As we have already discussed here, the Italian Competition and Market Authority (“AGCM” or “Authority”) has shown a significant interest in cases of abuses of economic dependence in recent years. Another recent example is the investigation launched in December 2021 against Original Marines (“OM”) regarding the franchise terms applied by the latter to its franchisees, alleged to be an abuse of economic dependence under Article 9 of Italian Law no. 192/1998. The investigation has recently been closed by the Authority with a decision finding that all commitments proposed by OM were acceptable.

In line with prior cases, the proceedings against OM originated from the complaints filed by former franchisees of OM, complaining that the franchisor allegedly abused their position of economic dependence by imposing a set of contractual conditions, through which OM centralized and reserved for itself all business decisions concerning the management of the store, transferring its business risks on the franchisees and affecting their possibility to effectively operate on the market.

By way of example, according to the franchisees’ allegations, the allegedly abusive conducts by OM included the provision of clauses assigning special prerogatives to OM regarding the composition of orders, including through computer-type control at the store and automatic restocking mechanisms, and imposing promotions and resale prices while preventing the franchisees from independently carrying out sales promotion and marketing campaigns.

After the start of the investigation, OM submitted its commitments, which were published by the Authority on its website and underwent a market test. After the conclusion of the market test, OM made changes to its commitments, which resulted in a new version of the franchise contracts providing for:

  • an amendment of the clauses related to quantities to be purchased by removing all references to minimum quantities and products to be mandatorily purchased;
  • the introduction of a clause that explicitly defined restocking to be optional, without minimum purchase obligations, with the possibility of mutually agreeing automatic restocking options;
  • an amendment of the clause related to resale prices, removing all reference to official price lists;
  • an amendment of the clause related to sales promotions and marketing campaigns, removing any reference to the prohibition of competition between retailers and to authorizations required for carrying out marketing campaigns.

The Authority found that the commitments proposed by OM ensure the decision-making autonomy and freedom of choice of franchisees, thus safeguarding the free determination of franchisees regarding purchase orders and restocking, as well as regarding the determination of sales prices and the launching of promotional campaigns, removing the competitive concerns identified in the order which opened the investigation. Consequently, the Authority closed the proceedings without a finding of infringement. The Italian original of the decision can be found here.