Embracing collaborative commerce does not only entail benefits. It also triggers legal considerations. While collaborative projects can be developed without formal arrangements initially, legal implications should be thought through well. Some of the breaking points include ownership of information, intellectual property, definition and allocation of liability, and responsibility concerning data and processes. To avoid legal issues, you should know the most important laws that border collaborative commerce.
What is Competition Law?
Probably the area often overlooked, Competition Law is a law that promotes market competition by regulating anti-competitive conducts. It prohibits agreements that restrict free trading and competition. It also bans abusive behavior by a dominating market. Moreover, it supervises mergers of large companies that threaten the competitive process.
When parties collaborate in the industry, the risk of coming into conflict of competition law also increases. The collaboration can be interpreted as a traditional union agreement. When companies conspire to enforce dominance, competition law comes into play. Guilty parties may be fined of up to 10% of its worldwide revenues.
What is Customer Protection Laws?
It is a group of laws aimed to prevent businesses from engaging in partial or fraudulent practices. It aims to protect the rights of consumers in making better choices in the marketplaces and resolving their complaints. The interest of the consumers must be protected by promoting competition in the market, consistent with economic efficiency.
What are Competition Authorities?
Competition authorities enforce and regulate competition laws. They also enforce consumer protection laws. Many countries implement competition laws and they make sure that aspects of mergers and acquisitions are regulated accordingly. So before these regulators use rigid tools, market thresholds have to be reached. Fortunately, the European Commission appears to be favorable on agreements that achieve cost efficiencies and promote innovation.
To minimize the risk of disputes among parties, you must be able to define and establish liability for a product or service and responsibility for maintaining privacy and confidentiality in the supply chain. By doing so, you will help build trust among your trading partners and promote greater collaboration. Allocation of responsibility ensures accurate data and legal obligations must be met when handling it.
Most companies think it is simple to build legal protection, however there are unexpected consequences. The risks can be minimized by thinking thoroughly who owns the company, who’s responsible, and what happens if things go wrong.