Legislative Decree no. 198/2021 implemented Directive (EU) 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain, in accordance with the principles and guidelines set out in Article 7 of the European delegation law no. 53/2021.
The new legislation repeals Article 62 of Decree-Law No. 1 of 24 January 2012, converted with amendments by Law No. 27 of 24 March 2012, and the related regulations.
Scope of the decree is to fight unfair commercial practices in B2B relationships between suppliers and purchasers of agricultural products and foodstuffs, assessing as prohibited those practices, contrary to the principles of good faith and fairness, that are imposed unilaterally by a contracting party on its counterpart. The new rules, applying to the supply of agricultural products and foodstuffs by suppliers established in Italy, irrespective of turnover, with the exception of supply contracts concluded directly between suppliers and consumers, introduce a system of mandatory rules that prevail over any conflicting sectoral rules, whatever is the law applicable to the contract for the supply of agricultural products and foodstuffs.
One of the mandatory provisions is that contracts for the supply of agricultural products and foodstuffs must be concluded in writing prior to delivery and must indicate the duration, quantity and characteristics of the product to be supplied, the price, the method of delivery and payment. The written form may be fulfilled by means of transport or delivery documents, invoices, purchase orders, provided that the above elements have been previously agreed upon in a framework agreement.
The minimum duration of the contracts is fixed at twelve months, except in cases where a shorter duration is justified, also for the seasonal nature of the products, and is agreed by the contracting parties or results from a contract concluded with the assistance of the respective professional organizations most representative at national level and present in at least five chambers of commerce, including through territorial and sectoral branches. Apart from the permitted exceptions, a period shorter than the minimum duration shall in any case be deemed to be twelve months.
Prohibited commercial practices include:
- failure to comply with payment terms (respectively 30 days for perishable goods and 60 days for non-perishable goods, following delivery or the deadline for delivery, whichever is later);
- the cancellation of orders for perishable goods with less than 30 days' notice;
- the unilateral modification of the terms of purchase as to place, time and manner of supply, quantities, terms of payment and ancillary services;
- charging the supplier with liability for deterioration of the products when such deterioration was not caused by the supplier's fault or negligence;
- the unlawful acquisition, use or disclosure, by the purchaser or parties belonging to the same central purchasing body or purchasing group as the purchaser, of the supplier's trade secrets within the meaning of Legislative Decree No. 63/2018 which implemented Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure;
- threats of retaliation and claims for compensation for the costs incurred in investigating customer complaints.
Other prohibited business practices, unless they have been agreed upon in the supply contract or framework agreement in clear and unambiguous terms, concern requests to the supplier to return unsold goods, to bear the costs of advertising, marketing and discounting.
Finally, the following practices are prohibited:
- the purchase of agricultural products and foodstuffs through the use of double reduction tenders and electronic auctions;
- the imposition of particularly burdensome contractual conditions, such as reselling products below production costs;
- failure to comply with the obligation to draw up a written contract prior to delivery, as well as the omission of elements such as the price and the criteria for determining it, the quantity and quality of the products, the duration of the contract, the terms and procedures of payment, the arrangements for collecting and delivering agricultural products and the rules applicable in the event of force majeure.
The decree also provides the sanctions, which are particularly severe: suffice it to say that the penalty for some violations can be up to 5% of the turnover achieved in the last financial year prior to the assessment; the measure of the sanction is determined differently, depending on the violation, with reference to the value of the goods sold or the benefit received by the party committing the violation or the extent of the damage caused to the other party.
The new provisions will apply to contracts concluded after the date of entry into force of the decree on 15 December 2021, while contracts in progress will have to be brought into conformity within six months of that date.