The investigation which was initiated for alleged abuse of economic dependence was closed with the acceptance of commitments. The new contractual standard now permits limiting the gap of rights and obligations between the licensor and its network of franchisees

The Italian Competition Authority closed the investigation for alleged abuse of economic dependence against McDonald's Development Italy LLC (MCDI) by accepting the commitments submitted.

In particular, the proceedings involved the conduct of MCDI towards its franchisees that manage the Mc Donald’s restaurant network, which consisted of imposing specific conditions and obligations that unduly influenced their business activity and unjustifiably compressed their profit margins.

The alleged abusive conducts at the time of start-up involved not only a number of clauses which were included in the contracts for the lease of the business units and/or franchise contracts and the terms applied to franchisees during and at the end of the contractual relationship, but also the behaviour adopted in the period prior to signing the contract. In particular, the manner in which MCDI managed the pre-contractual phase appeared to undermine the negotiating power and the possibility of making alternative choices of future franchisees, right from the moment the contract was signed.

On the whole, the Authority considered that the commitments submitted by MCDI effectively eliminated the competition concerns related to all the aspects of the alleged abuse of economic dependence as stated in the opening of proceedings decision. The management as a whole of the pre-contractual phase has been significantly modified, in order to guarantee full awareness - on the part of aspiring franchisees - of the contents of the contract that they are to sign, including their obligations and commitments, and profits, related to the management of a Mc Donald's restaurant, also reducing the costs incurred for training.

According to the Italian Competition Authority, the new contractual standard proposed by MCDI may significantly limit the gap of rights and obligations between the licensor and its franchisee network right from the moment the franchisee relationship is established. Finally, the clarifications that MCDI has agreed to include in the contracts, above all with respect to recognising the licensees' autonomy in terms of commercial policies and choice of suppliers, were considered to be suitable to guarantee to the franchisees an adequate margin of autonomy in their business choices.

Rome, 30 June 2022