Many Italian businesses operate in supply chains where a single customer, supplier or platform accounts for a decisive share of their revenue. This is common in industrial subcontracting, distribution, logistics and services. Economic dependence is not unlawful in itself. Italian law steps in when the stronger party exploits that dependence to impose terms the weaker party would never accept if it had genuine alternatives in the market.

The legal basis and its scope

The rule is found in Article 9 of Law No. 192 of 18 June 1998, originally enacted to regulate industrial subcontracting. It describes economic dependence as a situation in which one business is able to create an excessive imbalance of rights and obligations in its commercial dealings with another. A key factor is whether the business suffering the abuse can realistically find satisfactory alternatives in the market.

According to the prevailing view of the Italian courts, the prohibition applies to business-to-business contracts generally, including supply, distribution, franchising and service agreements. Importantly, the stronger party does not need to hold a dominant position in the antitrust sense. What matters is relative dependence: the balance of power between those two particular businesses.

Conduct that may amount to abuse

The statute gives examples: refusing to sell or buy, imposing unjustifiably burdensome or discriminatory contract terms, and arbitrarily terminating an existing commercial relationship. In practice, typical warning signs include:

  • prices imposed below a sustainable margin, or unilateral downward revisions;
  • unilateral changes to volumes, technical specifications or delivery schedules;
  • demands for unpaid additional services, or for dedicated investments with no assurance that the relationship will last;
  • excessive payment terms or systematic late payment;
  • sudden termination, without adequate notice, of a relationship that had led the weaker party to specialise.

Late payment is subject to a specific rule: where the Italian late payment legislation is breached in a widespread and repeated manner to the detriment of businesses, particularly SMEs, abuse may be established without proving economic dependence. For digital intermediation platforms that play a decisive role in reaching end users or suppliers, the 2021 Annual Competition Law (Law 118/2022) introduced a rebuttable presumption of economic dependence.

Available remedies

Any agreement through which the abuse is carried out is void. The business affected may bring proceedings before the Italian civil courts seeking:

  • a declaration that the abusive clauses are null and void;
  • an injunction to stop the conduct, including urgent interim relief where harm is imminent, for example where an interruption of supplies would threaten the continuity of the business;
  • damages, which may cover lost margins and the cost of investments that have become worthless.

Where the abuse also affects competition in the market, the Italian Competition Authority (AGCM) may intervene with cease-and-desist orders and fines. For certain types of contract, including subcontracting, franchising and continuing supply agreements (somministrazione), an attempt at mediation is now a mandatory precondition to court proceedings, which should be factored into any timetable.

Evidence: where cases are decided

The burden of proving both dependence and abuse lies with the claimant. Courts examine the facts closely, so the relationship must be reconstructed with documents:

  • the weight of the counterparty in the claimant’s revenue and margins over time;
  • relationship-specific investments and how far they can be redeployed;
  • the absence of realistic alternatives within a reasonable time and at reasonable cost;
  • how contract terms evolved, and the correspondence between the parties;
  • a quantification of loss, often supported by a forensic accountant.

The strength of a case largely depends on what the business kept before the dispute began. Purchase orders, emails, meeting minutes and customer profitability analyses are often the most valuable evidence.

Prevention, and when to seek legal advice

The best time to act is before the relationship breaks down. At the negotiation stage, it is worth agreeing a minimum term or notice periods proportionate to the investment required, price review mechanisms, renegotiation clauses for changed circumstances, and clear rules on exclusivity and volumes. Monitoring revenue concentration and diversifying where possible are equally important.

Legal advice is advisable when a commercial partner demands significant unilateral changes, threatens or announces termination, or when the economics of the contract have become structurally loss-making. An early assessment makes it possible to establish whether the conditions for abuse are met, to preserve evidence, and to choose between negotiation, interim relief and full proceedings, weighing the commercial consequences of each option.

This article is for general information only and does not constitute legal advice.