On 8 May 2021 Italian Law no. 53 of 22 April 2021 (so-called European delegation law) came into force, laying down the principles and criteria to transpose the Directive (EU) 2019/633 (UTP Directive), which introduces at the EU level harmonised measures to combat unfair trading practices in relationships between buyers and suppliers in the agricultural and food supply chain.
The new Italian provisions implementing the UTP Directive will mainly affect the existent Article 62 of Italian Decree-Law no. 1/2012 ("Article 62"), regulating trading relationships between operators in the agricultural and food supply chain, which also applies to franchise agreements implying the supply or agricultural or food products.
Article 62 currently requires that supply agreements concerning agricultural and food products are in writing, providing for the minimum content they must include.
It also prohibits the following practices:
a) directly or indirectly imposing unjustifiably onerous purchase, sales or other contractual conditions, as well as non-contractual and retroactive terms;
b) applying objectively different terms for the performance of equivalent obligations;
c) making the conclusion and performance of the agreements and the continuity and regularity of trading relations subject to the performance of obligations which, by their nature and according to commercial uses, have no connection with the subject matter of the agreements or the trading relations;
d) obtaining the performance of undue unilateral obligations not justified by the nature or content of the trading relationship;
e) adopting any further commercial conduct which appears unfair also taking into account the overall commercial relations characterising the supply terms.
Mandatory payment terms are also set out, i.e. within 30 days for perishable products and within 60 days for other products, starting from the last day of the month in which the invoice is received, and the application of increased interest in the event of delay.
The current Italian rules may apply to the benefit of both the supplier and the buyer.
The purpose of the UTP Directive is to harmonise at the EU level the protection of suppliers of agricultural and food products in their relations with buyers through the provision of a minimum list of trading practices to be considered always prohibited (the so-called "black list") and a list of trading practices permitted only if agreed in clear and unambiguous terms in the supply agreement (the so-called "grey list").
2.1. Scope of the UTP Directive
The rules laid down by the UTP Directive apply to sales of agricultural and food products between suppliers and buyers of certain economic sizes as identified on the basis of the turnover thresholds laid down in Article 1(2) of the UTP Directive.
The agricultural and food products covered by the UTP Directive are all those listed in Annex I of the TFEU and other products processed for use as food using such products.
The provisions of the UTP Directive only concern B2B relations and are intended to protect suppliers only. Therefore, contracts with consumers are excluded.
The new rules apply to sales where at least one of the contracting parties is established in the European Union.
2.2. The black list
The UTP Directive provides that trading practices resulting in the following are always prohibited:
Each Member State may introduce additional unfair trading practices that are always prohibited.
2.3. The grey list
The UTP Directive also provides that the following trading practices are prohibited, unless previously agreed in clear and unambiguous terms in the supply agreement or in a subsequent agreement between the supplier and the buyer:
The transposition of the UTP Directive in Italy will mainly result in the amendment of Article 62, maintaining its broader scope, and the introduction of new provisions to strengthening the protection of traders in the agricultural and food supply chain.
3.1. Protection irrespective of the economic size of the operators
The Italian legislator, considering the dynamics of the supply relationships in the agricultural and food supply chains in Italy, has established that the provisions on unfair trading practices must apply irrespective of the economic size of suppliers and buyers. The new transposition provisions will therefore apply to all suppliers of agricultural and food products operating in Italy, regardless of the turnover thresholds laid down in the UTP Directive.
3.2. Written form
The new Italian provisions will maintain the requirement to conclude supply agreements concerning agricultural and food products in writing and prior to delivery of the products. In this respect, the Italian law will be therefore stricter than the provisions of the UTP Directive, which does not provide for a general requirement to conclude written contracts.
3.3. Further prohibited unfair practices
By virtue of the possibility for the Member States to introduce stricter national rules to combat unfair trading practices, under the new Italian framework, in addition to the list provided for in the UTP Directive, the following practices shall be considered unfair:
In addition, the regulation of sales below cost, as set out in Presidential Decree no. 218/2001, shall be revised in relation to the sale below cost of fresh and perishable food products.
3.4. Complaints and mediation or alternative dispute resolution mechanisms
In accordance with the provisions of the UTP Directive, the new Italian provisions shall ensure that the principle of confidentiality of complaints to the authority is strictly implemented and the protection of anonymity of complaints concerning unfair trading practices is guaranteed.
It will be also guaranteed the possibility of using mediation or alternative dispute resolution mechanisms.
3.5. Penalties
The Italian provisions implementing the UTP Directive will establish effective, proportionate and dissuasive penalties, taking into account the nature, duration, recurrence and gravity of the infringement, which will be up to the 10% of the turnover achieved by the infringer in the last financial year.
Such provision will result in a possible increase in the penalties provided for by Article 62, which are currently up to EUR 500,000 for certain infringements and take into account different parameters.
3.6. Enforcement authority
An important innovation concerns the designation of the Central Inspectorate for the protection of quality and fraud repression of agri-food products (ICQRF) as the enforcement authority responsible for supervising the application of the provisions governing trading relations in the sale of agricultural and food products, as well as the application of the prohibitions provided for by the UTP Directive and the relevant penalties.
The authority currently competent for the application of Article 62 in Italy is, in fact, the Antitrust Authority (AGCM), which since 2012 has applied such provision in a number of cases, both in terms of enforcement and through moral suasions.
Although the transposition measures have not yet been adopted, the European delegation law provides useful elements to allow franchisors operating in the agricultural and food chain to plan some measures to comply with the new foreseen Italian provisions implementing the UTP Directive.
Based on the principles and criteria set forth by the European delegation law, it is recommended to:
According to the UTP Directive, the new national measures shall apply from 1 November 2021. New agreements concluded after the date of application of the transposition provisions shall immediately comply with the new framework, whereas agreements concluded before the date of publication of such national provisions will have to be brought into compliance within 12 months after such date of publication.