Law No. 118 of August 5, 2022, introduced important changes to the regulations governing subcontracting in productive activities and the abuse of economic dependence (Art. 9 Law 192/1998), with undoubted implications in relations between the parties, including in the case of litigation.
In October 2023, the guidelines on subcontracting will turn 25 years old; over time Law 192/1998 has undergone several amendments, the most recent being that of August 2022 (Law 05.08.2022, No. 118), effective as of October 31, 2022, amendments that significantly affect the scope of the well-known Article 9 on abuse of economic dependence. Before pointing out the new changes, it is useful to briefly summarize the features of the regulations under review. First of all, according to the definition given in Article 1 of Law 192/1998, under the subcontracting agreement an entrepreneur undertakes to carry out work on behalf of a client enterprise on semi-finished products or raw materials supplied by the client, or undertakes to supply the client with products or services intended to be incorporated or otherwise used in the production of a complex asset in the context of the client's economic activity, according to instructions provided by the latter.
Such a contract must be in writing under penalty of nullity and must accurately indicate the goods or services that are the object of the order, as well as the agreed price and the terms of delivery/testing of supplies. The parties must also fix the terms of payment for subcontracting, and interposition between subcontractors is prohibited: in a nutshell, the subcontractor cannot entrust third parties with the performance of its services that exceed 50 percent of the value of the supply, unless authorized by the client. There are also rules on the liability of the subcontractor, on the intellectual property of projects supplied by the client, on the VAT arrangements for orders and, most importantly, on the possible abuse of economic dependence by the client to the detriment of the subcontractor. By introducing a specific rule on this abuse, the legislator wanted to protect that condition of weakness and subordination of those small and medium-sized (but also large) companies, often "single-agent", whose survival depends to a large extent, if not completely, on the supplies requested by the client. The excessive imbalance of rights and obligations to the detriment of the subcontractor results in so-called economic dependence. What Article 9 of Law 192/98 prohibits is the abuse of such dependence, abuse that may manifest itself in the client's refusal to sell or buy, in the imposition of unjustifiably burdensome or discriminatory conditions, or in the arbitrary interruption of existing business relations. In such a context, the subcontractor must also find it impossible to find concrete and satisfactory business alternatives in the market. All clauses that contribute to an abuse of economic dependence are void. In August 2022, Article 9 of Law 192/98 was supplemented, expanding the possible hypotheses of abusive conduct; thus, looking at the digital world and the Internet, a presumption of economic dependence has been introduced when a company uses intermediation services provided by a digital platform that has a decisive role in reaching end-users or suppliers, including in terms of network effects or data availability (new paragraph 1 Art. 9); such abusive practices may also consist: (a) in providing insufficient information or data regarding the purpose or quality of the service provided; (b) in demanding undue unilateral benefits not justified by the nature or content of the activity performed; (c) in adopting practices that inhibit or hinder the use of different providers for the same service, including the application of unilateral conditions or additional costs not provided under existing contractual agreements or licenses.
As legal safeguards, the possibility for the subcontractor to report the abusive conduct to the Italian Antitrust Authority was contemplated from the onset in order to activate the investigation, with consequent warnings and, if appropriate, severe sanctions; alternatively, those who suffer the abuse can always take the case to the ordinary courts, not only to obtain possible injunctions but also to obtain the client's condemnation to pay damages. As from October 31, 2022, such actions can be brought before the Section specialized in business matters.
Originally Published by 29 September 2023
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