Whereas the obligation not to compete during the contract is a normal burden imposed on the agent, the covenant of post-contractual non-competition is permissible only where there is a specific agreement between the parties and, in any event, within the narrow limits provided for in Art. 1751-encore c.c.

In absence of such a covenantonce the contractual relationship is dissolved, nothing prohibits the agent to start an activity in competition with the former principal, since the mere status of former agent is not sufficient to render unlawful an activity that does not in itself have any independent unfairness.

The discipline of unfair competition is regulated in Article 2598 of the Civil Code, which provides as follows:

"Without prejudice to the provisions concerning the protection of distinctive signs and patent rights, any person commits acts of unfair competition:

  1. uses names or distinctive signs capable of producing confusion with the names or distinctive signs legitimately used by others, or slavishly imitates products of a competitor, or performs by any other means acts likely to create confusion with the products and business of a competitor;
  2. disseminates news and appreciations about a competitor's products and activities that are likely to determine its discreditor appropriates the merits of a competitor's products or enterprise;
  3. makes direct or indirect use of any other means not in accordance with the principles of the professional fairness and likely to damage the business of others."

The provision in question outlines, in paragraphs 1 and 2, the typical cases of unfair competition, including in point 1 all acts "likely to cause confusion with the products and the activity of a competitor", and in point 2, acts of denigration and appropriation of the merits of others.

The case of the 'confusion"is constituted by the conduct of the entrepreneur who addresses to the public of potential purchasers a message capable of generating the false belief that his products and/or activities can be traced back to a competing entrepreneur; on the other hand, there is "imitation servile" in the case of the development of a product by infringing a competitor's patent and/or with the aid of technical information of a confidential nature owned by the principal.

Point 3 of Article 2598 of the Civil Code, on the other hand, provides for the general clause of the professional fairness as a rule that entrepreneurs must adhere to in order to avoid damaging competitors and engaging in unfair competition.

Although in the absence of a valid post-contractual covenant not to compete, it is perfectly permissible for the former agent to carry on an activity in competition with the former principal following the termination of the relationship, some case law[1] considers, on the assumption that the former agent's competition is more 'dangerous', that there is a special emphasis on the duty of professional loyalty and probityas well as a special duty of discretion and non-aggression towards the home company.

Thus, the difficulty of balancing what are, in fact, two opposing interests is evident: on the one hand, the right to conduct business in competition with the principal in the absence of a post-contractual non-compete agreement, and on the other hand, the agent's duty to act in accordance with professional loyalty and within the limits imposed by Article 2598 of the Civil Code.

As a matter of principle, the duty of professional correctness is manifested, in the case of the former agent, principally in the management of the relations he/she establishes with the clients of the former principal.

On this point, case law[2] has repeatedly pronounced itself, stating that:

"the benefits, in terms of goodwill and clientele, that accrue to the principal from the promotional activity carried out by the agent, remain vested in the principal, even after the termination of the agency relationshipas an asset belonging to his company, protectable against any acts of unfair competition, even if coming from the agent himself after the termination of the relationship; with the consequence that  the diversion of customers by the former agent [...] of a company, making use of the confidential knowledge acquired in the previous report or, in any event, in a manner that cannot be justified in the light of the principles of professional fairness, constitutes unfair competition within the meaning of Article 2598(3) of the Civil Code'.

The Court also ruled on this point, clarifying that:

"constitutes unfair competition for the diversion of customers the systematic use by former employees of confidential information acquired in the previous relationship, such as the customer list, and having proposed more favourable contractual conditions to them."

In the same judgment, the Supreme Court states that:

"constitutes an act of unfair competition, contrary to the rules of professional fairness (Article 2598, no. 3, Civil Code.), the diversion of customers carried out by a former employee of a company who, making use of confidential knowledge acquired in the previous employment relationship (and relating to customers and the economic conditions of ongoing contractual relationships), undertakes similar business activity by systematically acquiring the competitor's customers (through the preparation of cancellation letters of pre-existing contracts, the sending of the same by him within the contractually agreed terms, the consequent conclusion of new contracts)."[3]

Other precedents are to be found in case law, mainly related to unfair competition activities carried out by former employees for which more case law is available both in the literature and in case law. However, some of these precedents are listed here in view of the applicability of general principles announced therein also to the category of commercial agent.[4]

  • He commits unfair competition who "offers an exclusive tool supplier the former employer to supply him with the same utensils; b) in advertising to the former employer's customers he flaunts his status as the former employer's employee; c) in the advertising of his undertaking to the former employer's customers he makes an explicit comparison between the latter's products and prices and his own. (see also: Obligations of the Agent. Is a simple propaganda activity sufficient?)
  • "An act of unfair competition is committed by a former employee who, by using not only the lists of customers, but also knowledge of the terms and conditions of the individual employer's contracts, once the employment relationship is terminated, divert some of the customers by offering lower rates and preparing and sending termination letters for the former employer's contracts in due time."[5]
  • "It is an act of unfair competition to use a database containing names of potential customers, provided and processed informatically by the former sole director of the former user company, by a competitor company to which the database was provided by the same person in the context of a subsequent cooperation relationship."[6]
  • "It constitutes unfair competition lthe former employee's use of notions concerning the specificthe particular needs of the former employer's individual customers, in order to offer each of them products precisely tailored to meet their needs, where such tailored products required the former employer to make repeated contacts with individual customers in order to identify their wishes and expectations and to gradually arrive at the optimum solution. [...] The unlawfulness of this conduct is accentuated by the fact that the former employee flaunts to the customers the identity of the products offered, envisaging a continuity of production merits in the sense of meeting the wishes of each individual customer, as compared with the production of the former employer."[7]

Without prejudice to the foregoing, it must also be emphasised that the prohibition of unfair competition cannot be extended to such an extent as to prevent the agent from making any use of experience gained in previous employment. Regarding the inadmissibility of such a conclusion, a historical (and still relevant today) ruling of the Supreme Court has stated that:

"The dismissed employee cannot be prevented from exploiting his technical capacity, even if it is acquired in the performance of tasks to which it was assigned and for which it was bound to secrecy, and even if that capacity constitutes a personal asset of the employee and is used to provide the latter with the means of subsistence, is carried out in activities and products similar to those of the employer. Therefore, it does not constitute an act of unfair competition within the meaning of Article 2598 no. 3 of the Civil Code, the use, by an employee, after termination of employment, of technical knowledge even if acquired in the performance of the duties to which he was assigned. "

This principle applies whether the former agent has taken up employment with another company or has gone to work for himself.[8]

However, according to prevailing case law, in the former agent's freely usable knowledge and skills specific information on the needs of individual customers contacted during the previous work period cannot be includedsince acquired knowledge does not fall within the concept of corporate information and experience;[9] usable technical knowledge is thus contrasted with non-usable information learned in the previous employment relationship.[10]

In conclusion, it can be reasonably assumed that the former agent it is not prevented from developing products in competition with the former principal and also offering them to the latter's customers; however, the relationship with these customers is very delicate and must be handled with the utmost caution and professional loyalty, since the agent may not carry out targeted sales campaigns against such persons and make use of company information and news about specific needs of specific customers, which have accrued in the course of the previous employment relationship.

Concluding it can be stated that:

  • the agent can carry out any competing activities with the principal as a result of the employment relationship;
  • i limits competition are dictated by the acts of unfair competition which are identified, in the case of the agent, mainly in:
    • slavish imitation and confusion of the products it develops for the competing business it operates;
    • denigration of the products sold by the former principal;
    • diversion of customersthrough the launch of targeted sales campaigns towards customers of the former principal, and making use of company information and news about specific needs of specific customers, which had accrued during the previous employment relationship.

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[1] See UBERTAZZI, Commentario breve alle leggi su proprietà intellettuale e concorrenza, art. 2598, CEDAM.

[2] Cass. Civ. 2004 no. 16156.

[3] Trib. Turin 11.1.2008; Cass. Civ. 2004 no. 16156.

[4] Trib. Di Milano 1974; Court of Appeal Florence 27.9.1987.

[5] Trib. Turin 28.12.1973.

[6] Trib. Turin 28.12.1973.

[7] Trib. Genoa 19.6.1993.

[8] Court of Appeal Milan 5.6.1987.

[9] Trib. Milan 25.9.1989.

[10] Trib. Florence 26.11.2008.