International Distribution Institute
Venice, 19th May 2012
Can a commission contract replace a
commercial agency contract?
Copyright 2012
www.albertovenezia.it
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Statistics Milan Chamber of Commerce 2012
 46.576 commercial agents : 38.515 registered as phisical person; 8.061
registered as a company
 1.032 commission agents: 149 registered to the meat sector, 821 to the
fruit and vegetable sector; 62 to the fish products sector
 Relevant product market of the commission contract:
‒ Fruit and vegetable sector
‒ Fish products sector
‒ Meat sector
 Decline of the commission contract
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COMMERCIAL AGENCY CONTRACT
Characteristics
 Great control of the local market
 Very good level of cooperation
 Stability
 Autonomy
 Independence
 Disapplication of antitrust regulation
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Legal sources
 Italian Civil Code (arrt. 1742 – 1753 c.c.)
 General rules on contracts: art. 1321 c.c. ss.
 Collective Agreements (aec)
 EC Council Directive n° 653/86
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Italian Civil Code
 Amendments in 1991 (decree 10/9/1991, n. 303) and
1999 (decree 15/2/1999, n. 65) to implement EC
Directive 653/86
 Law 21/12/1999, n. 526 amended art. 1746 c.c.
concerning del credere clauses
 Law 29/12/2000, n. 422 (art. 23) added
a new
paragraph to art. 1751 bis c.c. providing for a specific
indemnity for non competition obligations after the end of
the contract
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Collective agreements - AEC
 Concluded between the organisations of principals and
agents in 4 different areas to which the principal may
belong:
 Industrial undertakings (AEC 20/3/2002)
 Commercial undertakings (AEC 16/2/2009 - 10/3/2010)
 Artisans (AEC 12/6/2002)
 Small undertakings belonging to Confapi (AEC 20/3/2002)
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Main obligation of the contract
The agent undertakes to promote the entering of
contracts on behalf and in the name of the principal
within a specified territory
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Exclusivity
The commercial agent can’t promote the conclusion of
contracts in the same area for other principals with
competing products
 The principal cannot appoint other commercial agents in
the same area and for the same products defined in the
agreement
Unless otherwise agreed in writing by the parties, there is
automatic bilateral exclusivity.
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Remuneration
 Commission
 No fixed payment
 In principle commercial agent must pay the expenses
incurred in the performance of his duties
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Duration
1. Indefinite period agreement
 free rescission of contract with due notice (from 1 to 6
months - 8 according to AEC)
2. Fixed period agreement
 it expires by effluxion of time
 If a fixed period agreement continues to be performed
by both parties after expiry of the fixed time, it is
converted to an indefinite period agreement, terminable
by notice.
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Termination indemnity
Problems concerning the calculation method to be applied.
Two possibilities:
1. art 1751 Italian Civil Code (ex art 17-18 EC Council Directive
86/653)
2. AEC (collective agreements)
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Art. 1751 c.c.
 Italy has implemented art. 17 of EC Directive choosing
the “German” indemnity
 Art. 1751 c.c. contains almost ad verbatim art. 17 par. 2
of the Directive
 2 conditions must be met for the right to indemnity:
1) new customers brought in or increased business with the
existing customers; and
2) payment is equitable having regard to all the circumstances
 Maximum amount: 1 year commissions
 A concrete criteria of calculation is lacking from art. 1751
c.c. but can be found in the Directive
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Collective agreements
 When art. 1751 was replaced in 1991 by d.l. 303/1991
implementing EC Directive, the trade organisations of
principals and agents modified in 1992 the existing
collective agreement but substantially reinstated the system
of calculation previously in force, favourable to principals.
 In 2002 the 4 existing collective agreements were renewed
introducing some minor modifications
 In 2009 and 2010 only the collective agreement for
commerce was renewed introducing a method of
calculation very favourable to the agent
 Calculation is based on a percentage of the commissions
earned by the agent during the contract
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Economic function
 Create a distribution network
 A continuous and fiduciary relationship
 Product and brand development
 Market control
 Customer loyalty
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Costs
 Remuneration: variable cost
 Termination indemnity: problematic cost
 Social security costs: (ENASARCO – also for foreign
principals Italian-based or with any Italian subsidiary)
 Compensation in lieu of notice (only for permanent
contracts)
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COMMISSION CONTRACT
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Legal sources
 Civil Code (artt. 1731 – 1736 c.c.)
 Mandate provisions artt. 1703 – 1730 (if not derogated)
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Main obligation of the contract
 The purchase or the sale of goods on behalf of the principal and in
the name of the commission agent
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Characteristics
 Occasionality
 Commission agent acts in his own name
 Independence of commission agent
 No contacts between principal and client / third party
 No obligation to promote
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Duration
 One or more specific affairs
 Temporary nature
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Termination
 Revocation by the principal (payment of the affairs
performed; no social security costs; no termination
indemnity; no notice period;)
 Withdrawal by the commission agent before the expiry
(only for good cause, otherwise compensation for
damages must be recognised in favour of the principal)
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Economic function
 Anonymity of the principal
 Use of the commission agent’s commercial organization
 Cost savings
 Business risk transfer
 Entry into new markets
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Costs
 Variable remuneration: commissions as agreed
 Extra remuneration based on «star del credere»
 Expense reimbursement (if agreed)
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Commercial agency contract
Advantages
 Better level of cooperation
 Great control of the local market
 Stable assignment
 Exlusivity (it can be derogated)
 Development of the principal’s brand name and /or
trademark
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Commercial agency contract
Disadvantages
 Social security costs (ENASARCO)
 Termination indemnity
 Notice period for permanent contract
 Limits related to «star del credere»
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Commission contract
Advantages
 «Star del credere»
 No social security costs (ENASARCO)
 Easier termination
 No termination indemnity
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Commission contract
Disadvantages
 Temporary nature
 Not integrated distributor
 No relationship between principal and clients
 Lack of principal trade name diffusion
 Lack of market control
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Can a commission contract replace a
commercial agency agreement ?
Difficult to imagine the replacement of a commercial
agency contract by a commission contract
The object, structure and characteristics of the contract
Contract’s economic functions
Different aim and market approach
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THANK YOU
FOR YOUR ATTENTION
Avv. Alberto Venezia
Via Visconti di Modrone 1
20122 Milano (Italy)
www.albertovenezia.it