The non-compete obligation in the agency contract: during and after termination of the relationship.
In the European context, it is certainly surprising that the 86/653/EEC makes no mention whatsoever of the agent's obligation not to compete with the principal during the course of the contractual relationship.
This approach has led most of the Member Countries not to mention, regulatively and expressly, this institution in their legal systems. Therefore, in the European context absolutely not to be taken for granted that the agent, in the absence of a special agreement between the parties, is obliged not to work for competitors of the principal during the contractual relationship.
In contrast, under Italian law during the course of the relationship, the prohibition of competition is "natural effect of the contract"This, even though there is no specific rule providing for it, such as, for example, Art. 2015 of the Civil Code for employees, is indirectly inferred from para. 1 of Art. 1746 of the Civil Code, according to which the agent must protect the interests of the principal and act loyally and good faith.
As for the period following the termination of the contract, i.e. the so-called prohibition of 'post-contractual' competition, it was partly regulated by the directive, which dictated the minimum protections to be respected by all signatory countries. They are:
- to be stipulated for registered;
- concerning the sector geographical area or group of persons and the geographical sector entrusted to the commercial agent, as well as the goods for which the commercial agent had representation under the contract, and thecommercial agent had representation under the terms of the contract.
- which is of a duration not exceeding two years from the contractual relationship
The directive has therefore provided that the post-contractual non-compete agreement is permissible only by specific agreement of the parties and in any event within certain legal limits. Indeed, an obligation of that nature, which certainly has the utility of ensuring that the principal can maintain the clientele that was managed by the agent prior to the termination of the relationship, nevertheless has the side effect of actually making it impossible for the agent to carry on its business and for that reason has been expressly limited by the European directive, so as to guarantee the interests of both parties.
The prohibition of 'post-contractual' competition was introduced in our country of Article 1751encore c.c., by Decree 303 of 1991. Specifically, the first paragraph of Article 1751encore provides that:
"An agreement restricting competition by the agent after termination of the contract shall be in writing. It must concern the same area, customers and kind of goods or services for which the agency contract was concluded and its duration may not exceed two years after the termination of the contract."
The second paragraph of Article 1751encore c.c., was inserted by Law No. 422 of 2000, and states that:
"acceptance of the non-competition agreement entails, upon termination of the relationship, the payment to the commercial agent of an indemnity of a non-commission nature. The indemnity shall be commensurate with the duration, not exceeding two years after the termination of the contract, the nature of the agency contract and the severance payment."
It is important to emphasise that the latter article applies only to certain categories of agents of commerce, which were considered more deserving of protection. Article 23.2 of the aforementioned Law No 422 of 2000, which introduced precisely the second paragraph of Article 1751encore c.c., expressly provided that the article applies:
"exclusively to agents practising in the form of sole proprietorships, partnerships or single-member corporations, as well as, where provided for by national economic agreements in the sector, to corporations consisting exclusively or predominantly of commercial agents. The provisions of paragraph 1 shall take effect on 1 June 2001."
Therefore, the post-contractual non-compete agreement has, in the first place, onerous charactersecondly, it must relate to the same area, clientele and type of goods or services for which the agency contract was concluded (Trib. Florence 20 November 2012) and, in addition, must assume the written form ad substantiam (Trib. Milan 12 September 2011).
As for the quantificationan indemnity of a non-commissionable nature is provided for the agententrusted to negotiation between the partiestaking into account the National Economic Agreements of the category.
In the absence of individual agreementand only when AECs are not applicable, Art. 1751encore third paragraph, provides that the indemnity shall be determined by the court in equity, with reference:
- the average of the fees collected by the agent during the term of the contract and their impact on the total turnover over the same period;
- the causes of termination of the agency contract;
- to the size of the area assigned to the agent;
- the existence or non-existence of exclusivity for a single principal.
ABSTRACT
- under Italian law during the course of the relationship, the non-competition clause is a 'natural effect of the contract'
- the prohibition of 'post-contractual' competition was introduced in our country in Art. 1751encore c.c.. It must relate to the same area, clientele and type of goods or services for which the agency contract was concluded, its duration may not exceed two years following the termination of the contract and it must be concluded in writing
- acceptance of the covenant not to compete entails, upon termination of the relationship, the payment to the commercial agent of an indemnity of a non-commission nature
- an indemnity of a non-commissionable nature is envisaged for the agent, entrusted to negotiation between the parties, taking into account the National Economic Agreements for the category
- in the absence of an individual agreement, and only when the ERM is not applicable, Art. 1751encore third paragraph, provides that the indemnity shall be determined by the court on an equitable basis
