As anticipated in the first edition of this newsletter, several important changes to the food and beverages sector have been heralded by the so called “Liberalisations Law Decree” (Decreto Liberalizzazioni – Law decree 24 January 2012 no. 1 – the Decree), converted into Law with Act on 24 March 2012 no. 27.
With specific reference to Article 62 of the Decree concerning the new regime on transfer agreements of agricultural and food products, on 24 October 2012 the Italian Government set out the rules for the effective application of the regime in order to provide clarification and practical guidance on aspects of its application.
In particular, the main features related to transfer agreements of agricultural and food products are i) mandatory written form of the transfer agreements and relevant essential content; ii) terms of payments; iii) forbidden unfair practices; and iv) competent surveillance authority.
Before examining each of these in more detail, it is worth clarifying that the transfer agreements covered by the new legislation are those concerning agricultural products (including, inter alia meat, fish, dairy products, edible vegetables and fruits, coffee, tea and spices, cereals) and food products, whose delivery occurs within Italian territory.
In this regard, a guideline issued by Confcommercio (the Confederation of Italian entrepreneurs) specifies that in import/export transactions, the transactions on the export of agricultural and food products will be subject to the new regime if the goods are delivered within Italian territory, e.g. to a carrier, although the final destination is abroad, whereas the import/export transactions shipping/delivering directly abroad will not be subject to the new regulation.
Moreover, the following agreements are also excluded by the scope of application of Article 62:
- agreements concluded with the final consumer;
- transfer agreements where the products’ delivery and the payment occurs immediately;
- transfer agreements between members of a cooperative to the cooperative itself;
- transfer agreements between members of an organisation of producers to the organisation itself;
- transfer agreements of fish products between fish producers.
The regulation set out by the Government applies to all transfer agreements concluded after 24 October 2012, whereas all agreements concluded earlier than that date should comply with the mentioned rules by 31 December 2012. In any event, since 24 October 2012, the terms concerning unfair competition practices and the terms of payments apply to all agreements.
i) Mandatory written form of the transfer agreements and essential content of the agreements
An important change foreseen in the new rules is that it should be mandatory for transfer agreements of food and agricultural products to be in writing and should indicate the duration of the agreement, the quantities and characteristics of the products sold and the payments and delivery terms.
Should the agreement not include said terms, it can be declared as void by a judge unilaterally, even in the absence of the counterpart raising objection. The provision is clearly intended to ensure transparency of contractual terms among the operators and prevent disputes concerning these terms.
Also, in order to avoid excessive formalities not suited to the dynamic sector of food law, it was clarified that the “written form” requirement is also fulfilled by any form of written communication, forwarded both in an electronic manner and via fax, also without being formally undersigned.
However, the absence of a signed agreement is allowed only if “there are circumstances equivalent to the signing which serve to unequivocally refer the documents to a specific person”.
It is possible to fulfill the requirement of the written form of agreement also on the basis of shipment or delivery documents and invoices provided that they include all the information on duration, product quantities and characteristics, payment and delivery terms, and bear a disclaimer specifying that they fulfill the requirements set by the new rules.
A monetary sanction up to €20,000 is foreseen for the violation of this provision.
ii) Terms of payment
The Government also specified the modalities to calculate the timeframe and effect payment related to the transfer agreements.
As mentioned in the first edition of this newsletter, the terms of payment vary according to perishable (30 days) or non perishable nature of the goods (60 days), and run from the last day of the month of receipt of the invoice. If the date of receipt is not certain, the date to which reference should be made is the date of delivery of the products.
The violation of this provision can be punished with a monetary sanction up to €500,000.
iii) Forbidden unfair practices
A list of forbidden unfair practices is set out, and sanctioned, by the new regime.
One worthy of mention is the imposition of contractual conditions which imply an undue burden on the other party, the application of different conditions for equivalent obligations, or setting conditions on the conclusion or the execution of the agreement based upon circumstances not objectively connected to the obligations involved in the transfer agreements.
In addition, non-adherence to good practices and using unfair practices as identified to the European Commission during the High Level Forum for a better functioning of the supply chain approved on 29 November 2011 is considered as unfair practice subject to punishment. The sanction foreseen for the breach of this provision is up to €3,000.
iv) Competent surveillance authority
The Italian Authority for the Competition and the Market (Autorità Garante per la Concorrenza ed il Mercato - AGCM) is the body in charge of surveillance concerning the compliance with the Decree and for issuing sanctions. The Italian Financial Police assist on the operative side the AGCM for the fulfillment of its tasks. AGCM can act directly or upon request of any interested party.
Of particular interest is that an interested party entitled to file a request to AGCM can also be an association which could file a complaint on behalf of its members and not only individuals or single companies. This has the benefit of ensuring protection also to those subjects which would have a weaker contractual power, if taken singularly.
The scope of the regulation and the critics among the operators
The declared aim of this new piece of legislation is to set higher standards of transparency among the operators and possibly boost the confidence of Italian food and agricultural producers. Although the effort is certainly to be welcomed, the new rules described have been widely criticized.
Food and agricultural producers, business organizations and several specialized reviews accused the new piece of legislation to fail to achieve its targets, creating confusion in the relevant implementation among the operators and useless bureaucratic difficulties restraining the very dynamic sector of foodstuff commerce.
In particular, the operators complain that requesting their clients and suppliers to conclude an agreement in writing for the transfer of their products is not easily accepted, mostly by small producers which usually make their orders over the phone or in very simplified manners.
Moreover, the fact that is possible to avoid the signature of the agreement does not constitute a real advantage in terms of simplification. As a matter of fact, avoiding the signature is permitted only if other suitable manners are used, e.g by using electronic tools (e.g. certified email address, certified electronic signature) or exchanging the copy of signed agreements via post or email. Therefore, any possible advantage deriving from avoiding the signature is overturned by the disadvantage of using other methods as burdensome as collecting a signature.
Another critic concerns the fact that a transfer agreement lacking of the specific indication of duration, quality and quantity of the products as well as the terms of payment and delivery is null. Contractual nullity is indeed a tough tool, which can have complicated procedural consequences in case a dispute arises.
Finally, also AGCM complain that for the time being there are no resources for performing its tasks under the new rules, thus the discipline although challenging and ambitious would hardly have a proper application.
Other articles related to the Food Law Digest Newsletter for January 2013:
> Poland: Dairy producers against private label products> Popular wine brand 'Tokaj' remains in Slovakia> Deficiencies in food control in Sweden> CJEU to claify dispute between Barcardi and Mevi on customs duty suspension arrangements> The Czech Republic loses its famous butter spread> Sarika Connoisseur Cafe Pte Ltd v Ferrero SpA> Nutritional claims and new beer tax in France
> Indirect advertising for alcoholic beverages
 Under Italian Law, law decrees are legislative acts issued by the Government under urgency circumstances and which lose efficacy if not converted into law within 60 days following their publication.
 With Ministerial Decree dated October 19, 2012 and enforced since October 24, 2012.
 Agricultural products are products listed in Annex 1 mentioned in Article 38.3 of the Treaty on the Functioning of the European Union.
 According to Article 2 of the Regulation 178 / 2002, “‘food’ (or ‘foodstuff’) means any substance or product, whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be ingested by humans”.
 The good practices were approved on November 29, 2011.