On January 19, 2023, Italian Law No. 6 of January 13, 2023 (“Law”), containing amendments to Italian Law No. 108 of August 5, 2022, entered into force. The previous law contained urgent provisions for the safety and development of infrastructure, transport, and sustainable mobility, as well as for major events and for the functioning of the Ministry of Sustainable Infrastructures and Mobility and, under Article 7-quinquies, it introduced provisions impacting the automotive distribution chain (see in this respect our previous alert) that were not applicable to agency agreements.
In contrast, the amendments contained in Article 7-ter of the Law extend those provisions to agency agreements as well, and they also make Article 7-quinquies mandatory.
In a nutshell, as a result of the amendments:
- Article 7-quinquies shall apply to vertical agreements, “including those falling under the scheme of a contract of agency or sales concession or commission between the automobile manufacturer or importer and individual authorized distributors authorized for the marketing of vehicles that have not yet been registered, as well as of motor vehicles that have been registered by the authorized distributors for no more than six months and that have not driven more than 6,000 kilometers” (emphasis added);
- agreements between the manufacturer or importer and the authorized distributor shall be either agreements of indefinite duration or fixed-term agreements;
- fixed-term agreements shall last at least five (5) years;
- agreements shall regulate the terms of sale, the limits of the mandate, the assignment of liability among contractual parties, as well as the allocation of costs linked to sales;
- each party is entitled to withdraw from the agreement of indefinite duration at any time by giving twenty-four (24) months’ written notice of withdrawal to the other party;
- for a fixed-term agreement, each party shall provide written notice of its intention not to renew the agreement at least six (6) months prior to the expiration of the agreement; in the absence of such notice the agreement shall be renewed automatically;
- Article 7-quinquies of Decree-Law No. 68/2022 is mandatory (but does not apply to existing contracts).
Paragraphs 3 and 4 of Article 7-quinquies remain almost unchanged (but are now applicable to agency contracts). Respectively, they introduce the following obligations for manufacturers and importers:
- before an agreement is signed or in the event of subsequent amendments, the authorized distributor/agent must be provided all available information necessary to assess the extent of the commitments to be undertaken and the sustainability of the same in economic, financial, and equity terms, including an estimate of the marginal revenue expected from the marketing of vehicles (par. 3);
- in case of withdrawal from an agreement, a fair indemnity shall be paid to the distributor/agent (except in the event of termination due to contractual breach or when the withdrawal is requested by the authorized distributor/agent), based on the value of both a) investments made in good faith for the purpose of executing the agreement that have not been recovered at the date of termination of the agreement; and b) goodwill for activities carried out in execution of the agreement, proportionate to the turnover of the authorized distributor in the last five years that the agreement was in effect.
Several of these provisions seem to be inspired by the former EU automotive block exemption regulation (“BER”) no. 1400/2002 no longer in force which paid particular attention to the protection of distributors in vertical relationships. These provisions were then superseded by the following EU general BER no. 330/2010 applying to all vertical agreements (including those in the automotive industry) recently replaced by EU BER no. 720/2022.
