At the beginning of the summer, the Italian Competition Authority (Agcm) closed a proceeding against the well-known fast-food chain McDonald's for abuse of economic dependence (in violation of Article 9 of Italian Law No. 192/1998), accepting the commitments presented by the party to eliminate possible competitive distortions in the market.
Following to the annual report presented by Agcm, the Italian Competition Authority had many occasions in the last two years to deal with of abuse of economic dependence cases like those involving Benetton, Poste Italiane and WindTre.
Italian law regulating abuse of economic dependance provides that – regardless a situation of dominance on a specific market- abuse of economic dependence occurs when the 'stronger party' of a contractual relationship succeeds in determining an excessive imbalance of rights and obligations of the dependent company, which may reverberate, over time, on the very balance of the market concerned and cause, for example, higher prices or lower quality and innovation on the supply side.
The investigation against McDonald's is about its chain of franchising relationship: in the case at stake, the former franchisees, (weaker parties in the contractual relationship), complained about having faced very rigid contractual conditions imposed on them by McDonalds and of having been subjected to a whole series of controls that made it, in fact, impossible to act with the entrepreneurial autonomy that should abstractly characterise the franchising relationship.
Fee-based training for potential franchisees, a very strict non-competition clause extended to the entire food and beveratge sector, the impossibility of negotiated derogation from the proposed contractual standard, and the imposition of a minimum threshold of annual advertising investments were just some of the restrictions that, according to the complainants, substantiated the reported abuse.
These elements as highlighted in the report of the former franchisees were considered enough by Agcm to commence an investigation against McDonald's.
The party chose to avail itself of the option of proposing binding commitments for its future behaviour and to submit them to the so-called 'market test', i.e. the publication of the same to allow competitors to take a position on the effectiveness or not of the proposed solutions.
In particular, McDonald's commitments concerned the elimination of training costs to be borne by potential franchisees, the lowering of the minimum level of advertising investment required, the possibility of negotiating changes to the proposed contractual standard, and the elimination of most of the restrictions provided for in the original version of the non-competition agreement.
The successful overcoming of the market test and the final approval of the binding commitments proposed by Agcm allowed McDonald's to close the proceeding without the imposition of a fine, but, given the public nature of Agcm's power to impose sanctions, the acceptance of the commitments for the future, whenever it closes the investigation does not shield the party from the possibility of the former franchisees bringing a civil action for damages before the ordinary judicial authority (Ago).