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.
Selling online abroad: applicable law, geoblocking and antitrust law.
The purpose of this article is to provide the reader with ideas for structuring an online sales strategy aimed at foreign markets, taking into account the EU regulations on geoblockingregulations of the countries to which one intends to export and, last but not least, antitrust law.
1. Geoblocking: what is it and when does it apply?
Firstly, one must
analysing the recent European discipline, introduced with Reg.
28 February 2018, No 302/2018in force since 3 September 2018, containing
measures to prevent unjustified geographical blockades (also known as
as "geoblocking").
The geoblocking was introduced by the EU with
to ensure that it is also correctly applied to the market
one of the founding principles of the European Union: free movement
of goods.
The new Regulation, si
therefore proposes to prevent unjustified geographical blockades or other forms of
discrimination based, directly or indirectly, on nationality, place
of residence or establishment of customers.
Article 3 of that regulation states
in fact that:
"A professional [i.e. an entrepreneur/company].
cannot block or restrict through the use of technological tools or
otherwise, a customer's access to its online interface for
reasons related to nationality, place of residence or place of establishment
of the customer."
This article continues:
"A professional
cannot for nationality reasonsplace of residence, or to the
place of establishment of a customer, redirect that client to a version
of its online interface other than the one the customer wanted
log in initiallybecause of the structure of the language used or of
other features that make it specifically intended for customers with
a particular nationality, place of residence or place of establishment, a
unless the customer has explicitly consented thereto. "
From a concrete point of view, the
Rules prohibits the practice whereby a user is prevented, to
French example, to buy a product on an Italian site, as it is redirected
automatically to another site designated to handle French customers.
Warning, this does not mean
intends that the professional may not use different versions of its
interface onlinein order to address customers from
Different Member States[1]
(e.g. the German language version, for the German market, the
French for France, etc.), but requires that the different versions designed for the
different markets, be accessible from all EU countries (a
French, you can see the Italian site and the conditions of sale there).
On this point, Art. 3(2),
point 2 of the Regulation makes it clear that:
"in case of redirection with the explicit
consent of the client, the practitioner's version of the online interface
which the customer initially wished to access must remain easily accessible
to the customer in question."
As a result, the professional will not only be free to use different versions of their interface online to address customers from different Member States, but also to automatically redirect the customer to a certain version of the interface if the user has given his or her explicit consent[2] and provided that the user is still free to access all other versions of the same interface.
2. Does geoblocking mean that I have to sell everywhere?
One point must be clarified: the new Regulation
clears the block, but does not oblige you to sell outside your country.
The geoblocking does not limit the possibility of deciding
to market their products online in certain countries, but prohibits
that if the site only provides for delivery to certain countries (for
simplify, in Italy), the customer from another EU country (Germany) is prevented
to buy online that product if you accept delivery in Italy.[3]
Furthermore, if marketing is envisaged
price differentiation is allowed in several countries to take into account, for example,
of the different costs to be incurred for the delivery of the goods, as long as the choice
does not take place in a discriminatory manner.
In fact, Art. 4(1) of the Regulation
provides that the geoblocking:
"does not prevent traders from offering general terms and conditions, including net selling prices, that differ between or within Member States and that are offered to customers in a specific territory or to specific groups of customers on non-discriminatory basis. "
3. Who do I sell to?
Given that the proposal of
sale entered online on its website implies that it is visible
by all users of the network, in the absence of clarification, it is
would apply the general rule that if the professional directs
its sales activity in a given foreign country, implicitly makes
assume that the sale is also aimed at customers domiciled in that particular
Country.
It follows that if the site is
translated into German it is implied that the sale is directed against Germany,
Austria, Lichtenstein and Luxembourg, as well as if it is translated into English, that the
same is promoted to (almost) the whole world.
Although the choice of 'maximum
opening' may seem very commercially viable, we invite you to evaluate it
prudently, as it has considerable legal repercussions (mainly
related to the law applicable to individual sales contracts and the
violation of any foreign rules), tax (in particular with
reference to the transaction being subject to VAT in the purchaser's country of domicile)
and customs (in the case of non-EU sales).
Therefore, for the avoidance of doubt, once you have assessed which countries you actually intend to sell to, it is advisable to state this directly on the site and in the general terms and conditions of sale.
4. By what law is the sale regulated?
If sales are only aimed at
to a market (e.g., to simplify, Italy), with delivery of the goods
in the territory of that country and the purchaser is a consumer domiciled in a different
country (e.g. Germany), which requires the delivery of the goods to take place in
Italy, such a sale will be governed by Italian law, without the need to worry about
to provide in the general terms and conditions of sale for compliance with any regulations
imperative provided by Germany. [4]
A different matter, however, if the order originates in Germany and the delivery of the goods takes place on German territory, in which case the law applicable to the contract of sale will be German law and, if the end user is a consumer, this may not be derogated from, even with the written consent of the parties.[5]
5. Violation of information obligations and foreign regulations.
If the site provides for the sale
also in countries other than Italy, it will be necessary to organise it by ensuring
that:
- the general sales conditions respect the obligations of
consumer information, as referred to in Art. 6, para. 1 of the Directive
2011/83/EU;[6] - the general terms and conditions of sale comply with any mandatory regulations
of the countries to which they intend to export, different and/or additional to those
provided for by Italian law; - commercial information required by the
State of export.
With reference to the above
disclosure obligations, it should be noted that:
- the restriction on delivery of the goods must be clearly stated
since the beginning of theprocedure leading to the conclusion of the contract, formerly Art. 8(3) of the
Directive 2011/83/EU;[7] - must be in the language of the consumer (Art. 8 para. 1 of the Directive
provides for the obligation to 'inform the consumer in plain and intelligible language').[8]
The penalty in case of
breach of consumer information obligations consists in the extension of
of the right of withdrawal from fourteen days to twelve months and fourteen
days.[9]
In addition to the risk of such a sanction, in some European countries there is also the risk of being subject to a warning and, in the most serious cases, an injunction action before the competent court: German law, for example, provides that in the case of ineffective clauses in the general terms and conditions of sale and violation of consumer protection rules, the warning and/or injunction action may be brought not only by the consumer, but even by a competitor, i.e. a consumer protection association.[10]
6. Can distributors and retailers sell online?
In the event that the manufacturer also makes use of third-party distributors and resellers to market its products, it is worth briefly recalling what are the powers of control over these entities, referring, for further details, to the section antitrust of this blog.
The Vertical Sales Regulation 330/2010 and recent judgments of the European Court of Justice[11] provided that a manufacturer may not prohibit its distributor/reseller from sell purchased products through their own websitenor market through the digital platforms of third parties.
The only way to limit this possibility by third parties is (for high-end, luxury and technically developed products) to create a selective distribution networkin which the distributors and resellers undertake to sell the contract goods only to distributors selected on the basis of objective criteria of a qualitative nature established indiscriminately and non-discriminatorily for all persons belonging to the network.
In that case, according to the most recent case law of the Court of Justice,[12]a manufacturer is authorised to impose a clause on its distributor allowing it to sell products via internet, but on condition that such sales activity online is realised through an 'electronic shop window' of the authorised shop and that the aura of luxury and exclusivity of these products is thereby preserved (on this point, see the Amazon Case e The mixed system: when the manufacturer chooses to adopt both exclusive and selective distribution).
[1] Compare recital 20
of the Regulation on geoblocking.
[2] Consent, once given, may be considered valid
even for subsequent visits by the same customer to the same interface
online, provided that the customer is given the opportunity to revoke it when he or she considers
appropriate. On this point, see recital 20 of the Geoblocking Regulation.
[3] On this point, see Stefano
Dindo, E-Wine, Legal-economic aspects of wine communication and distribution
online, G. Giappichelli Editore, p. 41, 2018.
[4] According to Art. 6(1),
(a) and (b) of Regulation 593/2008.
[5] See previous footnote.
[6] Directive 2011/83/EU of
european parliament and the council of 25 october 2011 on the rights of
consumers. Importantly, since this is a Directive (and not a Regulation), the
it must be transposed by national laws, while leaving the
Member countries free to choose the most appropriate regulatory path to achieve the
objectives set therein; it follows that each country is free to insert
information obligations in addition to those set out in the directive itself.
[7] Art. 3 Directive 2011/83/EU:
"E-commerce sites shall indicate clearly and legibly, at the most
late at the beginning of the ordering process, if restrictions apply
delivery and which means of payment are accepted."
[8] Attention! These parameters
language must also be complied with for the application of the provisions
of the GDPR. On this point, see Recital 20 of that Regulation.
[9] Art. 10 para. 1 of Directive 2011/83.
[10] Cf. Robert Budde, E-Wine,
Legal-economic aspects of online wine communication and distribution, G.
Giappichelli Editore, p. 51 ff., 2018.
[11] See judgment of the Court of
Justice in the Pierre Fabre case C-439/09.
[12] Judgment of 6 December 2017, C-230/16 Coty Germany GmbH.
Parallel sales and the principle of trade mark exhaustion.
Can unauthorised distributors make parallel sales? When can the principle of trademark exhaustion be invoked? The Amazon, Sisley and L'Oréal cases.
Like
has already been explained (cf. La
selective distribution. A brief overview: risks and benefits), the
selective distribution has the function of protecting the marketing of
products which, depending on their characteristics, require a
resale more selected and cared for than consumer products.
In
such cases, the producer is inclined not so much to focus on the breadth and
capillarity of its sales network, as much as to favour a limitation of
commercial channelspreferring to entrust their products to a small
number of specialised dealers, chosen according to certain criteria
objective dictated by the nature of the products: professional competence (for
as far as would-be distributors are concerned),[1] quality
of the service offered, i.e. prestige and care of the premises in which the
retailers will have to carry out their activities.[2]
This system, regulated by the EU Regulation 330/2010 on Vertical Agreements,[3] complies with Art. 101 § 3 of the Treaty (and therefore does not fall under general prohibition laid down in § 1 of that Article), essentially if:
- "the choice of dealers is made according to objective criteria of a qualitative nature, concerning the professional qualification of the dealer, his staff and his facilities'.,
- which "these requirements are required indiscriminately for all potential resellers".,
- and that "are assessed in a non-discriminatory manner".[4]
With
reference to the type of products for which it may be
justified the use of a selective system, even though the Regulation
330/2010 makes no mention of this, as it merely gives a definition
of this system, it is considered that it is only reserved for products of
luxury, high quality and technologically developed.[5]
One
of the essential elements linked to selective distribution, it is certainly
related to the fact that, in such a system, the producer can impose the obligation of
not sell to parties (other than end users) not belonging to
to the network (formerly Article 4 (b) (iii)).[6]
According to
advantage is related to the limits that can be imposed on members of the system
selective, regarding the possibility of selling products online. On
point, European case law has stated that, while a
manufacturer of a non-selective system, it cannot prevent its distributors
to sell online,[7]
in a selective system, the producer is authorised to impose on its
distributor a clause allowing products to be sold through internet, a
provided that such sales activity online is
realised through an 'electronic shop window' of the authorised shop and that
thus preserving the aura of luxury and exclusivity of these
products.[8]
Moreover, case law[9] considered legitimate a contractual clause that prohibits authorised distributors of a selective distribution system to make recognisable use of third-party platforms for the Internet sale of contractual products, provided that this is aimed at safeguarding the image of those products and that it is established indiscriminately and applied in a non-discriminatory manner.
1. Parallel distribution by unauthorised distributors.
In any case, it is highly common in practice that, even if the manufacturer creates a selective system, parallel distributions develop within the market itself. This may be due to the fact that very often manufacturers only distribute 'selectively' in the most important markets, while reserving a 'classic' system (i.e. through an exclusive, non-selective importer) for the other areas, thus allowing (and facilitating) the 'classic' distributors to sell products also to parallel distributors within a selective market.[10]
Read also Parallel Sales in the EU. When and to what extent can a manufacturer control them? e Selective and exclusive distribution: the mixed system selective.
What
therefore happens if the manufacturing company takes over the unauthorised sale of
their products on a platform e-commerceby a
distributor/intermediary outside the selective distribution network?
È
clear, in fact, that in such a situation the relationship between producer and third party is
of a non-contractual nature and one must therefore understand what (and if any) instruments
legal provisions enabling the manufacturer to defend itself against such extraneous sales
to the selective system.
In order to answer this question, it is necessary to take a brief step back.
2. The principle of Community exhaustion.
As is well known, 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.[11]
According to
this principle, once the holder of one or more property rights
industry enters directly or with its own consent[12]
(e.g. by the licensee) to market a good in the territory of the Union
the European Union, the latter loses its exclusive rights.
The exclusive
is therefore limited to the first act of marketingwhile none
exclusivity may subsequently be claimed by the holder of the design,
on the circulation of the product bearing the mark.
The
principle of exhaustion, however, has an important exception: the second
paragraph of Article 5 c.p.i. contains, in fact, a safeguard rule that, with
reference to the trade mark, allows the proprietor, even when he has placed the
product on the market and, therefore, 'exhausted' the right, of prevent the
patent suffers a decrease in attractiveness and value.
At
in order to circumvent the fact that the trade mark proprietor may arbitrarily restrict the
free movement on the Community market, the derogation from the principle
of trade mark exhaustion is limited to the occurrence of conditions that
make it necessary to safeguard the rights that are the specific subject of the
property: the second paragraph of Art. 5 of the IPC provides that they must
exist
"reasons
legitimate for the holder himself to object to the further
marketing of products, particularly when the state of these is
modified or altered after being placed on the market".
La
community case law[13]
confirmed that the existence of a selective distribution network can be
included among the 'legitimate reasons' preventing exhaustion, provided that
the marketed product is a luxury or prestige item that
justifies the decision to adopt a selective distribution system.
It will be up to
at national judgetherefore, called upon to judge whether
there are 'legitimate reasons' for the trade mark proprietor to oppose it
further marketing of its products and, therefore, check whether the
selective distribution contracts comply with the law antitrust
European.[14] This
is (to simplify, but far from trivialising) to ascertain:
- the lawfulness of the
products, assessing their nature (i.e. whether they are luxury goods or,
high quality or technologically developed products); - that the third party respects the standard which
the manufacturer requires from its authorised distributors.
In
If not, then if the marketing methods used of the
third do not respect the standard required and are damaging to the trade mark
of the producer, this activity will be exempt from the principle of exhaustion.
In order to give some practical examples and thus try to make this issue as clear as possible for the reader, three recent (and very interesting) judgments of the Court of Milan are given below.
The case of Landoll s.r.l. v MECS s.r.l.
In the
2018 the Court was called upon to decide the following question: Landoll,
company leader in research, development and commercialisation
of professional cosmetics and owner of several brands, provided
selective distribution of their products, based on standard qualitative
selected, aimed at protecting the image of luxury and prestige. The applicant
detected the unauthorised offer for sale of its products on a
platform e-commerceattributable to the defendant. The applicant has therefore
sought an injunction against the respondent to continue its activity
of sale.
The
Court recognised that the infringement of the
appellant on its registered trade marks, it was inferred from the
"assessment of the existence of a
effective harm to their image of luxury and prestige that follows
from examination of the how products are presented to the public [...] is
on an e-commerce platform, which on its websitemanifested in the
their presentation to be plainly assimilated to any generic product of the
even lower quality sectors."[15]
Ha
therefore prevented the respondent from further advertising,
marketing, offer for sale of the plaintiff's products.
Case Sisley Italia s.r.l. v. Amazon Europe Core s.a.r.l.
In
this dispute,[16] Sisley
Italia s.r.l., a company also leader in the cosmetics sector and
organised through a selective distribution system, brought an action for
the Court of Milan prevented Amazon from marketing in the territory
Italian products bearing the Sisley trademarks, considering that the manner in which they are placed
commercially used by the defendant violated the standard required
by Sisley to its authorised distributors. The device states that on the
Amazon portal
"Sisley products
are displayed and offered mixed with other items, such as products for the
household and cleaning products, which are however low-profile and of little value
economic. Also in the 'Luxory Beauty' section [...] the Sisley brand is
approached to low-end brands of very high quality, reputation and price
inferior or far less prestigious."
La
judgment continues:
"Where you
consider that, in its contracts, Sisley explicitly requires that the
their products are sold in luxury perfumeries or in departments
specialising in perfumery and cosmetics in department stores, with staff
qualified, in a given urban context, undoubtedly appears
inadequate, compared to the required standards, the sale of products
in question next to microwave containers, cleaning products for the
floors and for pets,'
The Court of Milan therefore recognised that the marketing and promotion of such products on the same internet page as products of other brands - even of lower market segments - was "detrimental to the prestige and image of the Sisley brand. "
But what happens if products are imported from a non-EU country? The L'Oréal Case.
Like
condition because the exhaustion formerly article 5 c.p.i.
takes place is that the first marketing was carried out by the
holder (or with his consent) and that such entry is made
within the single market.
Different
the situation where the first entry into the single market is made by
Unauthorised third parties: the jurisprudence of the Court of Justice since 1982
decided that if the marketing of the protected good is carried out by the
holder outside the Community, the latter may assert his right
to oppose importation into the Union by a distributor
non-EU.[17]
Applying
these principles the Court of Milan[18]
prohibited IDS International Drugstore Italia s.p.a. from offering for sale
and marketing, in any manner or form, including the use of internet
and of social mediaof products L'Oréal. These products
had indeed been purchased by IDS from a non-EU distributor,
who had bought them directly from the manufacturer.
Place
that the first marketing within the EU had not been
carried out by the owner (or with his consent), he continued to
hold, pursuant to arts. 5 and 20 c.p.i., the right to oppose importation
parallel from non-EU countries without his consent.
Different
issue would be where the trade mark proprietor consents to the marketing
on the market in a given EEA Member State, in which case he exhausts
its intellectual property rights and, therefore, can no longer prohibit the importation
in a different Member State.
[1] Consider the
decision Grundig approved in 1985 by the Commission, in which
presence was required "of qualified personnel and an external service
with the technical expertise to assist and advise customers',
as well as 'the technical organisation necessary for the storage and
timely supply of buyers'; 'present and display products
Grundig in a representative manner in special rooms, separate from other
departments, and whose appearance reflects Grundig's market image'.
[2] On this point cf.
PAPPALARDO, The Competition Law of the European Union, p. 409, UTET,
2018.
[3] defining distribution
selective as: "a distribution system in which the supplier
undertakes to sell the goods or services covered by the contract, either directly or
indirectly, only to distributors selected on the basis of criteria
specified and in which these distributors undertake not to sell such
goods or services to unauthorised resellers in the territory that the supplier has
reserved for such a system."
[4] Metro Judgment I,
25.10.1977 and Case C-31/80, L'Oréal v PVBA. This orientation was confirmed
also from the Commission's Guidelines at No. 175, which state that "In
gender, it is considered that selective distribution based on purely
quality does not fall under Article 101(1) because
does not lead to anti-competitive effects, provided three
conditions. Firstly, the nature of the product in question must make
selective distribution system in the sense that such a system
must be a legitimate requirement in view of the
characteristics of the product in question, to preserve its quality and
ensure their proper use. Secondly, the choice of dealers
must take place according to objective criteria of a qualitative nature established
indiscriminately and made available to all potential resellers and
applied in a non-discriminatory manner. Thirdly, the criteria established do not
must go beyond what is necessary."
[5] In any case, an answer can be found in the Commission's Guidelines, where in No. 176, it is stated that: "if the characteristics of the product do not require selective distribution [...], such a distribution system does not generally lead to efficiencies that outweigh a significant reduction in intra-brand competition. If appreciable anti-competitive effects occur, the benefit of the Block Exemption is likely to be withdrawn". See also, n. 25, case Coty Germany, judgment of 6.12.2017, which provides:
[6] In this regard, one
recalls what the Court of Justice stated in the case Metro-Saba
IJudgment of 25.10.1977, at para. 27 ".Any sales system
based on the selection of distribution points inevitably implies -
otherwise it would make no sense - the obligation for wholesalers who are part of the
network, to supply only authorised dealers'.
[7] Case Pierre Fabre, judgment of 13.10.2011.
[8] Case Coty Germany, judgment of 6.12.2017.
[9] Cf.
previous note.
[10] In that case, the
manufacturer may not impose a ban on passive sales, in the
resellers in areas where the system does not exist
selective, but only prohibit it, pursuant to Art. 4(b)(i), from selling
active.
[11] Art. 5,
paragraph 1, c.p.i. (Exhaustion), "The exclusive faculties conferred by this
code to the holder of an industrial property right are exhausted one
once products protected by an industrial property right are
put on the market by the holder or with his consent in the territory
State or in the territory of a Member State of the European Community or of the
European Economic Area.'
[12] The practice
decision-making and European case law have made it clear that one has the consent
when the marketing was carried out by a controlled undertaking
by the intellectual property right holder or an enterprise, as a rule
a licensee, authorised to do so by the holder. Exhaustion occurs
when the protected product has been placed on the market by the holder of the
right "with his consent or by a person bound to him by ties of dependence
legal or economic' (sent. Keurkoop, cit., no. 25). On this point Cf. Pappalardo, The right
European Union competition, p. 875, 2018, UTET.
[13] Case Copad SA, judgment of 23 April 2009, "Where the marketing of luxury goods by the licensee in breach of a clause in the licensing contract is nevertheless to be regarded as having taken place with the consent of the proprietor of the trade mark, the latter may rely on that clause to oppose a resale of those goods on the basis of Article 7(2) of Directive 89/104, as amended by the Agreement on the European Economic Area, only if it is established, having regard to the circumstances of the case, that such resale damages the reputation of the trade mark. "
[14] On this point, cf. Fratti, Selective distribution of luxury cosmetics: the Court of Milan clarifies the prerequisites for the exclusion of the principle of trade mark exhaustion.
[15]
Court of Milan, Order of 18.12.2018. See previous footnote.
[16] Court of Milan, order of 3.7.2018
[17] Cf. Pappalardo,
op. cit., p. 878.
[18]
Court of Milan, Order of 19.11.2018, see footnote 12.
Consequences in the event of the transfer of the agency contract or company transfer.
What are the consequences of the transfer of an agency contract? If the principal decides to make a business transfer, can the agent terminate the contract?
The legal institution of assignment of the contract is governed by arts. 1406 et seq. of the Civil Code. In brief, an assignment of a contract occurs when a party to a performance relationship (the assignor) enters into a new contract (assignment) with a third party (the assignee), whereby the assignor agrees to transfer to the assignee the original contract or, to be more correct, all the assets and liabilities arising from the assigned contract. The assignment of the contract is, therefore, a trilateral transaction, which is perfected only (pursuant to Art. 1406 of the Civil Code) with the consent of all parties: original contracting parties (assignor and assignee) and assignee.[1]
1. Assignment of the agency contract
The agency agreement, of course, is also subject to the general principles on contracts briefly referred to above. It follows that for the assignment of an agency contract to be valid, it must be communicated to and accepted by the assignee.[2]
With reference to the form of the contract of assignment, the silence of the legislature leaves a problem open; the jurisprudence is however constant in resolving it, affirming that the same forms prescribed for the contract of assignment must be observed for the contract being transferred, given that the assignment brings about a real subjective modification of the obligatory relationship.[3] By virtue of this principle, the assignment of the agency contract will also be subject to the written form ad probationem request pursuant to Article 1742(2) of the Civil Code.
Read also Formal requirements of the agency contract.
In the event that it is the agent who transfers the contractual relationship, it is
essential to emphasise that the right
of the same to receive severance pay formerly Article 1751
c.c.. The second paragraph of that article provides that:
"L'allowance not
is due when pursuant to an agreement with the principal, the agent yields
to a third party the rights and obligations who has by virtue of a contract
agency.'
This provision is based on the fact that the new agent succeeds to the overall legal position of the original agent, i.e. to all active and passive relationships arising from the assigned contract, among which is certainly included the right to severance pay.[4]
2. Agency contract and business transfer
Another very interesting topic, also related to the issue
of the assignment of contracts, is the case of the succession of the
report of agency following purchase of company.
This issue is governed by Article 2558 of the Civil Code.[5] which provides as a natural effect of the transfer of the company, the succession of the purchaser in all contractual relationships entered into for the operation of the company that do not have a personal character;[6] It is therefore a true and proper automatic transfer of the obligatory relationship, which is not subject to the consent of the transferred party, as provided for in the case of the assignment of the contract. With this provision, the legislator intended to ensure the preservation of the economic functionality of the business unit that has been transferred and, therefore, to protect the interests of the acquiring party.
It is important to emphasise that the parties (seller and buyer) may still derogate this provision and avoid the purchaser's consequent sub-entry into certain contractual relationships of the transferor, provided that the contractual relationship(s) that they intend to exclude from transfer do not have "personal character'. (cf. Civil Cassation No. 3312 of 2001).
The doctrine[7] tends to hold that the agency relationship should not be excluded a priori from contracts intuitu personaegiven the absolute heterogeneity of the category of commercial agents, which can take the form of both corporations and natural persons; contrary to majority case law[8] excludes that this contractual figure can be included among relationships of a personal nature, asserting that:
"the agency contract is not of a personal naturebut constitutes a typical contract pertaining to the operation of the business and the organisation of the business structure, so that in the event of a transfer of the business it automatically continues with the transferee unless the parties have agreed otherwise."[9]
The fact that the agency contract is attributed the nature '.staff" means that it is impossible to apply to the same the discipline of Article 2112 of the Civil Code.,[10] which gives employment relationships greater protection in the event of transactions involving the transfer of a company.
Firstly, formerly Article 2112 of the Civil Code, employment relationships automatically continue in the hands of the transferee and (unlike the discipline under Article 2558 of the Civil Code) this provision is mandatory by the parties.
Secondly, Article 2112 of the Civil Code gives the employee the right to resign within three months of taking over the business if there has been a substantial change in working conditions; otherwise, Article 2558 of the Civil Code provides for the possibility of terminate the relationship within three months of being informed of the transferonly if there is a just cause:
"the agent does not enjoy a freedom of
absolute termination, but rather conditional on the existence of a just cause."[11]
In order to understand the extent to which the agent is entitled to terminate the contract if the principal sells the business, a 2007 judgment comes to our aid, which expressed the following principle:
"the agent is entitled
to withdraw from the contract for just cause in the event that for reasons
extrinsic to the contract, not directly inherent in it, the substitution
of the assignee to the assignor as counterparty to the contractual relationship realises
a situation in view of which would have refused to contract if
had known her in time. "
To give a practical example, the following may be invoked as a cause for termination of the agency relationshipinsufficient security of financial strength of the buyerwhich does not guarantee to the third party a regular performance of the obligations arising from the continuation of the term contract.[12]
3. Debts prior to the transfer of the business
In the event of a transfer of the principal's business, the purchaser's succession in the existing relationship with the agent, does not imply an automatic cumulative assumption of pre-sale debts (e.g. unpaid commissions). The fate of the debts relating to the transferred business is governed by Art. 2560 of the Civil Code, according to which the transferor is not discharged if the debts predate the transfer (para. 1) and the same are apparent from the compulsory account books (para. 2).
The following is an excerpt from a 2017 judgment of the Court that was questioned on this issue:
"The only (alleged)
transmission of accounting documents relating to the agency contract
(transferred to the successor company pursuant to Article 2558 of the Civil Code) is certainly not equivalent to
also mean that the condition expressly required by Art.
2560(2) i.e. the entry of debts in the books of account
obligatory, so that the joint and several obligation ancillary to
borne by the purchaser of the transferred business.
Therefore, anyone wishing to assert the corresponding claims against the purchaser of the business has the burden of proof among the constituent elements of one's right also called inscription.[13]
Read also The principal's bankruptcy and the agent's lodgement of liabilities.
[1] For a
overview of the institution see TORRENTE AND SCHLESINGER, Handbook of Law
private, GIUFFRÈ EDITORE.
[2] On
Point cf. Court Reggio Calabria, 15.1.2003, which ruled that "for the purposes of
of the assignment of the agency contract, it is necessary
the consent of the assigned contractor. "
[3] Cass. Civ. 2001 no. 10498; Cass.
Civ. 1993 No. 12163.
[4] Cf.
VENEZIA, Il contratto di agenzia, p. 462 et seq., 2015, Giuffrè Editore.
[5] Art.
2558 c.c. states "unless otherwise agreed, the purchaser of the business
succeeds to the contracts concluded for the operation of the holding itself that do not
have a personal character.
[6] Cf. on
point Cass. civ. Sec. II,
19/06/1996, n. 5636
[7] Cf. VENEZIA, The Agency Contract, p. 462 et seq., 2015, Giuffrè Editore; TRADATI, Il contratto di agenzia nel trasferimento d'azienda, in Agenti & Rappresentanti 2003, no. 4, p. 14 ff.
[8] Cass.
Civ. 2017 no. 15956, Court of Perugia 17.5.2011 Cass. Civ. 2004 no. 21678,
Trib. Reggio Emilia 8.2.2002. Contra for the personality of the
agency, with the consequent need for consent for its transfer Trib.
Reggio Calabria 15.1.2003.
[9] Trib. Di
Reggio Emilia 8.2.2002.
[10] Cass. Civ. 2004 no. 21678, Cass.
Civ. 2000 no. 6351.
[11]
Court of Perugia 17.5.2011.
[12] Cass. Civ. 2007 no. 21445, with note by SANGIOVANNI, Obbligazioni e contratti, no. 5, 2008.
[13] Cass.
Civ. 2017 No. 15956.
Agent's right to commission on long-term contracts.
If an agent procures long-term contracts, is he entitled to commission if the contracts continue after the agency relationship is terminated?
Where an agent procures long-term contracts, such as long-term supply contracts or subcontracts, the question arises as to whether or not the agent is entitled to commission on the deliveries made in performance of the contract procured following a possible termination of the agency relationship.
To answer this question, it is necessary to take a brief step back and understand in detail when the agent's right to commission arises (on this point see also Agent's commissions for business concluded by the principal after termination of the relationship). Article 1748(3) of the Civil Code provides on this point that:
"The agent is entitled to commission on business concluded after the date of termination of the contract if the proposal was received to the principal or agent before or business is concluded within a reasonable time from the date of termination of the contract and the conclusion is from mainly traceable to his activityIn such cases the commission is due only to the previous agent, unless specific circumstances show that it is equitable to allocate the commission among the intervening agents."
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:
- if the proposal was received on antecedent upon termination of the relationship;
- if the deal is concluded within a reasonable term from the date of termination of the contract and the conclusion is due to mainly to theactivities of the agent.
While the first hypothesis does not give rise to any particular problems of interpretation, the second, on the other hand, may give rise to several doubts, mainly related to the interpretation of the concept of 'prevalence' and of 'reasonableness[3]".
An interpretative aid can be derived from Art. 6, last paragraph, AEC 30.7.2014[4] (cf. when applying ERM e how the AEC Industry 2014 severance payment is calculated), which imposes an obligation on the agent to report to the principal in detail on negotiations undertaken and not concluded at the time of termination of the relationship; this provision also provides that if, within six months from the date of termination of the relationship, some of those negotiations are successful, the agent will be entitled to the relevant commissions (cf. The agent's obligation to inform the principal).
On the basis of the foregoing, 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 deliveries, it can 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 during 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."
* * *
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] Jurisprudence has also considered a term of six months to be reasonable (Court of Cassation Civ. 9.2.2006) and in some cases, such term has even been extended to two years (see Court of Cassation Civ. 16.1.2013 in which the Court held that the two-year term for loyalty cards sold thanks to the agent's promotional activity was reasonable, thus considering fuel sales made after the termination of the relationship attributable to the agent's performance.
[4] Art. 6, last paragraph AEC 2014 Industry: "The agent or representative is entitled to commission on business proposed and concluded even after termination of the contract, if the conclusion is primarily the result of the activity performed by the agent or representative and takes place within a reasonable time after termination of the relationship. To this end, upon termination of the relationship, the agent or representative shall report to the principal in detail on the business negotiations undertaken, but not concluded, due to the termination of the agency agreement.
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 commission, as regulated above. 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 be paid. This is without prejudice, however, to any agreements between the parties providing for a different time limit or for the distribution of the commission among the agents who have been present in the area and who have intervened in the promotion and conclusion of the transaction. "
[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.