is unable to breakdown an invoice costs and assumes inflated pricing, leading to disputes. In addition, a lack of transparency on fees, discounts and project fee structuring has often prevented potential clients from seeking professional design advice at all.

Discover how SBID recommends interior design fees should be structured for best practice.

The common practice of designers passing trade discounts to their customers, i.e. the public, shrinks the development of interior design as a profession and ultimately costs each market sector profit and reputation. It is not surprising that those who trade in this practice are the largest sector in administration and bankruptcy. They are also the most boisterous when policies such as the SBID Fair Trading Policy are introduced. SBID’s aim in implementing the Fair Trading Policy is specifically to further separate hobbyists from professionals and, in doing so, raise the standards of the entire profession.

Practitioners who provide a design service free of charge undermine the overall design industry. It is neither appropriate nor financially sustainable for professionals to provide their key performance, their design knowledge and advice, free of charge. It is by charging a fee for the trained services of a professional designer, that a designer generates income.

Retail prices include the cost of stock and customer service. Trade prices are products supplied on business to business (B2B) terms by manufacturers, or professional industry partners (PIPs). Interior design has until now rarely respected the difference. Currently, two common unprofessional billing methods adopted by designers are:
1. Sharing trade prices as leverage to obtain projects;
2. Providing a free design service, creating income from ‘supplying goods’ only.

All too often a designer’s unrealistic recognition of project costs and random product supply between trade and retail-pricing generates customer complaints. This common practice is therefore a threat to the overall reputation and growth of the profession of design.

Other grey areas of passing on trade prices to one-time-purchasers make it impossible for retailers to compete fairly. Supplying goods has additional costs attached for different performances: retailers absorb costs such as showroom space, staffing, after-sales service and product training etc. which designers do not provide.

There is a clear additional cost in every sale a retailer makes when compared to the service provided by a designer. Designers may need to install, take delivery, organise returns of products, and so on, and this clearly has time (and cost) attached. Therefore the fee a designer earns in a trade price reflects some of the services the designer performs.

Under the SBID Fair Trading Policy, a clear charging system sets out procedures for other services such as sourcing and supplying products. SBID design professionals are encouraged to be transparent about rates for hourly, daily and project billing fees in their terms of engagement.

The policy supports SBID Designers and PIPs* and provides a fair, equitable industry plan for growth. Registered SBID international industry body members are supported by the policy to promote qualified services, however the policy does not advise, direct or propose what a fee rate should be.
*PIPs – Professional Industry Partner

About SBID

– SBID was formed in March 2009 meeting the European Councils entry criteria for Interior Designers and Architects and was inducted into the European Council of Interior Architects (ECIA) in September 2009.

– Until 2009, Britain remained unqualified to meet the eighteen year old EU standards in interior design

– The sixteen page Intellectual Property owned document* formed the basis of the registration of SBID under British Law and part of the terms of membership of the European Council of Interior Architects (ECIA)

– Andrew Rolfe is one of Britain’s leading (top 100) contract lawyers, a member of the SBID Advisory Board and partner of Clifford Chance law firm.
*The sixteen page business prospectus is the intellectual property and copyright of Vanessa         Brady and Andrew Rolfe; its joint creators. It may not be reproduced without written authority from its joint creators.

– The SBID Fair Trading Policy is part of a joined up business plan that creates the bases of a design professional through education, practice and control with the aim of protecting the consumer and improving the professional image and performance of design professionals.- SBID is a Professional body raising, promoting and setting standards to create opportunities for design professionals to trade pan-industry providing design advice products and support services. The SBID Fair Trading Policy supports and builds on the relationship between these market sectors to create a clear route to market for the professional sector of design. The outcome will be a joined-up industry.