A543 - ICA: Benetton under investigation for an alleged abuse of economic dependence in franchising agreements
According to the Authority, the group might have obliged its retailers to maintain a sales structure and a commercial organisation tailored to Benetton’s needs and such as to prevent them from independently managing their own business
Autorità Garante della Concorrenza e del Mercato has opened an investigation against the Benetton group (headed by the holding company Benetton S.r.l.) for an alleged abuse of economic dependence pursuant to article 9, paragraph 3 bis of Law no. 192 of 18 June 1998, with regard to two franchise agreements entered into with an independent retailer of Benetton branded products.
In terms of economic dependence, Benetton allegedly obliged its retailers to maintain a sales structure and a commercial organisation tailored to Benetton’s needs; in particular Benetton contractually ensured it had the possibility of setting rules and organisational parameters that would make the franchisee's business structure less flexible, to the point of hindering, if not preventing, its possible reconversion.
In this respect, the subject of the investigation is the alleged discretionary use by Benetton of some contractual clauses that allegedly allow it to influence the retailer's strategic choices, such as defining sales proposals and/or purchase orders, not just in terms of timing, but also of quantities. In this way, Benetton may have significantly affected the economic activity of the franchisee, which may be prevented from independently managing its own commercial activity.
The Benetton Group holds a significant position in the clothing market, with a brand that enjoys a strong commercial appeal, and therefore this matter is relevant not only in terms of the individual contractual relationship, but also to protect competition and the market. The use of the contractual template under investigation by an entity that operates a significant franchised commercial network could have a significant impact on all the entrepreneurs part of the network in question, to the detriment of competitive dynamics in the market.
On 24 November 2020, the Authority carried out inspections at the premises of Benetton S.r.l. and Benetton Group S.r.l. with the collaboration of officers from the Guardia di Finanza (Italian Finance Police).
Rome, 25 November 2020