General conditions of contract in national and international online sales. What if the Vienna Convention applies?
The regulation of general terms and conditions in e-commerce involves not a few insignificant complexities.
If on the one hand it seems easy enough from a practical point of view to ensure that the general terms and conditions of sale are knowable by means of certain expedients, it is certainly more complex and less easy to ensure that vexatious clauses are expressly approved in writing in accordance with the dictates of the second paragraph of Art. 1341 of the Civil Code.
The notion of general terms and conditions of contract ("GTC") is included in our legal system in Art. 1341 of the Civil Code. General Terms and Conditions of Contract are to be understood as a set of contractual clauses, which are by their nature generalitiesas they are intended to apply to all contracts of a given series, and of one-sidednessas they are only prepared by a contractor, the so-called predisponent.
The formula general terms and conditions thus expresses the practical phenomenon of the prior and unilateral formulation of a uniform negotiating content intended to be used to regulate an indefinite series of relationships belonging to the predisposer.[1]
1) When are they valid?
Art. 1341 of the Civil Code lays down, in relation to the content of general terms and conditions, two different requirements of effectiveness. It provides, in para. (1), for the general requirement of effectiveness of knowledge or cognizability and, in para. (2), for the particular requirement of effectiveness of specific approval in writing in the case of so-called vexatious or so-called onerous clauses.
1.1. Knowability and knowledge.
Knowability consists in the possibility for the adherent to acquire knowledge through the use of ordinary diligence. Therefore, for all contracts that are concluded by means of uniform contractual terms and conditions prepared by the contracting party, the favourable principle dictated by the first paragraph of Art. 1341 of the Civil Code applies, according to which the actual content of such clauses is enforceable against the other contracting party even if the latter, without having knowledge of them, should nevertheless have known them by using ordinary diligence.[2]
This, however, presupposes an activity on the part of the predisposing party that is appropriate to permit knowledge, taking into account the diligence that is normal to expect of the average adherent with reference to the type of economic transaction performed.[3]
1.2. Written proof and unfair terms.
Para. (2) regulates the specific situation in which the terms themselves are vexatious and provides that they, in order to be binding on the other contracting party, must be approved particularly in writing, in the knowledge that an objectively onerous obligation is being undertaken.[4] The list of unfair terms (which is exhaustive and not subject to extensive interpretation)[5] is specifically concerned with:
- limitations of liability (Art. 1229);
- power to withdraw from the contract (Art. 1373) or to suspend its performance (Art. 1461), or impose forfeitures on the other contracting party (Art. 2965);
- limitations on the right to raise objections (Art. 1462);
- Restrictions on freedom of contract in relations with third parties (arts. 1379, 1566, 2596), tacit extension or renewal of the contract (arts. 1597, 1899), arbitration clauses (art. 808 of the Code of Civil Procedure) or exceptions to the jurisdiction of the courts (arts. 1370; 6, 28, 29, 30, 413 of the Code of Civil Procedure).
Since one of the characteristics of the GTC is their unilateral nature, the need for written approval of unfair terms is excluded whenever the conclusion of the contract was preceded by a negotiation which specifically addressed the terms that would otherwise require an independent signature, whereas the signature remains indispensable for terms with vexatious content to which the party has adhered without any discussion.[6]
As to the manner of approval, it is generally held that there is no need for a specific signature for each vexatious term and that the requirement of specific approval in writing is also fulfilled in the case of numerical references to terms provided that they are accompanied by an indication, albeit summary, of their content.[7]
2) 1341 of the Civil Code and electronic commerce.
Applying the principles summarised above to the electronic marketplace entails not a few insignificant complexities: in particular, the double signature of vexatious clauses in telematic contracts is a very complex problem that has been debated both in doctrine and in jurisprudence.
If in a sale onlineOn the one hand, it seems quite easily solvable from a practical point of view to ensure the cognizability under Art. 1341 para. 1 of the Civil Code of the general terms and conditions of the contract by means of certain expedients (e.g. the insertion of link on the site or within the order, which refer to the GTC), it is certainly more complex and less straightforward to ensure that vexatious clauses are expressly approved in writing in accordance with the dictates of the second paragraph of the aforementioned article.
The solution that is normally adopted on e-commerce is to set up two form separate, one of which is intended for the approval of the general terms and conditions as a whole (by ticking a box and accepting with a "click"so-called "click-wrapping") and one of the vexatious clauses, which are then separately accepted (albeit by means of a "click").
Jurisprudence has had several occasions to pronounce on whether acceptance by click complies with the formal requirements imposed by Art. 1341(2) of the Civil Code, recording for the time being quite opposing positions.
There is a ruling by the Justice of the Peace of Trapani stating that:
"checking a box by clicking cannot be equated with the double signature requirement of Art. 1341 of the Civil Code, since it cannot be equated with the signature of the contracting party who has not prepared the text of the agreement."[8]
This guidance echoed a somewhat less recent decision of the Court of Catanzaro in 2012,[9] in which the plaintiff had complained of the vexatious nature of the clause contained in the terms of use of the principal's (eBay's) website, which allowed the company to suspend or delete at any time, even without justification, theaccount with which the seller could use the platform.
The Court had upheld the application, finding the abusive nature of the clause and noting that eBay had not set up a valid double acceptance mechanism pursuant to Art. 1341(2) of the Civil Code, through specific approval of the adherent of the GTC by means of digital signaturesince only the latter would have guaranteed the actual acceptance of the provision and the identifiability of the subscriber.
In the writer's opinion, given that the text of Art. 1341(2) of the Civil Code does not require the specific signing of the unfair terms, but rather their approval, the digital signature should not be considered a necessary element to ensure the fulfilment of this requirement, but rather to overcome a different (and further) obstacle, i.e. relating to the proof of the traceability of the signing of an electronic contract to a well-identified person.[11]
To this end, given that such 'identification' can also be carried out in a more streamlined manner and more in line with the business needs of both parties, it could be considered that the validity of the acceptance of the general terms and conditions by click and their traceability to a particular party could be more 'strengthened' if this is collected, for instance, following a login with insertion of user name e password by the member.[12]
It should be noted, however, that more recently, in 2018, the Court of Naples, in a similar case (still concerning eBay's terms of use), instead adopted a very different orientation, considering it unnecessary to introduce the requirement of a digital signature to accept the vexatious clauses, since this solution would have led to:
"transforming all telematic contracts into binding form contracts as a matter of pretext, requiring for their conclusion the use of a sophisticated instrument, not yet massively widespread among the public, and thus effectively paralysing the development at national level of an entire sector of trade that is becoming increasingly important at planetary level".
Again in this sense, we read in a decision of the Justice of the Peace of Partanna,[10] which had held that the requirement of written form under Article 1341(2) of the Civil Code was sufficient through
"a double assent, by pressing the appropriate button: one of adhesion and the other of approval of the so-called vexatious clauses."
3) 1341 Civil Code and international trade
3.1. Waiver of Jurisdiction.
After having, albeit very briefly, analysed the main issues concerning the limits of the usability of the GTC in the context of e-commerce, we go on to examine the possibility of waiving jurisdiction in favour of the judicial authority of a Member State by simply inserting an extension clause in the general terms and conditions, to be submitted to the adherent for acceptance by a simple click.
Article 23 of the Regulation Brussels I bisprovides that the agreement conferring jurisdiction must be concluded:
- "In writing or orally with written confirmation,
- or in a form permitted by the practices established between the parties, or
- in international trade, in a form permitted by a usage which the parties knew or ought to have known [...].
- The written form includes any electronic communication that allows for a durable record of the clause conferring jurisdiction"
The European Court of Justice[13] was asked to answer whether the click-through procedure, by which a buyer has access to the general terms and conditions of sale appearing on an internet site by clicking on a hyperlink opening a window, fulfils the requirements of Article 23(2) of the Brussels I Regulation.
The case concerned a car dealer established in Germany who, after having purchased on the defendant's (a Belgian-based company's) website, sued the seller in the German court of Krefeld. The seller entered an appearance arguing that the German courts did not have jurisdiction, since Article 7 of the GTC contained a clause conferring jurisdiction in favour of the court in Leuven (Belgium).
The European Court of Justice confirmed the jurisdiction of the Leuven court, holding that the procedure of acceptance by clicking on the general terms and conditions of a contract of sale concluded electronically, which contain a clause derogating from jurisdiction, constitutes an acceptance in writing of those terms and conditions, since they are electronic communications that do not open automatically upon registration on the website, can be saved or printed before the conclusion of the contract and therefore constitutes an electronic communication within the meaning of Article 23(2) of the Regulation.
This issue was also recently submitted to the United Sections of the Supreme Court,[14] which have held that an extension of jurisdiction clause (pursuant to Article 23 of the Regulation) is valid even if it is contained in the general terms and conditions of a contract, expressly referred to in the purchase order signed by the customer and accessible from the web address referred to therein, and that prior to the conclusion of the contract, the text of those terms and conditions can be printed and saved.
The waiver of jurisdiction, therefore, does not require the specific written approval of the adherent, pursuant to Article 1341(2) of the Civil Code, since it does not fall within the vexatious clauses exhaustively listed therein. It should be noted that, according to a well-established jurisprudential orientation,[16] Article 1341 of the Civil Code dictates a criterion of jurisdiction and that this does not affect the different criteria of jurisdiction applicable to international disputes. The United Sections themselves[15] have recently pronounced themselves on this point, stating that:
"The requirement of written form, prescribed by Art. 23 of the Regulation [...], is fulfilled if the clause itself appears in the general terms and conditions of the contract, if the contractual document signed by both parties contains an express reference to the aforesaid general terms and conditions bearing that clause, without the need for a specific approval in writing pursuant to Art. 1341 of the Civil Code.
3.2. General Terms and Conditions and the Vienna Convention.
In the event that the general terms and conditions of the contract regulate international purchase and sale relations, the Vienna Convention (if any) is applicable,[17] the question arises whether or not the double signature requirement of Article 1341 of the Civil Code can be invoked.
Indeed, the Vienna Convention, like any other uniform contract law convention, does not regulate all questions that may arise in connection with the contracts it regulates; this is of no little importance if one considers that the questions that are not regulated will have to be resolved on the basis of the law applicable to the contractual relationship.[18]
On the contrary, all matters that are expressly regulated by the Convention will prevail over the rules of domestic law, which will be derogated from by it; in order to understand whether Art. 1341 of the Civil Code can be invoked in such a case, it is essential to understand whether or not the GTC are governed by such rules of uniform law.
According to more authoritative doctrine,[19] although the general terms and conditions of contract are not expressly regulated by the Vienna Convention, since in Part II thereof the "formation of the contract" is exhaustively regulated. it will be necessary to refer to the rules of the Vienna Convention in order to understand what formal requirements the GTC must comply with.
On the assumption that Article 11 of the Vienna Convention establishes the principle of the freedom of formpart of the doctrine[20] and case law[21] therefore held that in the event of the application of the Convention, the requirement under Article 1341 of the Civil Code that any vexatious clause drafted by one of the contracting parties be subject to specific written approval must be regarded as waived.
Following this principle and applying it to online sales, it can therefore be considered that, in the event of the application of the Vienna Convention, unfair terms included in general terms and conditions would not require specific approval, and could therefore also be accepted by 'click'; it would still be the duty of the originator (pursuant to Art. 9) to ensure that the adherent has been put in a position to become aware of them, by means of a 'proactive' attitude by virtue of a general obligation of good faith and commercial cooperation.[22]
[1] Bianca, Civil Law, Giuffrè, Third Edition, p. 340.
[2] Court Milan 18.6.2009.
[3] Bianca, The General Conditions of Contract, 1979, p. 2.
[4] Cass. civ. 2003, no. 1833.
[5] Cass. Civ. 2013, no. 14038.
[6] Cass. civ. 2020, no. 8268.
[7] Trib. Rimini, 4.4.2020; Cass. Civ. 2018, no. 17939.
[8] Giudice di pace Trapani, 14.10.2019, with note by Quarta La conclusione del contratto di albergo per via telematica: pagamento anticipato e revoca della prenotazione, Danno e responsabilità, 2020, 2; Giudice di pace Milano 28.01.2019, Tribunale di Catanzaro 30.4.2012, in Res. Civ. e prev., 2013, 2015 ff.
[9] Trib. Catanzaro 30.4.2012, in Contratti, 2013, 1, 41, with a note by V. Pandolfini, Contratto on line e clausole vessatorie: quale firma (elettronica)?
[10] Justice of the Peace Partanna 1.2.2002.
[11] The Court of Catanzaro itself argues that the contract is invalid because only the digital signature would have guaranteed the actual acceptance of the provision and the identifiability of the signatory.
[12] On this subject, see also Cerdonio Chiaramonte, Specific written approval of unfair contract terms, NGCC, No. 3, 2018.
[13] Court of Justice of the European Union, 21.5.2015, No. 322/14.
[14] Cass. Civ. Sec. Un. 2017, no. 21622.
[15] Cass. Civ. Sec. Un. 2020, no. 1871.
[16] On this point see Cass. Civ. Sec. Un. 1982, no. 6190, Cass. Civ. 2003, no. 17209, Cass. Civ. 2010, no. 14703.
[17] Article 1 of the Convention that it "shall apply to contracts of sale of goods between parties having their place of business in different States: a ) where those States are Contracting States; or b ) where the rules of private international law refer to the application of the law of a Contracting State."
[18] According to Italian case-law, issues relating to e.g. representation and prescription are not governed by the Convention (Trib. Padua 25.2.2004; Trib. Vigevano 12.7.2000).
[19] Ferrari, International Sale of Goods,
[20] Bortolotti F. ''Handbook of International Commercial Law'' vol. II L.E.G.O. Spa, 2010; Ferrari F. ''General Terms and Conditions of Contract in Contracts for the International Sale of Goods'' in Obb. e Contr., 2007, 4, 308; Bonell M.J. ''Le condizioni generali in uso nel commercio internazionale e la loro valutazione sul piano transnazionale'' in ''Le condizioni generali di contratto'' edited by Bianca M., Milan, 1981).
[21] Trib. Rovereto 24.8.2006; Cass. Civ. 16.5.2007, no. 11226.
[22] On this subject, Ferrari, General Terms and Conditions in Contracts for the International Sale of Goods, Obbligazioni e contratti, 2007, 308.
Agency agreement and online sales: exclusive, non-competition and indirect commissions.
If a manufacturer chooses to sell online via its own e-commerce, it will certainly have to reckon with the reactions of its agents, likewise if the manufacturer sells to wholesalers or distributors who decide to put the purchased products online. Not to mention if this strategy is implemented by some agent who decides to start promoting sales with the help of the web.
This article will analyse what legal impacts online sales have on the 'traditional' sales network, examined from three points of view, that of the manufacturer, the third party and the agent.
1. Online sales by the manufacturer and impacts on sales agents.
Before analysing what are the legal repercussions in the event of a decision to put contractual products online, the following question should be answered: can the manufacturer sell in the areas where its agents operate?
To answer this question, one has to take a few steps back and understand how the principal may actually operate within the area granted to the exclusive agent.
- Read also: Area exclusivity in the agency contract.
Exclusivity is governed by Art. 1743 of the Civil Code, which prohibits the principal, unless otherwise agreed, from using the services of other agents within the territory. According to settled case law, this clause, which constitutes a natural element of the contract, ((Civil Cass. 2012 n. 16432; Civil Cass. 2002 n. 5920; Civil Cass. 1994 n. 2634; Civil Cass. 1992 n. 5083.)) does not only bind the principal not to appoint more than one agent within the same territory, but is also intended to protect the agent from any interference by the principal within the area, including the conclusion of business within the territory itself.((Cass. Civ. 2004 No. 14667.))
On the other hand, the regulation also provides that the agent is entitled to commissions even on business concluded by the principal directly with customers '.belonging to the reserved area or category or group of customers"(Art. 1748(2) of the Civil Code); this provision would seem to confer on the principal a 'free mandate' to sell directly within the territory, on the sole condition that he pays the agent the so-called indirect commissions.
Italian jurisprudence has arrived at a compromise that takes into account the opposing interests of the parties, as governed by the above-mentioned rules, holding that the freedom of the principal must be limited to the exercise of occasional sales within the territory, as it must be excluded that the principal may carry out systematic and organised sales there sales activities. ((One reads, for example, in a recent Supreme Court ruling that: "in matters of agency relationships, the principal may not operate, on a continuous basis, in the agent's area of competence but, pursuant to Article 1748(2) of the Civil Code, is only entitled to conclude, directly, individual deals, even if of significant size, the performance of which gives rise to the agent's right to receive so-called indirect commissions. It follows that, where the proponent's intervention is merely isolated, the right to payment of the commission is, in turn, episodic and not periodic in nature, and, as such, is subject to the ordinary limitation period under Art. 2946 of the Civil Code and not to the 'short' limitation period under Art. 2948(4) of the Civil Code. (Cass. Civ. 2008, no. 15069); see also Cass. Civ. 2009 no. 8948, Cass. Civ. 1993 no. 5591; on this subject cf. Bortolotti, Distribution Contracts, 2016, Walters Kluver.))
Following this orientation, if the contract does not expressly recognise the principal's right to make direct sales (even in a structured manner) within the exclusive territory, the principal who decides to set up a sales strategy through channels online subject itself to the risk of being challenged by its agents, for breach of exclusivity, especially if the trade via web generates a substantial amount of sales.((See Cass. Civ. 2009 no. 8948 where it was "ruled out the existence of just cause for the agent's termination without notice from the agency relationship on the sole basis of the principal's failure to pay the small commissions on only nine contracts concluded directly and of a marginal total amount."))
Very interesting is the cue promoted by a part of the doctrine, ((Baldi - Venezia, Giuffrè Editore, pg. 73 et seq.)) (which probably considers the orientation of the jurisprudence referred to above as too aleatory and not in line with the literary normative dictate of Art. 1748, para. 2 of the Civil Code) on the basis of which the principal should only be prohibited from carrying out an actual promotional activity, instead deeming lawful the answering of questions from customers who spontaneously address the principal, thus extending also to this hypothesis the distinction between active and passive sales of antitrust law.
2. Online sales within the exclusive agent's territory through third-party distributors.
A somewhat different problem is to understand when sales by third parties within the agent's territory may constitute a breach of exclusivity.
As analysed above, unless otherwise agreed, the exclusive agent is entitled to formerly Art. 1748(2) of the Civil Code to commissions also on all sales that the principal makes within its territory; it is therefore common ground that if the principal makes sales to a wholesaler based in the contract territory, the agent may claim the right to payment of indirect commissions. In order to understand whether the customer (legal entity) may be considered to be within the territory, it is appropriate to refer to a fairly old judgment of the Court of Justice, ((Judgment Kotogeorgas v Kartonpak of 12.12.1996, Case C-104/95.)) more recently confirmed by the Court of Cassation,((Cass. Civ. 2012 no. 5670.)) which clarified that any legal entity having its head office in the territory in which the agent enjoys exclusivity belongs to the zone.
It is less clear and obvious whether this third party, once it has purchased products from the principal, makes sales online directly to customers in the agent's reserved area, the agent may claim the right to commission from the principal.
Also responding to this question was a more recent ruling of the European Court of Justice:
"Article 7(2), first indent, of the Council Directive 86/653/EEC of 18 December 1986on the coordination of the laws of the Member States relating to self-employed commercial agents, must be interpreted as meaning that a commercial agent entrusted with a specific geographical area is not entitled to commission for transactions concluded by clients in that area with a third party without the direct or indirect intervention of the principal."It follows that there will only be a breach of exclusivity and the agent will only be entitled to an indirect commission if there has been direct or indirect intervention by the principal in sales made in the territory by third parties, ((Cass. civ. 2017 No. 2288.)) with the aim of de facto depriving the agent of business that the latter could have concluded.((See the principle established by the Court of Cassation sez. Lav. in judgment 2011 no. 11197.))
3. Online sales by commercial agents.
In contrast to distribution contracts, in agency contracts the principal may prevent the agent from carrying out online sales promotion activities (unless the agent, due to the manner in which he or she carries out his or her activities, is to be regarded as subject to antitrust law).
- Read also: Can a manufacturer prevent its distributors from selling online?
The question then arises, is the agent free to decide to start promoting online sales?
In fact, should an agent decide to do so, he or she will run afoul of what is the typical prerogative of the webi.e. that it is by its very nature visible everywhere and that any limitation aimed at preventing unjustified geographical blocks would even be contrary to European law.
- Read also: Geoblocking: what is it and when does it apply?
On the other hand, as already explained at the beginning of this article, the agency relationship provides as a natural element of the contract the obligation of exclusivity to which the parties are bound and which any breach entails contractual offences. In particular, if the agent makes out-of-area sales, it will be in breach of the exclusivity covenant vis-à-vis the principal, since in such a case it will not be able to claim any commission being reserved exclusively for the agent of the area where it made the sale.
If, on the other hand, the contract provides for such out-of-area sales, the exclusive agent where the sale was made may bring an action against the principal for breach of the agreements between them.
Placing these principles in the online market, the question that arises is whether the mere existence of a website where sales of contractual products are offered (which by its nature is also visible outside the agent's assigned area) should be considered as a sales promotion activity that infringes the exclusivity of other agents.
To date, there appear to be no case law precedents that have answered this question, and in order to find a (at least plausible) solution, it is necessary to go back over the general principles on the subject of agency, recalling the principles dictated by antitrust law, taking into account the peculiarities of the market online.
Based on the Orientations of the Commission, the mere existence of an Internet site must in principle be regarded as a form of passive selling. Indeed, it reads:
"If a customer visits the Internet site of a distributor and contacts him, and if that contact results in a sale, including actual delivery, this is considered a passive sale. The same applies if a customer decides to be informed (automatically) by the distributor and this results in a sale."((LGC No. 52.))
Otherwise, it must be considered an active sale:
"Online advertising specifically targeted at certain customers [...]. Banners showing a territorial link on third party websites [...] and, in general, efforts made to be found specifically in a certain territory or by a certain group of customers".((LGC No. 52.))
It would therefore be consistent with antitrust law and European competition law to hold that the agent's breach of exclusivity only arises in the case of 'active' sales promotion activities, since otherwise it would have to be held that the mere answering of questions from customers outside the area, who spontaneously approach the agent, would only result in the agent's commission not being recognised.
In view of what would in any case be the impact on the sales network of the establishment of an online distribution system, it is advisable to consider very carefully regulating contractual relations in a manner consistent and aligned with the actual distribution strategies to be implemented.
Agent's right to commissions on business concluded after termination of the relationship.
When the agency relationship comes to an end, it is often the case that the agent has reported some business, or has simply started negotiations that resulted in an agreement following the termination of the contract. In some (rarer) cases, the agent has concluded long-term contracts before the termination of the relationship. Understanding whether or not the agent is entitled to commissions on business concluded after termination is of crucial importance.
In order to understand whether the agent is entitled to commission on business concluded after the termination of the contract, it is first necessary to identify which of these business transactions fall under the terminated relationship and which are to be regarded as excluded, since it is from this that the actual accrual or non-accrual of commission is determined.
In this article we will first briefly analyse the more typical case, relating precisely to business concluded after the termination of the relationship, and then delve into the rarer (but no less important) case of long-term contracts, which were concluded before the termination of the agency relationship.
1. Commissions on contracts concluded after the termination of the contract.
1.1. Civil law regulations.
Following the termination of an agency relationship, it is often the case that the agent has reported certain business to the principal, or has initiated certain negotiations that resulted in an agreement following the termination of the contract. In such cases, it is necessary to understand which of these deals fall under the terminated relationship and which are to be regarded as excluded, since the actual accrual or non-accrual of commission is determined by this.
This issue is governed by para. 3 of Civil Code 1748, which provides that the agent is entitled to commission on business concluded after the date of termination of the contract if:
- "the proposal was received by the principal or agent prior to or
- the business is concluded within a reasonable time from the date of termination of the contract and the conclusion is predominantly attributable to the activity performed by the agent, unless specific circumstances show an equitable distribution of the commission among the agents involved."
This approach[1] is intended to prevent the principal from running the risk of paying a double commission: one to the outgoing and one to the incoming agent.[2] In the event of termination of the relationship, therefore, the agent will be entitled to the commission:
- whether it forwarded the order to the principal prior to the termination of the contract, or whether the principal received it directly from the local customer (in the event that the agent is entitled to indirect commission);
- In other cases, the commission is only due if the deal has been concluded within a reasonable term from the date of termination of the contract and the conclusion is mainly attributable to to the activity carried out by the agent himself.
The second hypothesis, i.e. the one that recognises the agent's commission even if the proposal is received after the termination of the relationship, as long as it is concluded within a reasonable time, certainly requires more attention.
One of the major problems of interpretation is to identify what is to be understood by 'reasonable time'i.e. what is the maximum time limit for the agent to still be entitled to commission. On this point case law is not uniform, one reads of cases that have set this term at six months[3] and others who considered an even two-year time limit reasonable.[4] However, it must be held that the reasonableness of the time limit must also be judged on the basis of the industry sector in which the agent has operated and the customs in force in that relationship.
1.2 The AEC Framework.
Certainly clearer is the discipline of AEC Industry 2014which in Art. 6, last paragraph, provide that the agent is entitled to commission on the business proposed and concluded even after the termination of the contract, not only if the conclusion of the business is the effect of its activity, but also make it subject to the fact that
- Upon termination of the relationship, the agent must report to the principal in detail on the commercial negotiations undertaken, but not concluded, due to the termination of the agency contract;
- if, within a period of six months from the date of termination of the relationship, any such negotiations are successful, the agent shall be entitled to the relevant commissions;
- Once that period has elapsed, the conclusion of any order, whether or not included in the agent's report, shall no longer be considered a consequence of the agent's activity and no commission shall therefore be paid;
- no commission shall be due for business concluded even within six months, but not indicated in the report.
2. The right to commissions on long-term contracts.
Where the agent in the course of the relationship promotes term contracts, the entitlement to commission on deliveries made in performance of the contract procured after the termination of the relationship depends essentially on the nature of the term contract.
In principle, in the event that the term contract is a a supply contract, a subcontracting contract, or a sales contract with divided deliveriesit may be stated that (unless otherwise agreed),[5] the agent is entitled to commission on all deliveries made even after termination of the agency contract, since these are in fact acts of performance of a contract concluded in the course of the relationship.
Conversely, where the contract promoted is a framework contractwhere each supply is to be the subject of a further agreement (order - acceptance), in which case the individual supplies are to be regarded as independent sales contracts,[6] even if concluded in the context of the framework contract, with the consequence that such subsequent sales contracts will not give rise to an entitlement to commission (unless the agent can prove that such business is attributable to its promotion activity and was concluded within a reasonable time).
Continuing with the reasoning, if, on the other hand, the term relationship is signed by the principal following the termination of the relationshipIn order to understand whether the agent may be entitled to commission, it will not be sufficient to ascertain the nature of the relationship of duration, but also to prove that the conclusion of the transaction is attributable to the agent's promotional activity.
A very interesting case is recalled below,[7] which was decided by a series of three judgments of the Court of GrossetoA case in point was the following: an agent, following burdensome negotiations lasting several months, had procured for the principal (a company operating in the frozen food sector) a deal with a chain of supermarkets for the indefinite supply of frozen and pre-packaged ready meals. The administration contract was concluded a few months after the termination of the agency relationship.
The agent sued the principal for payment of commissions on supplies made in performance of the supply contract. By judgment No. 52/2012, the Court of Grosseto upheld the agent's claims, holding that:
"the administration contract was formally concluded [...]. just over two months after the termination of the agency contract [...], a term that must be considered, due to its objective brevity, absolutely reasonable.
Although the Court had found that the agent was entitled to commissions, it rejected the plaintiff's claim seeking an order that the principal pay them
"until the end of the administration contract [...] as this would be a pronouncement of sentence 'in the future' related, moreover, to a term that was not identified by the parties in the administration contract, since the same contract was concluded for an indefinite period."
The agent, a few years after the delivery of the first judgement, brought a further action, in which it sought an order that the principal be ordered to pay commissions on supplies made after the expert valuation referred to in the first judgement. The agent based its claim on the principle of Article 2909 of the Civil Code.according to which the finding contained in the final judgment shall be conclusive for all purposes between the parties. The Court again condemned the principal, stating that
"the right to obtain the payment of the commissions that will gradually accrue in relation to the prolonged performance of the supply contract, is unquestionable and has already been ascertained in the irrevocable ruling issued by this Office with the consequent application of the revocatory effect provided for by Article 2909 (on this point, among others, Court of Cass. Sez. Lav. 2001 no. 4304).
Following this ruling, in order to avoid the payment of commissions on future business, the principal proceeded to effectively giving up the business to a company of the same group, also active in the frozen food sector. The agent then appealed again to the Court of Grosseto, arguing that the assignment of the duration contract pursuant to Article 1406 of the Civil Code entailed the transferee's obligation to pay commissions. The Court of Grosseto,[8] again supported the plaintiff's argument, stating that:
"since the characteristic feature of the assignment of the contract under Art. 1406 of the Civil Code is that it has as its object the transmission of a unitary set of active and passive legal situations resulting from each party to the contract [...], the transferee shall be obliged to pay to the plaintiff commissions - in the same amount as agreed in the agency contract - on the supplies of frozen food products made to X srl."
3. Commissions on long-term contracts and severance payments.
Lastly, it should also be emphasised that the signing of term contracts can be used as a determinant for prove that the conditions required by Article 1751 of the Civil Code are fulfilled.for the agent's right to receive severance pay (cf. Agent's severance pay. How is it calculated if AEC does not apply?). We read in an interesting Supreme Court ruling that:
"The termination indemnity compensates the agent for the asset increase that its activity brings to the principal by developing the goodwill of the business. It follows that this condition must be deemed to exist, and the indemnity is therefore due, where the contracts concluded by the agent are contracts of duration, since the development of goodwill and the continuation of benefits to the principal, even after the termination of the agency relationship, are in re ipsa'..[9]
[1] Article reformed by Legislative Decree No. 65/1999, by which the legislature transposed the principles of European Directive No. 86/653 and, in particular, Article 8, which provides as follows: "For a commercial transaction concluded after the termination of the agency contract, the commercial agent shall be entitled to commission; (a) if the transaction is mainly due to the result of the work performed by him during the agency contract and if the transaction is concluded within a reasonable period after the termination of the agency contract, or (b) if, in accordance with the conditions set out in Article 7, the order placed by the third party was received by the principal or the commercial agent before the termination of the agency contract. "
[2] Cf. Court of Rimini, 22.9.2004, No. 238, which excluded the agent's right to commissions in the event of extensions of supply offers, given the absence of the former agent's preponderant promotional intervention. On this point see VENEZIA, Il contratto di agenzia, pg. 281, 2015, CEDAM.
[3] Cass. Civ. 2006, no. 2824, in Leggi d'Italia
[4] Cass. Civ. 2013, no. 894, in Leggi d'Italia
[5] Art. 1748 para. 3 of the Civil Code, on commissions due for business concluded after termination of the contract, is entirely derogable: in favour Saracini-Toffoletto, Il contratto di agenzia. Commentario, 2014, GIUFFRÈ and Bortolotti, op. cit., p. 276; contrary, Trioni, who holds that this rule is not mandatory, given that the third paragraph of Art. 1748 cc, unlike the second and fourth, does not expressly provide for the salvation of contrary agreements.
[6] See on this point BORTOLOTTI, Concessione di Vendita, Franchising e altri contratti di distribuzione, p. 8, 2007, CEDAM.
[7] For more details see Giulia Cecconi, Le provigioni sui contratti di durata, in Agents and sales representatives, 1/2019, PUBLISHING AGE.
[8] Court of Grosseto, Judgment No. 269 of 2018.
[9] Cass. Civ. sez. lav. no. 24776 of 2013.
The influencer (or youtuber) is a commercial agent: food for thought.
The influencer often carries out a sales promotion activity for a fee: does this make him a commercial agent?
In order to legally frame the figure of theinfluencerit is necessary to start with a brief analysis of their activity, trying to give it a, albeit generic, definition. L'influencer, as the word itself implies, is a person who is able to influence the opinions and attitudes of other people, because of his or her reputation and authority on certain issues or areas of interest.[1]
In particular, the marketing influencer is an industry expert (which can range from fashion, to travel, music, technology, etc.) that, with its posts, allows it to offer greater visibility to products or services it promotes, using the web channels it considers most appropriate and adequate (Instagram, Youtube, Facebook, a personal blog, etc.).
L'influencer Precisely because of the decisive role it plays within the communication processes, it is often commissioned by companies in the sector in which it operates to advertise their products, thus carrying out a sales promotion activity, which is remunerated through the payment of a fee.
Precisely because theinfluencer often carries out a sales promotion activity for a fee, typical of the better-known figure of the commercial agent, the question may arise as to whether theinfluencer (in certain hypotheses), may be accumulated to such a contractual figure (see on this point But are online platforms commercial agents?)
Before proceeding to this analysis, it is important to clarify that, with this article, we want to give some food for thought, mainly aimed at trying to better frame the new modes of intermediation, with the intention of 'monitoring' the development of distribution techniques, with the help of new technologies.
If the contractual relationship between the company and influencer is governed by a written agreement, the point of reference for the interpreter's activity must certainly be the text of the negotiated declaration in the first place.
In any case, although the negotiated text is the first parameter of interpretation, for a correct exegesis one must not limit oneself "to the literal text of the words" (Art. 1362 of the Civil Code), but it is necessary to seek, through an overall examination of the deed, by interpreting the clauses of the "one through the other" (Art. 1363 of the Civil Code), what was the result pursued by the conclusion of the agreement, i.e. what was "the common intention of the parties", i.e. the meaning they both attributed to the agreement[2].
In order to trace the will of the parties, it will be necessary to take into account how the relationship actually developed.influencer to the producing company by analysing some of the typical contractual elements of the agency, namely whether:
- there is or is not a consultancy activity in addition to sales promotion;
- there is an obligation of stability of tenure;
- the company has the power to dictate the market guidelines and strategies of theinfluencer;
- there is a contractual non-compete clause;
- there is a commission payment, based on sales made.
Since there is no single, 'decisive' element to understand whether a given relationship qualifies as an agency, it must be considering the different typical elements in the individual case of this contractual figure, bearing in mind that none of them alone allows the relationship to be correctly framed, but rather an overall assessment of all of them must be carried out.[3]
1. There is a consultancy activity alongside the promotion activity?
Sometimes the contractual relationships that bind the influencer to companies are governed by consultancy contracts, remunerated through the payment of a fixed fee, sometimes coupled with a variable fee, calibrated on the sales generated by the promotional activity of theinfluencer.
There is no doubt that often theinfluencer performs a genuine consulting activity, being a professional who knows the market of social and the company contacts him, not only for his notoriety, but also to understand how to advertise products through the use of digital platforms.
It is also true that it is far from unusual for published posts and videos to be 'accompanied' by a linkwhich redirects the consumer to a particular shop online (which can be either the manufacturer's or a third party's), where it is possible to purchase the product advertised by theinfluencer.
Any purchase by the consumer through the use of this link is tracked, thus enabling the parties to verify the sales actually realised through the promotional activity of theinfluenceron which variable remuneration may be calculated.
In that case, one would be faced with a so-called ' contractmixed"consisting of the merger of the causes of action of two contracts: a contract of brokerage and a contract for consulting services. According to case law, in the event the parties enter into a contract of this nature mixedthe same shall be subject to the unitary discipline of the prevailing contract. It is stated on this point that:
"The mixed contract, consisting of elements of different types of contract, is not only unique, but has a single and inseparable cause, in which the elements of the different types that constitute it are combined. It is subject to the prevailing contract and predominance is determined on the basis of economic or other indices, such as the "strength" of the type or the interest that moved the parties, unless the elements of the non-prevailing contract, regulated by its own rules, are incompatible with those of the prevailing contract."[4]
In the light of the above, in order to understand which category to subject the brokerage/consultancy relationship to, it will be necessary to refer to how the relationship has actually developed over the years and to verify whether or not the consultancy activity takes precedence over the brokerage activity, noting that, if so, it would be more complex to consider the relationship as an agency contract (Main differences between the agency contract and the commercial distribution contract).
2. Absence of an obligation of stability of tenure
To understand whether the relationship between the company and influencer may be subject to the agency discipline, it is certainly essential to ascertain that the sales promotion activity (and not only the positioning of the brand) is carried out with stability. As has already been discussed (cf. What is the difference between an agency contract and a business intermediary?) is precisely the obligation to promote sales with stability one of the distinctive elements of the agency contract. It is stated in case law that:
"while the agent is the part that assumes permanently the mandate to promote on behalf of the other (principal or principal), the conclusion of contracts in a specific area, the business procurer is the person who collects orders from customers and transmits them to the company from which he has been commissioned, without stability constraint (unlike the agent) and on an entirely occasional basis [...].
Thus, while the agent's service is stable, as he is obliged to carry out the activity of promoting contracts, the procurer's service is occasional, in the sense that it depends exclusively on the his initiative.[5]"
If ascertaining the stability of the assignment is already a complex activity in the case of brokering "traditional'.is certainly even more so if the promotion activity is carried out online. Consider the (not uncommon) case of a influencer reviewing a product on youtube. The activity they perform is to create a video and post it on the platform.
The effects of such promotional activity, in any event, last over time, sometimes for months or even years (normally until the product reviewed is superseded by a new product launched by the parent company, or until the video is deleted from the web). In such a case, one would need to understand whether or not this promotion activity that unfolds its effects over time can be considered 'stable' within the meaning of an agency relationship.
While it is certainly not easy to give an unequivocal answer to this question, it is certainly without doubt advisable to contractually regulate the manner of payment of remuneration on sales conveyed by this post realised after the termination of the relationship between influencer and company.
(On this subject, cf. The commercial agent's commissions for business concluded by the principal after termination of the relationship; ...but if the commercial agent has procured long-term contracts and the relationship is dissolved before their expiry...).
3. Duty of the principal to impart market guidelines and strategies
A second distinguishing point of the figure of the commercial agent is certainly constituted by the obligation he assumes to follow the instructions of the principal, who is the party responsible for deciding market policies and imparting commercial strategies to the distribution network. Article 1746(1) of the Civil Code expressly provides that the agent must:
"perform the task entrusted to him in accordance with the instructions received [...]'.[6]
In the agency relationship, it is the responsibility of the principal to devise sales and marketing strategies. marketingstrategies to which agents normally belong and to which they must adhere in the performance of their duties, always within the limits prescribed by the principal.
It follows that the agent has a duty to follow the principal's instructions and is obliged to act in accordance with his instructions, also with regard to the objectives to be pursued and the results to be achieved, and may not refrain from adopting certain sales methods or techniques. marketing developed by the principal.[7]
Once again, as analysed in point 1 of this article, it will be necessary to check very carefully whether theinfluencer is obliged to follow the general directives of the company, or is he himself directing the company in its choices of strategy and marketing in the area of its competence (on this subject cf. The agency contract and the employment relationship: distinguishing criteria and evaluation parameters.).
4. Absence of non-competition
Article 1742 of the Civil Code provides that:
"The principal may not use more than one agent in the same area and for the same line of business at the same time, nor may the agent take over the business of several competing undertakings in the same area and for the same line of business."
According to settled case law, the non-competition clause is a natural but not essential element of the agency contract[8]with the consequence that the parties are free to regulate their relations differently either by an express agreement or by concluding behaviour[9] (on this subject see also Area exclusivity in the agency contract e Agency contract, exclusivity and indirect commissions.).
Although an agent is normally free to act by promoting several competing products, such an 'open' mode of promotion is certainly anomalous and is found in a more limited number of contractual relationships.
Applying this principle to the present case, it could be said that if a influencer carries out its activities in favour of several competing companies, without any of the intermediaries raising any objection as to the manner in which they operate, this element could be a clue which, although in itself cannot absolutely exclude the relationship from being classified as an agency, if combined with those already analysed above, could be a component that could influence its classification
5. Payment of commissions
Where the contract expressly provides as a method of calculating the consideration of theinfluencer the commission payment, this alone cannot be regarded as a sufficient element to be able to identify the relationship as an agency. The parties, in fact, whether they wish to conclude an agency contract or a consultancy/service contract, may freely (formerly Article 1322 of the Civil Code) define the remuneration terms that they deem to be the most appropriate and suitable in the case at hand.
Suffice it to say that if the relationship were to be framed as an atypical contract for the provision of services, Article 1657 of the Civil Code on the subject of contracts gives the parties complete freedom to decide on the manner of payment and calculation of services, which may therefore also be of a commission nature.
That being said, it cannot however be denied that the payment of the activity by means of the acknowledgement of a commission is typical of the agency relationship and it must therefore not be excluded that this must be taken into account when interpreting the contractual relationship.
In the event, the relationship is only remunerated with a fee in fixed formAlthough the European directive does not exclude the reconciliation of this method of remuneration with the figure of the agent, Italian jurisprudence (criticised by part of the doctrine[10]) stated its opposition to this argument,[11] considering that in that case the intermediary would not assume any entrepreneurial risk, which is a distinguishing feature of the figure of the agent.
A different matter, however, if the relationship were to be remunerated through the payment of a mixed remunerationunder which a fixed component is combined with a variable component. Such a solution whereby the agent is assured a "guaranteed minimum"is considered lawful and compatible with the agency employment relationship.[12]
Those analysed above are only a few elements that allow the interpreter to understand how best to frame a "dubious" contractual relationship, which must however be carefully analysed in its entirety, verifying the individual elements that characterise such a complex and versatile contractual figure.
[1] https://www.glossariomarketing.it/significato/influencer/.
[2] TORRENTE - SCHLESINGER, Handbook of Private Law, § 311, GIUFFRE EDITORE.
[3] Bortolotti, Distribution Contracts, p. 129, 2016, Wolters Kluwer.
[4] See Trib. Cagliari, 4. 5.2017; Trib. Firenze Decreto, 2.11.2016, Trib. Taranto Sez. I, 11.8.2016, Trib. Milano Sez. VII, 29/02/2012; Cass. civ. United Sect., 12.5.2008, n. 11656.
[5] Tribunale di Firenze Sez. lavoro, 4.3.2014.
[6] This obligation is also found in Art. 5, para. 2, AEC Industry 2014 and Art. 3, para. 2, AEC Trade 2009.
[7] On this point see also Bortolotti, Distribution Contracts, Wolters Kluwer, 2016, p. 166 et seq.
[8] Cass. Civ. 2002 no. 5920, Cass. Civ. 1994 no. 2634, Cass. Civ. 1992 no. 5083.
[9] Cass. Civ. 2007 no. 21073, Cass. Civ. 1992 no. 5083.
[10] PERINA - BELLIGOLI, The Agency Relationship, p. 27, Giappichelli Editore; Saracini-Toffoletto, p. 327 ff.
[11] Cass. Civ. 1986 no. 3507; Cass. Civ. 1991 no. 10588; Cass. Civ. 2012 no. 12776. The latter judgment went so far as to admit that "in the agency relationship the parties may provide for a form of remuneration for the agent's services other than a commission determined as a percentage of the amount of business concluded (such as a fixed sum for each contract concluded), but without going so far as to acknowledge that remuneration in the form of a commission can be entirely replaced by a fixed remuneration.
[12] See on this point Cass. Civ. 1975 no. 1346; Cass. Civ. 1980 no. 34; Trib. Di Milano 9 September 2011.
The effects of the coronavirus on agency and distribution contracts.
The restrictive measures the government has taken against the coronavirus through the DCPM of 11.3.2020,[1] have led to the suspension of a large number of commercial activities, with a serious impact on existing contractual relationships. This article will attempt to focus attention on agency and distribution contracts, trying to understand what remedies are provided by our legal system to deal with the problems that are most likely to arise between the parties.
In contractual matters, following the above-mentioned ministerial order, the legislator did not intervene with measures ad hoc (only a few measures of a predominantly tax and contribution-related nature are to be found in agency matters),[2] merely providing in Article 91 Decree-Law of 18 March 2020, better known as 'Cura-Italia', on the subject of "provisions on delays or breach of contract resulting from the implementation of containment measures", as follows:
"compliance with the containment measures set out in this decree shall always be assessed for the purpose of excluding, pursuant to and for the purposes of Articles 1218 and 1223 of the Civil Code, the debtor's liability, also with respect to the application of any forfeiture or penalty related to delayed or omitted performance. "
The sense of this regulatory provision would seem to delegate to the judge a more accurate and prudential assessment of a possible culpable breach (Art. 1218 of the Civil Code) caused by the "compliance with containment measures" of the pandemic, also for the purpose of quantifying damages (art. 1223 Civil Code), raising compliance with these measures to a parameter for assessing the imputability and importance of the breach (art. 1455 Civil Code).
1. Civil law regulations.
As is well known, Art. 1218 of the Civil Code establishes the criteria for determining the liability of a debtor who fails to perform its bondby providing for its exemption from liability for damages (Art. 1223 of the Civil Code) whenever the non-performance or delay was caused by impossibility of performance resulting from a cause not attributable to it (Art. 1256 of the Civil Code).[3]
Art. 1256 of the Civil Code also provides that supervening impossibility may lead to the extinction of the obligation, although a distinction must be made between the case of definitive impossibility e impossibility temporary. While the former, being irreversible, extinguishes the obligation automatically (Art. 1256(1) of the Civil Code), the latter determines the extinction of the obligation only if it lasts until such time as the obligor can no longer be required to perform the obligation, or the obligee no longer has an interest in performing it.[4]
Given that in the contracts for consideration the impossibility of performing an obligation does not always automatically imply the impossibility of performance (e.g. if the seller cannot deliver a product, the buyer may still be able to pay the price of the thing sold)[5] The legislature intended to protect the non-performing party by providing in Art. 1460 of the Civil Code that either party may refuse to perform its obligation if the other does not perform or does not offer to perform at the same time, unless otherwise agreed in the contract (i.e. the seller may refuse to make payment if the manufacturer does not deliver the goods).
However, this exception may only be raised if there is proportionality between the two benefits, taking into account their respective impact on the balance of the relationship.[6]
In order to prevent the contractual relationship from being transformed into a "limbo" in which both parties merely declare that they do not wish to perform their respective obligations, if the non-performance (in our case of the seller) depends on supervening external factors (e.g. If the non-performance (in our case, the seller's non-performance depends on supervening external factors (e.g. the suspension measures of the covenant-19) the legislature (taking over the general principles dictated on the subject of rescission of the contract for non-performance, as in Art. 1453 of the Civil Code), provides the parties with certain remedies for cases where the impossibility is total or only partial.
Art. 1463 of the Civil Code (total impossibility) provides that the party who has been released from its obligation due to the supervening impossibility of performance (e.g. the seller who because of covid-19 can no longer deliver fruit that has perished because it could not be harvested during the pandemic), may not claim the counter-performance (i.e. payment of the price) and must also return what it may have already received (e.g. an advance).
Art. 1464 of the Civil Code (partial impossibility), on the other hand, provides that when the performance of one party has become partially impossible (e.g. delivery of 50% of the goods sold), the other party is entitled to a corresponding reduction of the performance owed by it (payment of 50% of the goods delivered), or may dissolve the contract if it has no appreciable interest in partial performance.
Thus, while in the case of total impossibility the termination of the contractual relationship operates as a matter of right, in the case of partial impossibility the party suffering the non-performance may opt for partial performance or (if there is an appreciable interest) termination of the contractual relationship.
Still different is the case governed by Art. 1467 et seq. of the Civil Code, relating to relationships with continuous or periodic performance, or with deferred performance, where due to external factors the performance of one of the parties requires efforts that are excessive and disproportionatethan those that were enforceable once the relationship had been entered into. Even in such a case, the party who suffers the excessive onerousness of the performance may request the termination of the contractual relationship if a serious economic imbalance is created between performance and counter-performance.
In this case, the party against whom termination is sought may avoid it by offering (formerly Art. 1467(3) of the Civil Code) to modify the terms of the contract in an equitable manner so as to bring the relationship between the performances within the limits of thenormal alea of the contract.
It is therefore very important to emphasise that the does not provide for an obligation of the parties to renegotiate and reschedule the relationshipSuch an obligation cannot be inferred from an extensive application of the principle of good faith under Art. 1374 of the Civil Code, the subject matter of which is a different case. Nor, in the writer's opinion, can such an obligation be derived from an extensive application of the principle of good faith set forth in Art. 1374 of the Civil Code, which has as its object the different case of "integration of the contract" in cases of incomplete or ambiguous expression of the contracting parties' will (and not of modification of the contractual terms, in the event of variations in the equilibrium position of the contractual relationship due to facts not attributable to the parties).[7]
Bearing in mind that these are the instruments offered by the legal system, we go on below to try to respond to some of the problems that may arise in the context of commercial distribution, bearing in mind that the legislature's reference to the institutions set forth in Articles 1218 and 1223 of the Civil Code suggests that the legislator's concern was above all to keep contractual relations alivewhere possible and in the interest of the parties.[8]
2. Effects on distribution contracts
2.1. What happens if the manufacturer can no longer supply its distributors and/or customers because of the coronavirus?
As a general rule, if the manufacturer cannot supply its distributors due to a blockage and/or slowdown in production due to the implementation of government restrictive measures, it cannot be held liable for such delays if the impossibility was original (thus not known at the time the obligation arose) and occurred after the debtor's default (Art. 1219 of the Civil Code), the contract being in a state of 'quiescence'.
Whether it was foreseen (expressly or implicitly) for the delivery of the goods[9] a essential term (Art. 1457 of the Civil Code), the relationship will be terminated as of right once the term has expired.
If, on the other hand, the time of delivery of the goods is not essential, the contractual relationship is extinguished if the impossibility continues until the purchaser can no longer be considered obliged to perform, or if the purchaser's interest in obtaining performance ceases to exist.[10] The purchaser's right not to terminate the agreement and to demand only a reduction of the price, if the performance is/can be only partially performed (e.g. delivery of only a single batch of the purchased goods), shall remain unaffected.
2.2. Can the distribution agreement be terminated because of the pandemic?
The subject of the dissolution of the distribution relationship has already been dealt with in this blog, and reference is made to that article for further discussion.
The termination of the sales (or distribution, as the case may be) licence agreement.
As explained (briefly) in the introductory part of this article, the party who "suffers" the temporary non-performance may terminate the relationship if it has no interest in the partial continuation of performance. Therefore, given that due to covid-19 the distribution relationship is interrupted for a term that may be more or less prolonged, the interest in the continuation of the distribution contract must certainly be calibrated taking into account mainly two factors: the actual duration of the event (in this case the pandemic) and the remaining duration of the contract.
As a general rule, it may be said that the more prolonged the effects of the restraint and the closer the natural expiry date of the relationship, the greater will be the possibilities of terminating the obligatory relationship. Of course, in this assessment, one must also take into account the indirect effects of the restrictive measures, which are linked to a reasonable expectation of one of the parties of the perpetuation of a very important decline in trade even after the end of the blockade.
Furthermore, if one of the parties is contractually obliged to incur high costs for maintaining the distribution relationship (rent, employees, showroom, etc.) that make the collaboration no longer de facto sustainable, it may consider terminating the relationship for excessive onerousness pursuant to Art. 1467 of the Civil Code.
In this case, the party against whom termination is sought may avoid it by offering (Art. 1467(3) of the Civil Code) to modify the terms of the contract in an equitable manner so as to bring the relationship between the performances within the limits of thenormal alea of the contract.
2.3. Can the parties not respect the non-competition agreement?
The covenant of competition in distribution (and agency) relations may be agreed in two ways, namely:
- the manufacturer undertakes to supply only the distributor in a given territory;
- the distributor undertakes to purchase certain products only from the manufacturer.
If, because of covid-19, the manufacturer can no longer supply its distributor because it has been placed under a production freeze, i.e. the distributor can no longer perform because of the freeze, even though the manufacturer has the possibility of supplying it (e.g. because it had in stock the material), the question arises as to whether the party that no longer has an interest in maintaining the non-compete obligation due to a fact attributable to the other contracting party may decide not to perform its obligations by using the legal means referred to above.
On the assumption that the law does not provide for any obligation of the parties to renegotiate the original contractual arrangement,[11] the existence of a principle authorising one party to oblige the other to modify the contract in the interests of rebalancing cannot be inferred.
It follows that a temporary suspension of the non-compete clause (in the writer's opinion) is not legally foundedif this does not result from an agreement of both parties. Conversely, if the prohibition of 'competing' activities for the period in question creates unsustainable conditions, one may possibly consider terminating the contractual relationship on the ground of supervening impossibility or excessive onerousness.
2.4. Should advertising budgets be provided and spent as agreed even if distribution is not possible due to the pandemic?
If one of the parties is contractually obliged to incur fixed costs for marketing and advertising, might find itself in the position of deciding not to incur such expenses, believing that they are not necessary due to the halt in production.
In order to understand whether (and which) marketing activities can be blocked, it is necessary to analyse the nature of the individual advertising/marketing activities. It can tend to be said that all those 'general' activities that serve to maintain the brand positioning within the market, must be carried out even in the event of a distribution blockade, as they are in fact necessary prior to reopening.
A different reasoning should be made on the activities of marketing relating to sales actions that cannot be performed during the pandemic. In such a case, the problem is not so much that those performances cannot be performed (and thus permit the invocation of supervening impossibility), but rather the fact that they do not bring any commercial advantage to the party promoting them; moreover, very often those expenses will not burden the party obliged to bear them so much economically that they can sustain the breach of the contractual equilibrium and thus permit the invocation of the supervening excessive onerousness of the performance.
In such a case, if the parties fail to reach an agreement, the party obliged to perform the promotional activity may have as its only (rather blunt) weapon the decision not to perform and thus not to carry out such activities, relying essentially on the fact that the non-performance may be deemed by the court (having regard also to Art. 91 of the above-mentioned Decree) to be of minor importance (Art. 1455 of the Civil Code), taking into account that the performance would not have brought any commercial advantage to the parties in any event.
3. Effects on agency contracts
3.1. Does the principal still have to pay a fixed commission/expense reimbursement, if contractually agreed?
Especially in agency contracts, it is often stipulated that the entrepreneur pays a monthly fixed amount (as reimbursement of expenses, or as a fixed commission) to which a variable part is normally added.
In this period, since the promotion activity has in fact been largely blocked, one wonders whether the principal might decide to remove (at least this phase) this fixed part.
As noted above, although the law does not provide for an instrument entitling a party to unilaterally modify the contract, it is not at all atypical to find in agency contracts contractual clauses conferring on the principal the potestative right to unilaterally modify the agent's commissions, territory and/or customers.
Cf. Unilateral changes to the agency contract by the principal.
According to the prevailing view of the Court, the granting of this power to the principal must "be justified by the need to better adapt the relationship to the needs of the parties as they have changed over time".[12] It may therefore be held that the adjustment of the commission fee on account of covid-19 can only be legitimately implemented if there is a contractual clause providing for such an option on the part of the principal, who will in any event be obliged to avail himself of it in a reasonable and appropriate manner.
It is a different matter, however, if AECs apply to the agency agreement, which confer on the one hand the possibility of the principal to modify the agent's commissions, but on the other hand the right of the agent to reject the modifications and terminate the relationship for cause if those modifications are significant (on this topic see commission changes based on AECs). It is argued that this rule cannot be altered in favour of the principal even taking into account the impact of the covid-19 on the principal's sales network, who must be aware that any change in the commission may lead to a termination of the relationship for cause by its agent.
3.2. What should agents do if they cannot visit their customers?
It is clear that if the agent can no longer visit his customers, he will not be forced to do so; moreover, if before the pandemic he did not carry out any promotion activities online and was not contractually obliged to do so, the principal will certainly not be able to impose disproportionate efforts on his agent by requiring the latter to engage in 'telematic' promotion by using new computer tools.
3.3. What are the consequences of not reaching the turnover minimums due to covid-19?
In recent years, the jurisprudential orientation is becoming more and more established[13] which, while confirming the unquestionable applicability of the general rule under Article 1456 of the Civil Code on the subject of express termination clauses, nevertheless specified that in order to legitimately activate the relevant termination mechanism, the court must in any event ascertain the existence of a serious breach, constituting just cause.[14]
Cf. The 'minimum turnover' clause in the agency contract.
Following this orientation, the failure to reach the minimum turnover due to covid-19, cannot be considered in itself as a breach such as to legitimise a termination of the relationship due to an act attributable to the agent, with the judge having to assess on a case-by-case basis the actual imputability and culpability of such non-compliance.
3.4. Does the commercial agent retain the right to commission if the customer terminates the contract with the principal because of the coronavirus?
If the customer terminates the contract with the principal because of the coronavirus (e.g. because his shop had to close or his carriers stopped), the question arises whether the commercial agent loses the right to commission under Art. 1748 of the Civil Code.
The current Art. 1748(6) of the Civil Code provides that the agent is obliged to return the commissions collected in the sole event that the contract between the principal and the third party has not been performed for reasons not attributable to the principal (a rule that is, inter alia, mandatory for the parties).
The notion of a cause attributable to the principal has been understood as any intentional or negligent conduct of the principal that resulted in the non-performance of the contract.[15]
Since the customer's breach of contract due to impossibility and/or supervening excessive onerousness of performance (due to the coronavirus) is not a fact attributable to the principal, the agent will not be entitled to receive the commission on such business and will be obliged to return it to the principal if it has already been paid in full or in part.
3.5. The repercussions on severance and termination payments.
As is well known, the parties have the right to terminate the relationship by giving the other party notice. The agent upon termination of the contract is entitled to a severance payment, unless:
- the principal terminates the contract for an act attributable to the agent;
- the agent terminates the contract for an act attributable to the agent.
Taking the above into account, it can be reasonably argued that the arguments made in the previous paragraph "Can the distribution agreement be terminated due to the effects of the Corona pandemic?"may, in principle, also be valid for the agency contract, although one should be aware that it is nevertheless necessary to act with the utmost care and awareness before terminating the contractual relationship, assessing prudently on a case-by-case basis.
One thing, however, is certain, that this pandemic will have a significant effect on the calculations of severance pay and loss of notice for all terminations of contracts that occur close to the arrival of the pandemic.
If those indemnities were to be excessively distorted due to the economic framework connected with covid-19, the question arises whether the agent may supplement them by availing itself of the right guaranteed by Art. 1751(4) of the Civil Code, which grants the agent the right to claim damages in addition to those indemnities.
The prevailing view holds that the damages that the agent may claim in addition to the indemnity are only those from default or tort.[16] It follows that it will be very difficult for the agent to claim further sums beyond those paid to it by way of termination indemnities, given that the decrease in turnover (which led to the decrease in indemnities) is unlikely to be attributable to fault on the part of the principal.
[1] Urgent measures to contain the infection throughout the country.
[2] Limatola, News on agency contracts in April 2020.
[3] Trabucchi, Institutions of Civil Law, § 310, CEDAM.
[4] Torrente - Schlesinger, Handbook of Private Law, §210, Giuffrè Editore.
[5] In that case the debtor's financial difficulties will not be relevant in any event, on this point see Gazzoni, Manuale di diritto privato, Edizioni Scientifiche Italiane.
[6] Cass. Civ. 2016, no. 22626.
[7] On this point, see Vertucci, Non-performance of obligations in the time of the coronavirus: first reflections, ilcaso.it
[8] Vertucci, op. cit.
[9] See Cass. Civ. Cass. of 2013, no. 3710: essentiality is a characteristic that must result either from the express will of the parties or from the nature of the contract.
[10] See on this point Studio Chiomenti, Impact of Covid-19 on contracts.
[11] See on this point Vertucci, op. cit.
[12] Cf. Cass. Civ. 2000, no. 5467.
[13] Cass. Civ. 2011, no. 10934, Cass. Civ. 2012, no. 8295.
[14] Venice, Il recesso, la giusta causa e la clausola risolutiva espressa nel contratto di agenzia, March 2020, La consulenza del lavoro, Eutekne.
[15] Toffoletto, The Agency Contract, Giuffrè.
[16] Bortolotti, Termination Indemnity and Compensation for Further Damage, www.mglobale.it
But are online platforms commercial agents?
In theprevious article tried to go
outlining the legal nature of platforms online, retracing
the reasoning path taken by the Court of Justice in the recent
Uber sentences Spain[1], Uber France[2] and Airbnb Ireland[3].
From the study of this
decisions it is impossible to classify platforms online
all within the same legal category, each time having to
evaluate each individual reality, based on the services it offers: the Court
recognised that the Uberpop service, provided by the platform of the same name, should
be qualified as a transport service, while it excluded that the
intermediary service provided by Airbnb could be framed as a
real estate agency relationship, but rather as a 'service
of information societies".[4]
The Court arrived at these
conclusions by analysing in great detail the services of
intermediation that the two platforms concretely provide, starting from the
assumption that, in order to delineate the legal nature of such entities, it is
it is necessary to identify the''main element" that characterises them
through a detailed study of the services provided. In the Uber ruling
reads in fact that:
"the brokering service under discussion [must] be considered as an integral part of an overall service of which the main element was a transport service, and therefore did not qualify as an 'information society service'.[5]
It follows that,
regardless of the qualification given to the relationship by the parties, is
necessary to go from time to time to verify what is the actual
characterising factor of collaboration.
It can reasonably be said that the maxim enunciated by the Court (after all) does not depart too much from national principles on the interpretation of contracts under Art. 1362 et seq. of the Civil Code, according to which a legal transaction must be framed by taking into account what is the actual will of the contracting parties, giving greater weight to the concrete manner in which the relationship is conducted: the nomen juriswhile remaining an element of necessary evaluation,[6] does not constitute a constraint on the judge called upon to decide the concrete case, who remains free to reclassify the relationship by conferring on it the legal character that he considers to be the most correct.[7]
(Cf. on this point: difference between agent and employee, difference between agent and business intermediary, difference between agent and distribution contract).
It is clear, therefore, that if
it is to be understood whether the brokering activity performed by
a platform online can be framed as an agency relationship,
one must not only verify whether the parties have attributed to the relationship
aforementioned qualification, but also to investigate what their common intention was, going
to identify the main element characterising the activity of
brokerage.
The starting point for this interpretation is to determine what an agency contract is; the definition of agent given in Art. 1742 of the Civil Code certainly comes to our aid:
"With the agency contract, one party assumes the task on a permanent basis
to promote, on behalf of the other, against remuneration, the conclusion of
contracts in a given area."
To simplify, the basic elements of such a contract are:
- the promotion of contracts (both goods and services);[8]
- the stability of the assignment;
- the onerousness of the contract;
- autonomy.
In any event, one may go so far as to state that the most typical activity of all those listed above is certainly that of business promotion, to be understood as the work of (steadily) searching for and convincing the potential client, destined to lead in the event of success to the conclusion of a contract between client and principal.[9]
That being said, if agency activity were to be limited to sales promotion, understand whether the intermediation of a platform online can be brought under this contractual scheme would be almost straightforward. In any case, the issue becomes more complicated if one takes into account the fact that the promotion of the deal does not exhaust the tasks exercised by the agent, which normally include a number of preliminary or collateral activities, very often ancillary to the agency contract and functional to it.
The agent must first identify the potential customer, contact him/her and explain the typical characteristics of the products; he/she may be required to hold the principal's products in stock and subsequently deliver them to the buyer, participate in the advertising campaign, as well as be entrusted with the post-sales; he may also carry out technical product support, or be asked to organise and lead an underlying sales network.[10]
(Cf. Agent and/or Area Manager? A brief overview)
As if this were not enough, ancillary activities to the agency contract may also include verifying the correct display and presentation of products at the point of sale, as well as controlling the flow of purchases made there (so-called "sales"). sell out e sell in).[11] In line with this guideline, the Supreme Court has even found it compatible with the agency relationship to perform anancillary activity of "merchandising"namely
"a contract having as its object
object [the choice of modalities for] displaying products in spaces and
on the sales counters of a department store or shopping centre,
in order to make the products themselves more attractive to consumers. "[12]
In summary, case law considers compatible with the agency contract a whole series of complementary activities to the principal one of business promotion, provided (and with the limitation) that such services are not predominant and thus not such as to change the typical cause of the relationship.[13]
Applying the above principles to the electronic marketplace and more specifically to the world of platforms online, it may reasonably be argued that the intermediation activity carried out through such an intermediary may potentially fall within the contractual scheme of the agency contractnot only if the platform performs only a sales promotion activity, but also if it offers further ancillary services, provided that they do not prevail over the main activity.
This
approach, in the writer's opinion, would also be in line with the
case law of the Court of Justice referred to above, taking into account that
this, in ascertaining whether or not the Airbnb platform could be
framed as a 'real estate agent' explicitly took into account the fact
that the main element characterising brokering activities were
related additional services[14] which, although they constituted
"an integral part of a global service"[15]were not such as to
distort the characterising activity provided by Airbnb.
While it is considered that in principle a platform online can work as a commercial agent, it is certainly a very complex task to try to adapt legal principles and jurisprudential guidelines that have been developed over the years solely on 'traditional' agency relationships to this type of market. An attempt will be made below to give the reader some hints that may help in carrying out this interpretative process, going back to the typical and accessory activities of the agency contract referred to above and attempting to understand whether and how they may be adapted to the market onlinealbeit in the knowledge that this is only food for thought on a new and very complex subject.
a) Sales promotion, customer identification and product illustration.
There is no doubt that the identification of a customer within an area can be done through the use of electronic tools such as the SEO[16]product illustration can be rendered through the use of photos, films, descriptions, as well as of live chat prepared directly by the platform, either by personnel assigned to this task (internal or external to the platform), or by automatic response programmes that use algorithms to detect the most frequent questions from customers.
b) Participation in the advertising campaign.
Again, the advertising campaign can be utilised through the use of very accurate digital tools integrated with the platform: think of the best known tool, namely Google Adwordswhich makes it possible to identify in a very precise and detailed manner not only the type of user (and therefore potential customer) towards which an advertising campaign should be directed, but also delimiting the territorial area where to direct such promotions (a means to comply with any zone limits that may be imposed on the platform/agent by the principal)
(Cf. Area exclusivity in the agency contract).
c) Merchandising and sell in and sell out activities of online platforms.
It is certainly not unusual for a platform online can take maximum care of the correct display and presentation of products on its site, automatically suggesting certain products to customers who have already made purchases, or to potential customers on the basis of searches made by them on Google. In addition, the activity of controlling incoming and outgoing sales is very often used as an default from different platforms, which indicate to the user the availability of the products offered on the platform.
d) Storage activities.
This service is also often rendered by many platforms onlineplatform, as it allows companies using the platform to relieve themselves of managing a logistical activity that (particularly with regard to retail) requires a know-how highly developed, which they often do not possess, i.e. they do not have sufficient resources to manage it.
e) Remuneration or commission: commercial agents?
It is very common for a platform to be remunerated by the payment of a percentage of the amount of the completed transaction; this element may also be considered as an indication of a relationship within the scheme of agency, since such remuneration may be framed as a commission on the conclusion of the transaction (pursuant to Art. 1748 of the Civil Code).
(Cf. The agent's right to commission).
It is clear that only a few elements characterising the agency relationship have been briefly developed above, and other equally (if not even more) important points of this type of contract have not been analysed (e.g. the relationship of interdependence between platform and producer, representation, possible social security repercussions, etc.), since this would certainly require a more in-depth analysis. It should be noted, however, that the purpose of this article was certainly not to conduct a comprehensive analysis of this issue, but merely to draw attention to a subject that is as important as it is topical.
In light of the above, not only can it not be excluded that platforms online can carry out the activity of commercial agents, but it is likely that already some platform online is in fact carrying out this activity, without having been classified as such.
In any case, considering the potential of the network and the services that can be rendered through this medium, perhaps we should start thinking that the electronic marketplace should not a priori be considered an 'enemy' tool to the agency relationshipbut rather a means of expanding and enhancing the commercial capabilities of agents and companies. In all likelihood, this model should be increasingly encouraged and possibly integrated within the sales brokerage strategies of the distribution networks of national companies.
[1] Judgment of 20 December 2017, Associación Profesional Elite Taxi vs. Uber Systems
SpainSL.
[2] Judgment of 10 April 2018, Uber France
s.a.s.
[3] Judgment of 19.12.2019 Airbnb
Ireland UC vs. Association pour un hébergemen et un tourisme professionnels.
[4] if you search
within European legislation, the only definition we are given is
that of "online brokerage"referred to in Article 2 of Regulation 2019/1150[6]This standard qualifies
such activity as that performed by the "company services
information', pursuant to Article 1(1)(b) of the directive 2015/1535[7]in turn taken up
by Article 2(a) of the Directive 2000/31[8] on trade
electronic.
[5] Uber Judgment No. 40.
[6] Cass. civ. Sec.
Labour Ord., 2018, no. 18262.
[7] Among many, cf.
Milan Labour Court, 26 October 2017.
[8] Interesting
consider that the directive
86/653 on the coordination of Member States concerning the
agency, only covers agents promoting sales contracts
of goods, whereas our law covers the brokering of any
contract, including the provision of services. The Court of Justice Poseidon
Chartering,Judgment 16.3.2006However, it recognised the
possibility for member states to include the
agency contracts also the provision of services. On this point cf.
Bortolotti, Contracts
of distribution, p. 106, 2016, Wolters Kluwer.
[9] Bortolotti, p. 106,
op. cit.
[10] On the subject of activities
ancillary to the agency contract, cf. Venezia, Il contratto di agenzia, p.
600, 2015, Giuffrè Editore.
[11] Bortolotti,
p. 106, op. cit.
[12] Cass. civ. Sec.
labour, 2004, no. 6896.
[13] On this point Cass. Civ.
2006, no. 1308, Bortolotti, op. cit., p. 118 et seq.
[14] I
services taken into account are those referred to in paragraph 19 of the judgment
i.e. 'In addition to the service of putting landlords and
lessees via its electronic platform of centralised
offers, Airbnb Ireland offers hosts a number of other
services, such as a scheme defining the content of their offer, in
option, a photography service, likewise as an option, insurance for
liability as well as a guarantee for damages up to an amount of
to EUR 800 000. In addition, it provides them with a service
optional to estimate the price of their rental in the light of the averages of
market derived from said platform. [...] Airbnb Payments UK holds the
funds on behalf of the lessor after which, 24 hours after the lessee's entry
in the accommodation, it transmits them to the landlord by bank transfer, thus enabling the
lessee to have the certainty of the existence of the asset and to the lessor the
payment guarantee. Finally, Airbnb Ireland has set up a system
by which the lessor and the lessee can make a judgement
by means of a vote ranging from zero to five stars, a vote that can be consulted on the
electronic platform in question.'
[15]
Airbnb Ireland Judgment, No. 54.
[16] SEO stands for Search
Engine Optimisationor "search engine optimisation".
This term is used to refer to all work and
implementations necessary for a website to have the structure and
content that is easy for search engines to index.
The legal nature of online platforms: the Uber and Airbnb cases
With the Airbnb and Uber judgments, the Court of Justice ruled on the legal qualification of two very important online platforms. In this article, we are going to understand to what extent an online platform can be qualified as an 'information society' and when not.
One of the founding principles of the EU internal market is the free movement of goods and services. As we have already discussed some of the problems that the European legislator has had to deal with in trying to find a balance between the principle of free trade in goods and the interest of producers in creating competitive distribution networks (The mixed system: when the manufacturer chooses to adopt both exclusive and selective distribution), this article intends to focus attention on how the principle of free movement of services coordinate with the operation of platforms onlinewhich increasingly characterise the economic fabric of the internal market.
To do so, one must probably start from the origins of European law, which, with the introduction of the internal market (Art. 26 of the TFUE), aimed at guaranteeing any entity operating in a Member State to carry out an economic activity in another Member State (Art. 54 - Freedom of establishment) and offer its services there (Art. 56 - Services)[1].
With the 2006/123/EC[2] (relative
services in the internal market) Europe wanted to strengthen the principle of the
freedom to provide services[3], considering
that the pursuit of this objective "aims to establish increasingly
between the states and peoples of Europe and to ensure economic progress
and social"[4]as well as
to eliminate "barriers in the internal market [that] prevent the
providers, in particular small and medium-sized enterprises, to expand beyond the
national borders and make full use of the single market. "[5]
To understand whether the services offered by the platforms online, who increasingly play the role of intermediaries with the end user, fall under the definition of 'services" referred to in Article 56 TFEU and Article 4 of Directive 2006/123 and are therefore addressees of the protections guaranteed by those rules, it is first necessary to give a definition of 'platform online". Indeed, if one searches within the European legislation, the only definition provided to us is that of "online brokerage"referred to in Article 2 of Regulation 2019/1150[6]this rule qualifies this activity as that performed by "information society services', pursuant to Article 1(1)(b) of the directive 2015/1535[7]which in turn is taken from Article 2(a) of the Directive 2000/31[8] on e-commerce.
It is therefore at the term 'information society service" that one must resort to in order to begin to give legal status to such entities; it is qualified (by the above-mentioned directives) as any service "normally provided for remuneration, at a distance[9]electronically[10] and at the individual request of a recipient of services."
The EU after having defined, albeit generically, the concept of information societywith Directive 2000/31 considered it appropriate to ensure that the free market for services is also ensured for entities operating online and, in order to induce Member States to remove restrictions on the cross-border movement of services rendered by the information societyArticle 2 stipulated that Member States may not adopt measures restricting this exercise unless they are necessary for reasons of public policy, public health, public security or consumer protection (Art. 3).
Furthermore, it provided that the Member State must (subject to nullity of the measure)[11] having previously notified the Commission and the Member State in whose territory the service provider in question is established of its intention to take the restrictive measures in question (Article 3(b), second indent).
It follows from this that it is of paramount importance to understand whether a platform online may or may not be qualified as information societysince only in the latter case will the person enjoy the above-mentioned specific protections recognised by European law on the free movement of services.
On this point, it should be noted that the Court of Justice was recently asked about this very issue, in relation to the mediation services provided by the digital platforms Uber Spain, Uber France and Airbnb Ireland. We will now briefly analyse these rulings in order to try to understand what is the ratio which led the Court to take opposite decisions on (apparently) very similar situations.
1. The Uber Spain and Uber France cases.
With two 'twin' decisions, Uber Spain of 20.12.2017[12] and Uber France of 10.4.2018[13]the Court of Justice was called upon to decide whether the UberPop service, which is provided via an international platform, should be assessed as transport service and in that case subject to national legislation making the carrying out of that activity conditional on the hauliers obtaining a licence, or a service of the information societywith the consequent requirement of prior approval by the Commission of national regulatory measures prohibiting such activity.
The European Court of Justice in its first analysis acknowledged that:
"an intermediary service enabling the transmission, by means of a smartphone application, of information relating to the booking of a transport service between the passenger and the non-professional driver, who, using his own vehicle, will carry out the transport, meets, in principle, the criteria to be qualified as an 'information society service'."[14]
In any case, the
Court continues its reasoning by analysing in a
detailed what brokerage services actually are
provided through the use of the Uber application, noting that the company did not
is limited merely to putting in contact (and thus mediating) the
carrier and the transported, but also:
- select non-professional drivers
using their own vehicle and with the help of theapp of Uber,
provide a transport service to persons intending to make a
movement in the urban area, which otherwise they could not have resorted
to these services; - fixed if nothing else the price
maximum running; - receives payment of the customer and subsequently
pays it to its driver; - exercises control on the quality of
vehicles and their drivers and their behaviour; - in some cases may exercise against
their drivers exclusion from service.
The Court, having analysed the report in its entirety, therefore came to the conclusion that:
"the brokerage service in
discussion [must] be considered as an integral part of a service
total of which the main element was a transport service, and
therefore fulfilling the qualification of 'information society service' not
[...] but to the service aspect of 'transport quality'.Pursuant to
Article 2(2)(d) of Directive 2006/123'.[15]
In view of this
legal classification of the service provided by Uber, the Court held
legitimate regulatory measures that the Spanish and French states had
enacted to prohibit and repress the exercise of this activity, taking into account
that transport services are explicitly excluded from the scope of
implementation of directive 2006/123[16] (and therefore
neither subject to the obligation to inform the Commission under Article 3
of Directive 2000/31).
2. The caso Airbnb of 21.12.2019
The same procedure
argumentation was followed by the Court in a similar case,[17] where one
found itself engaged in deciding on the legal framework of the
intermediation service provided by Airbnb Ireland through the
its electronic platform, with which they are put in contact, behind
remuneration, potential tenants with landlords, professional or otherwise, who
offer short-term accommodation services.
The issue had arisen because the French Association for Accommodation and Professional Tourism (AHTOP) had filed a complaint against Airbnb Ireland, complaining that the Irish-registered company was carrying out a real estate mediation activity on French territory, which is subject under domestic law (Law Houget) to a licensing obligation.
Airbnb Ireland, denying that it was acting as a real estate agent, entered an appearance claiming the right to freedom of establishment and arguing that the law was inapplicable to it Houget because of its incompatibility with Directive 2000/31, claiming to operate in French territory only as information society.
The Court, echoing what was decided in the previous Uber rulings, again affirmed the principle of law that in order to be able to recognise the legal nature of information societyit is not enough that they are only if the four conditions are met cumulative as referred to in Article 1(1)(b) of the aforementioned Directive 2015/1535, but it is also necessary to verify whether it appears that:
"said
mediation service is an integral part of an overall service the
which main element is a service to which a different
legal qualification".
The Court held that the services provided by the platform related to presenting offers in a coordinated manner, with the addition of tools for searching, locating and comparing them, constitutes themain element of the service and cannot therefore be considered merely ancillary to a service to which the different legal guise of provision of accommodation must be applied.[18] In contrast, all these services (analysed in detail in recital 19 of the judgment)[19] represent the real added value of the electronic platform that allows it to stand out from its competitors.[20]
Following this reasoning, the Court held that Airbnb Ireland cannot be classified as a real estate agentThe purpose of its activity is not only to rent accommodation, but to provide an instrument facilitating the conclusion of contracts concerning future transactions. It is stated on this point that:
"a service such as that provided by the
Airbnb Ireland is not at all indispensable to the realisation of
accommodation services from the point of view of both tenants and landlords
who have recourse to it, since both have numerous other channels [...].
The mere fact that Airbnb Ireland enters into direct competition with
the latter channelsproviding its users, i.e. both landlords and
to tenants, an innovative service based on the particularities of a business
information society business does not allow us to derive from this
the indispensable character for the provision of a service of
accommodation."
Given the legal nature of Airbnb Ireland's information societythe Court declared that it was not subject to the licensing requirement imposed by French law (Loi Houget), as restricting the free movement of services, also noting that this regulatory measure had in any event not been notified to the Commission in accordance with Article 3 of Directive 2000/31.
Very interestingly, the Court came to a different decision to the Uber case, recognising the nature of information society serviceon the assumption that Airbnb Ireland does not exert a decisive influence on the conditions of the provision of accommodation services to which its mediation service relates, taking into account that the same neither directly nor indirectly determines prices of lettings, nor does it carry out the selection of landlords or accommodation offered for rent on its platform.[21]
From the study of the two judgments, it can therefore be seen that it is the independence and the failure to control on the entity using the electronic platform to promote its service, a central element in understanding whether the platform online whether or not it provides an intermediary service, which can be classified as service of information society and that this must be assessed by analysing the relationship in its entirety.
The above rulings are certainly of great significance not only from a legal point of view, as they lay the foundations for framing figures who increasingly occupy a fundamental role in our economic and social fabric.
[1] Art. 56
TFRUE "Within the framework of the following provisions, restrictions on the free
provision of services within the Union are prohibited in respect of the
nationals of Member States established in a Member State other than the one
of the recipient of the service. "
[2] Directive
2006/123/EC of the European Parliament and of the Council of 12 December 2006,
on services in the internal market.
[3] This directive
defines in Art. 4(1) as "service' means any activity
unpaid economic activity referred to in Article 50 of the Treaty provided normally
against remuneration. "
[4] Id.
Recital 1.
[5] Id.
Recital 2.
[6]
Regulation of 20 June 2019, promoting fairness and transparency for the
commercial users of online brokering services, effective as of
from 12.7.2020.
[7]
Directive that repealed and replaced the previous directive
98/34/ECwhich defined services
[8]
Directive 2000/31/EC of the European Parliament on certain legal aspects
of information society services, in particular trade
electronic commerce in the internal market ('e-commerce directive')
[9] La
directive definesremotely"a service provided without the
simultaneous presence of the parties.
[10] La
directive defines: "electronically": a service sent originally
and received at destination by means of electronic processing equipment
(including digital compression) and data storage, and that it is
entirely transmitted, forwarded and received by wire, radio, optical means
or other electromagnetic means.
[11] Cf.
on the point Judgment
of 19.12.2019 Airbnb Irland UC vs. Association pour un hébergemen et un
tourisme professionnels (AHTOP).
[12] Judgment
of 20 December 2017, Associación Profesional Elite Taxi vs. Uber Systems
SpainSL,
[13] Judgment
of 10 April 2018, Uber France s.a.s.
[14] Id. 19
[15] Id. 40.
[16] Cf.
Art. 2(2)(d) Directive 2006/123
[17] Judgment
of 19.12.2019 Airbnb Ireland UC vs. Association pour un hébergemen et un
tourisme professionnels.
[18] Judgment
of 19.12.2019 Airbnb Irland UC vs. Association pour un hébergemen et un
tourisme professionnels (AHTOP), No. 54
[19] Id. In
recital 19 lists in an analytical manner the services actually offered by
Airbnb that are "In addition to the service of connecting
landlords and tenants via its electronic centralisation platform
of the offers, Airbnb Ireland proposes a number of other
services, such as a scheme defining the content of their offer, in
option, a photography service, likewise as an option, insurance for
liability as well as a guarantee for damages up to an amount of
to EUR 800 000. In addition, it provides them with a service
optional to estimate the price of their rental in the light of the averages of
market from that platform. Moreover, if a lessor accepts a
lessee, the latter transfers to Airbnb Payments UK the price of the
lease to which must be added an amount, ranging from 6% to 12% of said
amount, by way of fees and service charged to Airbnb Ireland.
Airbnb Payments UK holds the funds on behalf of the lessor after which, 24
hours after the tenant enters the accommodation, it transmits them to the landlord
by bank transfer, thus enabling the tenant to be sure of the existence
of the asset and to the lessor the guarantee of payment. Finally, Airbnb Ireland has
established a system whereby the lessor and the lessee can
make a judgement by means of a grade ranging from zero to five stars, grade
available on the electronic platform in question. "
[20] Id. 64
[21] Id. 68
License Agreement and Antitrust Law: The Hello Kitty Case.
Can the manufacturer block the sales of its licensee? Is the licence agreement subject to antitrust law? Some answers from the Hello Kitty, Campari and Grundig case studies.
For decades, the European legislator has had to resolve the potential conflict that exists between competition rules, which oppose any measure that could restrict the free market within the EU, and protecting the owners of intellectual property rights to dispose exclusively of the property they hold.
This raises the question of how and to what extent competition rules and IPR enforcement can limit each other.
The approach that has been adopted by the European legislator from the outset has been to assign a central role to the creation of a large unified economic area[1] and, on the other hand, provide (with theArticle 36 TFEU) that the protection of industrial property may also derogate from the prohibition of restrictions on the import, export and transit of goods, provided that
"such prohibitions or restrictions do not [constitute] a disguised restriction on trade between Member States. "
In the following, an attempt will be made to retrace, in extreme synthesis, what has been the process of regulatory and jurisprudential harmonisation followed by the European institutions, aimed at finding a balance between apparently contradictory rules.
1. Licence agreement and antitrust law from the 1960s to the present.
As far back as the 1960s, the European Court of Justice for the first time took note of this potential conflict between the existence of IPRs (which are certainly not called into question by EU law) and their exercise, which may be limited by the competition rules of the Treaty in Article 101.
This milestone is represented by the case Grundig[2] (already briefly analysed under the aspect of the parallel sales within the EU): a producer (Grundig) had agreed with its French licensee (Costen), to have recourse to an instrument recognised to it by French national law (the registration of a trade mark of the soc. Grundig in favour of Costen), in fact with the one and only purpose of insulating this territory from parallel sales of products Grundig in France, thus ensuring absolute exclusivity for the licensee. The Court held that this agreement was null and void as contrary to European competition law:
"Article 36, which limits the scope of the trade liberalisation rules contained in Chapter 2 of Title I of the Treaty, cannot restrict the scope of Article [101].. "
In practice, although the agreement between the parties did not infringe the rules of domestic industrial law, the Court found it unlawful because it had de facto led to the isolation of the French market, allowing prices to be charged for products that were not subject to effective competition.
In the 1970s, the Court confirmed this principle in the judgment Siren,[3] where it is again confirmed that:
"Articles [101] and [102] of the Treaty do not preclude the existence of a right to exclusive use of a trade mark which has been conferred on it by a Member State. However, the exercise of that right may fall under those articles if the conditions are met. "
Again, with the case Bitter Campari 1977,[4] the Commission found Article 101 applicable to a trade mark licence agreement, through which the manufacturer had granted its licensees the right to manufacture the licensed products in strict compliance with the licensor's instructions, as well as to manage their marketing, albeit with severe export restrictions.
The Commission, considering the contract subject to discipline antitrustgranted the agreement an exemption formerly Article 101 § 3, considering that the limitations imposed by Campari-Milan to their distributors contributed
"to improve the production and distribution of products, [to] refine manufacturing techniques [...], to build new factories, [as well as to] intensify its brand promotion efforts [doubling] its overall sales volume."[5]
Subsequently, in the 1990s and 2000s, the Commission again considered trademark licensing agreements as a distribution agreement in cases Mooesehead/Whitbread[6] e Der Grüne Punkt,[7] thus effectively reinforcing an already established thesis.
This brought us to 2004, the year in which the Commission published the "Guidelines on the Application of Article 101"where she did not fail to reiterate the point she had already made several times,[8] arguing that IPR and competition are both necessary to foster innovations and ensure their competitive exploitation.[9]
In 2010, the Regulation 330/2010which introduced with Art. 2 § 1 the so-called principle of the".universal exemption", according to which all restrictions of competition, which are not expressly prohibited, are permitted. In particular, in Article 2 § 3 the European legislator wanted to "put in black and white" that the exemption also extends to "provisions concerning the assignment to the purchaser or use by the purchaser of intellectual property rights'. which have, however character "accessory[10]. "
The ancillary character of the IPR, as opposed to the commercial element, is a very relevant interpretative tool to understand which IPR licensing contracts fall within the scope of the Block Exemption Regulation. The Orientations of the Commission clarified on this point that:
"the primary object of the agreement should not be the assignment of IPRs or the licensing of IPRs, but rather the purchase, sale or resale of goods or serviceswhile the IPR provisions are aimed at the execution of the vertical agreement.[11]
This implies that the relationship between the parties must have as its object (main) the buying and selling of goods and IPRs, on the other hand, the role (precisely 'accessory') of "facilitate the use, sale or resale of goods or services by the buyer or its customers".[12]
Thus, where a dismissal contract falls within the scope of Art. 101, the contractual limitation clauses on free competition contained therein, will be subject to the strict European discipline on the matter governed precisely by Regulation 330/2010.
This element of 'accessory' was found in a very interesting decision of 2019,[13] by which the Commission fined the Japanese company Sanrio EUR 6.2 million for having entered into licensing agreements for the production and marketing of products (including the well-known trademark 'Hello Kitty") that violated EU competition rules. The operative part of the decision states that Sanrio had introduced a number of direct measures to limit sales outside the territory of competence on the part of licensees, as well as measures to encourage indirectly compliance with restrictions on territories (e.g. the obligation to use a specific language on a product).[14]
2. Licence agreement and trade mark exhaustion.
After having briefly analysed what limits licensors may impose on exports and sales made by their licensees, we will now analyse whether and to what extent an IPR holder may oppose the parallel importation from another Member State of a product previously marketed there by his own licensee.
As has already been analysed, the European legal system guarantees the (fundamental) freedom of movement of goods; the child of this freedom is the principle of Community exhaustionintroduced with European Directive 2008/95/EC in Article 7 and transposed into Italian law by thearticle 5 c.p.i.[15] (on this point see article Online sales by unauthorised distributors. The Amazon, L'Oréal and Sisley cases.)
According to this principle, once the owner of one or more industrial property rights directly or with your consent market a good in the territory of the European Union, he loses the relevant exclusive rights. The exclusivity is thus limited to the first act of marketingwhereas no exclusivity can subsequently be claimed by the proprietor of the trade mark on the circulation of the product bearing the mark.
The decision-making practice of European jurisprudence has made it clear that consent is also given when the marketing is carried out by an undertaking controlled by the holder of the intellectual property right or by an undertaking, as a rule a licenseeauthorised to do so by the owner.[16] It reads,
"may oppose the importation from another Member State of products having the same appearance as the design applied for, provided that the products in question have been put into circulation in the other Member State without the intervention or consent of the holder of the right or of a person bound to him by a relationship of legal or economic dependence. "[17]
The situation would certainly be different, however, if the first placing on the market had been carried out by a third party, or if after the placing on the market there are legitimate reasons for the proprietor to object to the further placing on the market of the products, in particular when the condition of the products is changed or altered after their placing on the market.
In such cases, the legal system provides means of protection, which have already been the subject of a brief analysis (see article "Online sales by unauthorised distributors. The Amazon, L'Oréal and Sisley cases."), to which reference is made.
_______________________
[1] The Common European Market (ECM) was born on 25 March 1957 with the signing of the Treaties of Rome, which came into force on 1 January 1958.
[2] Judgment Grundig-Costen, 13.7.1966. In particular, the producer Grundig in order to ensure the isolation of the French market, as well as having imposed numerous contractual prohibitions to its dealer (the soc. Consten), had also resorted to IPR, concluding with Consten an agreement, whereby Grundig would have created a brand Gint (Grundig International) and that this trade mark would be filed in each Member State in the name of the exclusive licensee operating in the country in question (in the case of France, the company Costen); this mark would then be affixed to all equipment produced.
This would have had the de facto aim of hindering parallel imports within the various countries, since the importation (e.g. into France) of products bearing the mark Gintwould have constituted an infringement, since only the exclusive distributor in that country enjoyed the right to use that mark. On this point see PAPPALARDO, The Competition Law of the European Union, p. 870, et seq., 2018, UTET.
[3] Judgment of 18.2.1971.
[4] Decision Bitter Campari, 23.12.1977.
[5] Id. III, A, 1.
[6] Decision 23.3.1990.
[7] Decision 20.4.2001.
[8] Guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union to technology transfer agreements, No 7.The fact that intellectual property laws grant exclusive rights of exploitation does not mean that such rights are excluded from the application of the competition rules. Article 101 of the Treaty applies in particular to agreements whereby the holder licenses another undertaking to exploit its intellectual property rights."
[9] Id., n. 7 "In fact, both intangible property and competition law pursue the same general objective, i.e. to increase consumer welfare and to foster an efficient allocation of resources. Innovation is a dynamic and essential component of an open and competitive market economy. Intangible property rights foster dynamic competition by encouraging firms to invest in the development or improvement of new products and processes; competition acts in a similar way by pushing firms to innovate. Therefore, intangible property rights and competition are both necessary to foster innovations and to ensure their competitive exploitation. "
[10] PAPPALARDO, op. cit. p. 338.
[11] Guidelines on Vertical Restraints, n. 35.
[12] Id. n. 36.
[13] Decision of 9.7.2019.
[14] https://ec.europa.eu/commission/presscorner/detail/it/IP_19_3950.
[15] Art. 5(1) IPC (Exhaustion), "The exclusive faculties granted by this Code to the owner of an industrial property right are exhausted once the products protected by an industrial property right have been put on the market by the owner or with his consent in the territory of the State or in the territory of a Member State of the European Community or the European Economic Area."
[16] Exhaustion occurs when the protected product has been put on the market by the rightholder "with his consent or by a person bound to him by ties of legal or economic dependence" (Keurkoop, cit., no. 25). On this point See Pappalardo, Il diritto della concorrenza dell'Unione Europea, p. 875, 2018, UTET.
[17] Judgment Keurkoop, 14.9.1982.
Sale of assets, jurisdiction and Incoterms (Wx-Works, FCA, CTP and CIF).
How the inclusion of an Inconterms clause (ex-works, FCA, CIF) may affect jurisdiction in the case of the sale of movable goods? A brief overview of European legislation and developments in Italian and European case law.
1. Jurisdiction, Sale and Incoterms: A Brief Overview of European Legislation
In the case of the sale of goods within Europe, the parties may agree in advance which courts will have jurisdiction to decide on any disputes that may arise between them. This principle of forum-shopping is governed by Article 25 of the Regulation EU 1215/2012,[1] which provides as a condition of validity that the agreement conferring jurisdiction has been:
- concluded in writing or evidenced in writing;[2]
- in a form permitted by the practices established between the parties; or
- in international trade, in a form permitted by a usage which the parties knew or ought to have known and which, in that context, is widely known and regularly observed by the parties to contracts of the same type in the trade concerned.
If the parties have not expressly made that choice, jurisdiction will be governed primarily by the following principles:
- the general principle of the defendant's forum (Art. 4 of the Regulation) and
- the principle of the''performance of the obligation in courto' (Art. 7 of the Regulation).
With specific regard to this second option, Article 7 of the Regulation provides that a person domiciled in one Member State may be sued in another Member State:
- in contractual matters, before the court of the place of performance of the sued obligation;[3]
- For the purposes of the application of this provision and unless otherwise agreed, the place of performance of the obligation in suit is: in the case of the sale of goodsthe place, located in a Member State, where the goods have been or should have been delivered according to contract. "[4]
Reading this provision, it is not fully understood what is to be understood by "place of delivery"That is to say, whether that place is to be regarded as the place where the physical delivery to the seller took place, or whether the place of delivery to the carrier can be regarded as sufficient.
To solve this dilemma, the Court of Justice came to the rescue,[5] stating that:
"Article 5(1)(b), first indent, of Regulation No. 44/2001[6] must be interpreted as meaning that, in the case of distance selling, the place where the goods were delivered or should have been delivered under the contract must be determined on the basis of the provisions of that contract.
If it is not possible determine the place of delivery on that basis, without reference to the substantive law applicable to the contract,[7] such a place is that of the material delivery of goods by which the purchaser obtained or should have obtained the power to dispose effectively of those goods at the final destination of the sale transaction. "
2. Sale of goods, jurisdiction and incoterms: the pronouncements of the United Sections and the Court of Justice.
Italian jurisprudence has adapted to this principle: the United Sections of the Supreme Court of Cassation have established that on the subject of the international sale of movable goods, when the contract concerns goods to be transported (unless otherwise agreed by the parties), the "place of delivery"must be identified in the place of final delivery of goodsi.e. where the goods become materially and not merely legally available to the purchaser, resulting in jurisdiction
"of the court of the [place of final delivery of the goods] with respect to all disputes mutually arising out of the contract, including disputes concerning payment for the goods sold."[8]
Having established this principle, in 2011 the Court of Justice[9] a new question was submitted, namely whether in the context of the examination of a contract, in order to determine the place of delivery, the court should also take into account the Incoterms. The Court ruled as follows:
'the national court seised must take into account all the relevant terms and clauses of that contract which are capable of clearly identifying that place, including generally recognised terms and clauses enshrined in the customs of international trade, such as Incoterms ('International Commercial Terms'), drawn up by the International Chamber of Commerce, in the version published in 2000."
In particular,
"with regard to Incoterm "Ex-Works, [...] this clause also includes [...] the provisions of paragraphs A4 and B4, entitled "Delivery" and "Taking delivery" respectively, which refer to the same place and thus make it possible to identify the place of delivery of the goods."
The EU Court therefore ruled that the Incoterms, may be an element enabling the court to understand whether or not the parties have agreed on a place of delivery different from the final place of delivery. In particular, with the parties' acceptance of the term "ex-works Iconterms", the parties agree that the physical delivery of the goods must take place at the seller's place of business and, therefore, in the event that the parties do not agree, the court having jurisdiction will be that of the seller's place of business.
National jurisprudence has accepted this orientation, specifying, however, that the general principle of physical delivery can only be derogated from if this is apparent on the basis of a "clear and explicit' contractual determination. The Supreme Court[10] therefore denied that it can "the unilateral ex Works wording on invoices issued by the selling party takes on value," since this method of delivery must have been agreed upon by the parties.
The Court of Cassation, held that these characteristics of clarity, do not result from all the terms in the Incotermsin order to be valid also for the purposes of determining jurisdiction and, therefore, to take precedence, it must be clear, explicit and unequivocal.
It was therefore denied that the CTP clauses,[11] CIF[12] and FCA[13] manifest a clear and unambiguous will of the parties to determine the place of delivery of the goodsas an exception to the factual criterion of final delivery, since such clauses are rather intended to regulate the passing of risk on to the buyer.[14]
[1] Regulation that replaced the previous EU Regulation 44/2001.
[2] With reference to the written form, it "includes any communication by electronic means that permits a durable record of the agreement conferring jurisdiction" under Art. 25.2 of Reg. The Court of Justice has clarified that the purpose of this article is "that of putting certain forms of electronic communication on an equal footing with the written form, with a view to simplifying the conclusion of contracts by electronic means, since the communication of information is accessible via a screen.
So that electronic communication can offer the same guarantees, in particular with regard to evidence, it is sufficient that it is 'possible' to save and print the information prior to the conclusion of the contract. " (CG EU 21.5.2015, CarsOnTheWeb.Deutschland GmbH). The Un. sec. of the Supreme Court 2009 No. 19447They also held that the written form required by Article 23.2 of Reg. 01/44 could be supplemented by the recording of the invoices issued by the other party on the company's internal electronic systems.
[3] European case law has held that where there are several obligations arising from the same contract "the court seised, in determining its jurisdiction, will be guided by the principle that the accessory follows the principal; in other words, it will be the principal obligation, among the various obligations in quesitone, that will determine jurisdiction'. CJ EU 15.1.1987, Shenavai; 15.6.2017 Saale Kareda.
[4] This clause, likewise, incorporates that of Art. 5(1)(b) of Regulation 44/2001. In particular, with this provision the Community legislature intended to break explicitly, for contracts of sale, with the past solution whereby the place of performance was determined, for each of the disputed obligations, in accordance with the private international law of the court seised.
By designating the place of performance, the EU legislator wished to centralise jurisdiction at the place of performance and to determine a single jurisdiction for all claims based on the contract of sale. On this subject see also CJEU 3.5.2008, Color Drack. On this point see Pirruccio, Contracts unusable if Incoterms clauses are not explicit, Law Guide, 35-36, 2019, Gruppo24Ore.)
[5] Judgment Car. Trim GmbH C-381/08.
[6] This provision was also taken up by Article 7(1)(b) of Regulation 1215/2012.
[7] According to doctrine (Pirruccio(op. cit.) for the purpose of identifying the "place of delivery" of the goods, it is not possible to refer to the definitions of national law (such as Art. 1510 of the Civil Code), the application of which would risk defeating the purpose of the Regulation. Attention (!), the latter provision, on the other hand, may be used (at least as a defence) in the event that the sale is non-EU in character and, therefore, the Regulation does not apply: see Cass. Civ. 1982 no. 7040.
[8] Cass. Civ. Sec. Un. 2009 no. 21191, Cass. Civ. 2014 no. 1134. Attention(!) in case of non-application of European law (e.g. for sales extra EU): contra Cass. Civ. sez. Un. 2011 no. 22883.
[9]Judgment Electrosteel Europe SA - Case C-87/10.
[10] Cass. Civ. Order No. 24279 of 2014.
[11] Court of Padua, 3.5.2012.
[12] Cass. Civ. 2018 No. 32362.
[13] Cass. Civ. 2019 no. 17566.
[14] On this subject, see also http://www.membrettilex.com/ruolo-degli-incoterms-2010-nella-determinazione-del-giudice-competente/.
Selective and exclusive distribution: does the mixed system work?
What happens if a manufacturer applies a mixed system (selective and exclusive distribution) within Europe? What are the main advantages and disadvantages?
As has already been pointed out, the European legislator has always
committed to finding a balance between the principle of free trade of
goods and the producers' interest in creating distribution networks
competitive.
The compromise reached by the legislator is now governed by the Regulation
330/2010 on vertical sales, which determines which agreements between undertakings
belonging to the same distribution network are subject to the prohibition of
agreements imposed by theart.
101(1) of the European Treaty and which, instead, benefit from the exemption
from this prohibition (formerly Art. 103(3)).
In essence, the producer is given a choice between two modes
of distribution: a general one that can be used by any type of producer (the
exclusive) and a particular one for specific situations (the selective one) (cf.
on the point La
selective distribution. A brief overview: risks and benefits e Clauses
exclusivity and vertical economic agreements in the European context: e-commerce and
territorial exclusivity).
With the exclusive distributionsupplier divides the markets into
which it operates through the appointment of exclusive distributors, who undertake to
to purchase goods and promote their sale in a manner that tends to
free.
Article 4(a) of the Regulation provides, in fact, that the producer shall not
can restrict, neither directly nor indirectly,[1] the
power of the exclusive distributor to determine the resale price,
without prejudice to the possibility of imposing a maximum price or recommending a
sale price.[2]
The manufacturer will also not be able to prevent, formerly Article 4(a) of the
Regulations, which the distributor make
of active sales[3]
within the territory, without prejudice to the right to reserve for itself customers
management and prevent them from retailing, in order to maintain this
level of the commercial chain, as distinct from the retail level.[4]
Finally, the distributor shall also have the right to make
sales outside the territory, provided they constitute a response
to unsolicited orders from individual customers outside the
territory (cd. sales
passive).[5]
It is clear that such freedom of the exclusive distributor is often incompatible
with what are the interests of certain types of producers, in
particular of those in the luxury sector or who develop products that are technically very
complexeswho will be more interested in, rather than a
widespread distribution, to the fact that their products are resold
only from authorised dealers.
Like
has already been dealt withexceptionally for specific situations
is provided for the producer to create a system of distribution
selectivewhich allows him, formerly Article 4(b)(iii), to prohibit members of the selective system from
sell to unauthorised distributors in the territory that the manufacturer has
reserved for such a system: in a selective system, assets can only pass
from the hands of one company admitted to the network to those of another, or to
those of the end user.[6]
In observance of the principle of free trade in goods, as
counterpart of the producer's right to impose such limitations on the
freedom of resale of members of the system, the Regulation:
- Article 4(b)(iv) confers on them the freedom to carry out the so-called cross-sellingwhich consist of unhindered procurement from "other designated distributors in the network, operating at the same or a different level of trade'.[7];
- Article 4(c) prevents the manufacturer from restricting to members of a selective distribution system, operating in the retail trade, the active or passive sales to end users.[8]
That being said, very often a producer, for practical, managerial and economic reasons, is unable to apply a single distribution system for the entire European market and reserves selective distribution only for those countries that are most strategic for him. In this context, the question arises, firstly, whether such a 'mixed' system is legitimate and, secondly, what risks are attached to it.
1. Mixed systems within the same territory.
The adoption of a mixed system within the same territory would lead to a conflict of interest between the exclusive distributor, which would have the right to be protected from active sales within its territory, and the selective distributor, which would have the right to make active and passive sales within the exclusive territory, pursuant to Article 4(c) of the Regulation.
The Commission questioned the legitimacy of a mixed system and clarified through the Guidelines that such a combination is not admissible "within the territory in which the supplier operates selective distribution [...] as it would make it a restriction of active or passive sales by resellers". incompatible with Article 4(c).[9]
2. Mixed systems in different EU territories.
Given that the Guidelines' prohibition on applying a mixed system refers only to the circumstance that it is developed within the same territory, it is implicitly inferred that the right antitrust does not prohibit the producer to create a mixed system within the different Member States.
This does not detract from the fact that this choice, although legitimate, may nevertheless create problems of no small importance, consisting mainly of the producer's inability to control:
- sales from the exclusive territory to the selective territory;
- sales from the selective territory, directed to the exclusive territory.
The individual cases are briefly analysed below.
a) Sales from the exclusive territory, directed to the selective territory.
The fact that the exclusive distributor may not be prevented from making passive sales outside the territory, and thus also within a selective distribution system that the manufacturer has reserved for another territory, is rather self-evident.
More controversial (and commercially impactful) is the
question of whether the exclusive distributor can also sales
active within the selective territory and, therefore, also carry out
real commercial campaigns within that territory. From a reading
Strictly speaking, Article 4(b)(i) of the Regulation prohibits the
exclusive distributors to make active sales "in the territory
exclusive customers reserved for the supplier or by the supplier
attributed to another buyer' and does not extend this prohibition to the
distribution system.
To date, there are no case law precedents that have clarified this question, which remains open. In any event, it is believed that a contractual clause requiring the exclusive distributor to make active sales in the selective system, which, due to the manner in which they are presented to the public, may be legitimate, do not harm the image luxury and prestige of the manufacturer's products (on this point see also Online sales by unauthorised distributors. The Amazon, L'Oréal and Sisley cases.).
b) Sales from the selective territory to the exclusive territory.
The problems for the exclusive producer, should the producer create
a mixed market, are essentially related to the fact that:
- in the first place, formerly Article 4(c) of
Regulation, the manufacturer may not prohibit authorised retailers from
making passive and active sales within the EU. The question arises whether
these should also include the sales within the
exclusive territoryor if the distributor's exclusivity protects him from
such sales actions; - secondly, the manufacturer may prohibit, formerly
Art. 4(b)(iii), sales of members of the selective system to resellers
unauthorised within the territory that the producer has
reserved for that system. It follows from a restrictive reading of the rule,
this prohibition would not seem to be able to be extended to the sales that the
selected distributors outside the distribution system
selectiveIf this interpretation were to be followed, authorised distributors could
sell freely within a different territory recognised in
exclusive to a distributor appointed by the manufacturer.
With reference to the above points, it should be noted that the
Guidelines state that "to retailers in a distribution system
selective [...] no restrictions can be imposed except to protect a
exclusive distribution system operated elsewhere."[10]
There is a serious uncertainty of interpretation,
given that a reading of the statutory text inclines towards the view that the
holder of an exclusive right does not have the right to be protected from 'invasion
zone' by selective distributors, whereas the Guidelines would make
leaning in the opposite direction.[11]
The only thing that is certain is that the risks to create a mixed system are very high and that if such a distribution strategy is adopted by the manufacturer, in the medium to long term it would lead to great difficulties in the management, especially of the parallel sales and reciprocal and continuous area invasions.
[1] Article 4(a) provides, in fact, that the taxation
of fixed prices, it cannot take place even indirectly, as a result of
pressure exerted or inducements offered by one of the parties. The Orientations,
No. 48 list numerous examples of such measures and, in particular, "agreements
setting the distributor's margin, or the maximum level of discounts that
the distributor may charge from a prescribed price level; the
the granting of discounts or reimbursement of promotional costs by the
supplier to respect a given price level; the price linkage
resale prices imposed on competitors' resale prices; threats,
intimidation, warnings, penalties, postponement or suspension of deliveries or
termination of contracts in relation to compliance with a given level of
price"In case law, the Commission's decision is referred to, Yamaha Case, 16.7.2003in which I was recognised as an imposition
indirect pricing the following clause: premiums/bonus "will be
granted only to retailers who have applied, in their actions
advertising, normal margins' and that "publicity actions and
promotions involving discounts in excess of 15% would not be
considered normal."
[2] Importantly, the Guidelines, No. 225
justify this choice of the European legislator, considering that ''imposition
of resale prices may [...] reduce dynamism and innovation to the level
distribution [and thus] prevent more efficient retailers from entering the
market and/or to acquire sufficient size at low prices." Other
song, it is also acknowledged that "Sometimes the imposition of
resale prices not only has the effect of restricting competition but can
lead, in particular if determined by the supplier, to increases in
efficiency, which will be assessed pursuant to Article 101(1). 3 [...].
Resale price maintenance plus avoidance of free-riding
[...]. According to the Best Doctrine
(Pappalardo, 356, op. cit.) pending decisions to verify
with this openness of the Commission, certainly the basis of the approach
open and positive of the Commission, it is preferable to consider it as the
confirmation of the absence of prohibitions in EU competition law
automatic.
[3] Cf.
Orientations, no. 51.
[4] On this point, see also Guidelines, no. 55.
[5] Cf. Guidelines, no. 51.
[6] Cf. Pappalardo, Competition Law
of the European Union, p. 363, 2018, UTET.
[7] On this point, the Guidelines, no. 58, state that '[...]
an agreement or concerted practice may not have as its direct or
indirectly to prevent or limit the active or passive sales of the
contractual products between the selected distributors, who must remain
free to purchase these products from other designated distributors in the network,
operating at the same or a different level of the business chain. "
[9] N. 57.
[10] Orientations,
n. 56.
[11] On
Point cf. Pappalardo, op. cit., 364.