The Legislative Decree No. 21/2014
The legislative Decree no. 21 dated 21 February 2014 (the “Decree”) implementing the Directive 2011/83/UE of 25 October 2011 (the “Directive”) and entered into force as of 13 June 2014 constitutes the last step of the Italian legislative process towards the strengthening the consumers’ protection applicable framework.
The Decree aims to simplify and revisit the rules provided by the previous Directive 85/577/CEE – concerning contracts negotiated away from business premises – and the Directive 97/7/CE – on distance contracts - by removing discrepancies, increasing the protection of consumers’ rights and interests, filling gaps, and raising the level of harmonisation of national laws. With a view to respecting the principle of a single public enforcer of consumer protections rules, the Decree entrusts the power to enforce the new rules to the Italian Competition Authority (the “ICA”).
The Decree has completely replaced Chapter I, Title III, Part III – Articles 45 – 67 of the Italian Consumer Code (the “ICC”) with a new Chapter, entitled “Consumer rights in contracts”. The new regulation deals with both distance contracts and traditional contracts, although the main changes are focused on distance and off-premises contracts.
The Italian legislator has intended to proceed with the two different levels of harmonisation already provided for by the Directive: a maximum level of harmonisation in the field of distance contracts and contracts negotiated away from business premises and a minimum level of harmonisation for contracts other than distance contracts.
Scope of application
In substance, these new rules apply to the following types of contract concluded between a trader and a consumer: (i) sales contracts; (ii) service contracts (excluding financial services); (iii) contracts for supply of water, gas, electricity or district heating, including by public providers; (iv) contracts of digital content not supplied on tangible mediums.
However, several types of consumer contracts fall outside of the application of the new rules, such as, amongst others, contracts related to gaming, lotteries and betting; distance contracts relating to financial services; sales transferring rights on real estate properties; contracts for tourist services and package holidays; and contracts negotiated away from business premises “for which the payment to be made by the consumer does not exceed €50”.
In terms of obligations upon companies concluding contracts with consumers, the Decree mainly deals with (i) consumer information for contracts other than distance or off premises contracts; and (ii) consumer information and right of withdrawal for distance and off-premises contracts. This further clarifies the additional rights of consumers which are identified on the basis of the ICA’s enforcement practice related to unfair commercial conducts in business to consumers transactions.
Consumer information for contracts other than distance or off premises contracts
With regard to contracts other than distance or off-premises contracts, i.e. contracts negotiated on business premises, Article 48 of the ICC establishes the minimum content of pre-contractual information to be provided by the trader, such as the characteristics of the goods and services; the identity of the trader; the total price; and interoperability features in case of contracts with a digital content.
Requiring such information represents a major improvement to the former legislation, insofar as, similar requirements in the pre-contractual phase previously existed only for certain contracts (i.e. holiday packages or distance contracts). This wider pre-contractual information obligation will now be imposed on any type of consumer contract.
However, and quite ambiguously, the provision excludes those contracts which “involve day-to-day transactions and which are performed immediately at the time of their conclusion”. The identification of this category of contract will be arguable and possibly subject to different interpretations.
Consumer information and right of withdrawal for distance and off-premises contracts
As far as distance and off-premises contracts are concerned, the new rules provide: (i) an extension of the content of the information that the trader shall provide to the consumer in the pre-contractual phase; (ii) the provision of formal requirements; and (iii) the provision of a strengthened right of withdrawal. Obligations for pre-contractual information to be supplied to the customer in a clear and transparent manner are more specific now than in the past. For example, in relation to distance contracts concluded by electronic means, there is now a specific formal requirement that the consumer be informed that, by activating a button or a link, that he is then obliged to pay. Further, regarding contracts concluded by telephone, the trader must confirm the proposal and give acceptance in writing.
One of the most relevant changes to the previous regime appears to be that the right to withdraw from a contract is now extended in favor of the consumer to 14 working days instead of 10 working days, as previously provided. The written form is no longer required and it is sufficient for the consumer to use any type of unequivocal statement.
Additional rights of consumers
In a specific section of the amended ICC, the Decree clarifies some general principles on the rights of consumers based upon the findings of the ICA in its decisional practice on unfair commercial conducts that infringe the provisions of the ICC.
With regard to additional or extra payments, consumer express consent is always required so that traders are obliged to apply an opt-in mechanism rather than the opt-out procedure frequently used in the sale of goods and services. In terms of time for delivery a deadline of 30 days from the date of the contract is to be met by traders. The risk of loss or damages to the goods is shifted to the consumer only at the moment when he actually receives the goods.
The enforcement of the new rules
Most importantly, the Decree further strengthens the ICA’s power; the new regulation has conferred an exclusive competence to the ICA in order to enforce these new rules. Therefore, the ICA can intervene ex officio or upon the request of any party having a legitimate interest in verifying whether the new rules are infringed. They can then impose heavy fines, thus exercising a power similar to that already used to pursue unfair commercial practices under the ICC. This is a major innovation to the extent that under the former regime the power to impose possible administrative penalties was with the individual chambers of commerce.
It remains to be seen how the ICA will interpret and enforce this new power, i.e. whether it will consider a violation of the new set of rules as a distinct infringement - which would appear consistent with the rationale behind the Decree - or whether it will decide to intervene only to the extent that non-compliance with the Decree will also result in an unfair commercial practice according to the pre-existing provisions and not amended by the ICC.
Regardless of the approach taken by the ICA, it is clearly of the utmost importance for any company doing business in Italy and concluding contracts with Italian customers to carry out a full review of their contracts and terms and conditions in order to comply with the new consumer protection framework introduced by the Decree.