Market spotlight

State of the marketplace

What is the current state of the luxury fashion market in your jurisdiction?

The style business is actually a big thing in Italian republic, as information technology is the homeland of designers who made the history of fashion, worldwide renowned brands, and a venue for hundreds of specialised enterprises, as well as for artisans whose hands are internationally valued. The market comprises big companies, international groups, and pocket-size and medium enterprises.

According to a recent study published by Confindustria Moda, the amass turnover of the mode manufacture in Italy was worth almost €22 billion in 2017. Clothing drives the manufacture, making up 49.six per cent of the full turnover, followed by footwear at 15.one per cent. Women'south fashion leads with a turnover of about €xiii.3 billion in 2018. Not surprisingly, exports (63 per cent of the total turnover in 2018) are constantly increasing.

Industry and distribution

Manufacture and supply chain

What legal framework governs the evolution, manufacture and supply chain for fashion goods? What are the usual contractual arrangements for these relationships?

Italian Civil Code provisions apply to manufacturing arrangements. Their main specificities are:

  • the contractor takes on the risk, organisation and supervision related to the business and contractual performance;
  • the brand, as a principal, is jointly liable for all salaries, insurance, severance indemnities, etc towards the contractor's employees upwardly to ii years post-termination;
  • long-term agreements may exist terminated at whatsoever time with reasonable discover;
  • warranty coverage lasts for two years provided defects are notified within 60 days from detection; and
  • the make is entitled to unilaterally stop the agreement, provided it reimburses all expenses and loss of earnings.

When the contractor manufactures appurtenances for more brands, manufacturing line, equipment and products destined to each brand are kept separate (to ensure brand protection).

Sub-supply agreements are specifically regulated by Law No. 192/1998, which imposes strict and mandatory requirements to ensure that the sub-supplier does non become economically dependent on the make. These include: payment terms cannot exceed sixty days; IP rights cannot be assigned to the brand for unreasonable consideration; and sub-suppliers cannot assign more 50 per cent of activities to third parties, unless authorised. Any not-compliance is void and unenforceable with regard to the sub-supplier.

Procurement of raw materials (eg, silk or leather) and components (eg, stones) is subject to the Italian Civil Code rules except for specific provisions on: exclusivity, to ensure that competitors will not accept advantage of similar products or technologies; and correct of start refusal in favour of the supplier, if the brand wishes to rely on the most economical or quality-competitive providers on the market.

Distribution and agency agreements

What legal framework governs distribution and agency agreements for style goods?

For outsourced distribution and resale, brands may recur to selective distribution systems (see question 26) and franchising agreements.

Franchising agreements are preferred to ensure total brand integration and higher control over the distribution line. They are regulated past Police No. 129/2004 and Ministerial Decree No. 204/2005 (encounter question 4).

No specific laws govern sales agency agreements in the style and luxury sector: the Italian Ceremonious Code and a national labour collective agreement use. It is, notwithstanding, common to provide boosted tasks (eg, availability of a showroom, marketing support, etc) that are not necessarily peculiar to ordinary sales agency contracts. The sales agent relationship with an individual triggers a cocky-employment relationship where, against the agent's commitment to promote the diplomacy of the principal, the latter pays a commission on the affairs ended thank you to the agent's activity. The contract can be executed for a definite or indefinite period (in the latter case, each party may resign by granting a minimum notice, unless the termination is grounded on a serious misconduct incurred by the other party).

What are the most commonly used distribution and bureau structures for fashion appurtenances, and what contractual terms and provisions usually apply?

Franchising agreements, to exist concluded in writing, shall not last less than three years. Agreements with the franchisor (ie, the make possessor) usually include specific provisions on:

  • location of where the business is carried out;
  • direction of IP rights and know-how ensuring that franchisees (ie, entities managing the stores under the brand's name) use IP rights in compliance with the make's policy;
  • parties' contributions to setting up the business;
  • shop interior decoration and furnishing; and
  • stock and postal service-sale assistance services management.

Distribution agreements are usually structured as framework agreements disciplining the overall relationship betwixt the brand and its distributors and by subsequent single purchase orders. Typical provisions include:

  • stock arrangements, besides in example of termination of the agreement;
  • minimum sales and performance requirements, including marketing activities;
  • mail service-auction assist;
  • extended warranties; and often
  • exclusivity provisions in favour of the brands.

Finally, bureau agreements usually contain specific provisions on:

  • where to operate;
  • consideration to be paid to agents (usually a percentage of the value of the agreement procured);
  • powers to represent and bind, if at all the principal (ie, the high-stop brand);
  • exclusivity; and
  • indemnity provisions in example of termination.

A mail-termination non-compete obligation is not mandatory but advisable. This obligation, to be agreed in writing, tin final a maximum of two years following termination and must be adequately compensated.

Import and export

Exercise any special import and consign rules and restrictions utilize to manner goods?

Italian police does non provide for special rules or restrictions for the import and export of fashion goods.

Given that such goods ordinarily comprise IP rights, attending should exist paid to the sales contractual conditions and to appurtenances value for custom duties purposes. Pursuant to the Marriage Custom Code, the primary footing for the determination of the goods custom value shall be the transaction value (ie, the toll actually paid or payable for the goods when sold for export). Therefore, it is necessary to include in the declared custom value the royalties and licence fees due for using the IP. Otherwise, Customs Authorities will have the power to amend this value and increase the taxable base of operations for custom duties purposes.

Finally, the World Trade Organisation recently authorised the United States to accuse special custom duties on luxury goods coming from Europe. Information technology is thus advisable to carefully evaluate the export requirements for way goods from Italy to the United States.

Corporate social responsibility and sustainability

What are the requirements and disclosure obligations in relation to corporate social responsibleness and sustainability for fashion and luxury brands in your jurisdiction? What due diligence in this regard is brash or required?

Although no law regulates sustainability with specific reference to way and luxury, Legislative Decree No. 254/2016 (implementing European union Directive 2014/95) sets specific obligations for big companies, defined as those counting more 500 employees and more than €20 one thousand thousand total assets or more than €40 million net revenues from sales. If a way make falls within these limits, it needs to make a sustainability disclosure covering environmental and social aspects, including the respect of human rights, environmental impact and fight against corruption.

Italian legislation does non provide for whatsoever due diligence obligation on environmental, social and governance aspects. All the same, given the increasing attention to sustainability and the number of worldwide scandals involving fashion brands, it is quite common in the field to adopt policies and codes of behave, the respect of which is monitored through audits.

What occupational health and safety laws should style companies exist aware of across their supply chains?

Companies operating in the fashion and luxury sector must - like whatsoever other employer - strictly comply with the obligations on health and safety requirements at work mainly provided by Legislative Prescript No. 81/2008 (ie, drafting and periodically updating a risk assessment, grooming personnel, adopting whatsoever measures aimed at excluding or reducing the risks for employees, etc).

Considering of the complexity and technicality of the health and safety obligations, it is strongly appropriate to appoint an external consultant supporting the employer with this duty.

Online retail

Launch

What legal framework governs the launch of an online style market or store?

In Italy, e-commerce is regulated by Legislative Decree No. lxx/2003 (implementing European union Directive 2000/31 on e-commerce). The sale of products online is subject to the filing of the SCIA, a find informing the government that online commerce is being started. Failure to comply will atomic number 82 to administrative sanctions, regulated on a regional basis.

Online fashion marketplaces and stores shall also comply with laws governing business-to-consumer (B2C) transactions, many of which were transposed in Legislative Prescript No. 206/2005 (Consumer Code), including EU Directives 2011/83 on consumer rights, 1999/44 on guarantees and 29/2005 on unfair commercial practices. This legislation sets out a number of rules, including disclosure and transparency towards consumers and determination of online contracts, etc. Failure to comply may lead to contract unenforceability with regard to consumers or to administrative sanctions upwardly to €v 1000000.

In addition, more sectoral (national, regional or both) legislation may apply (eg, on online extraordinary sales).

Finally, EU Geoblocking Regulation 2018/302 prohibits discrimination against consumers and, in limited cases, confronting businesses, based on their nationality, place of residence or establishment when buying appurtenances or services on online platforms, requiring mandatory access to foreign platforms, applicability of like conditions and acceptance of foreign payment methods.

Sourcing and distribution

How does e-commerce implicate retailers' sourcing and distribution arrangements (or other contractual arrangements) in your jurisdiction?

Recent years have shown that high-end brands are finally - subsequently decades of in-store predominance - fully embracing the tech world by offering high-ranked e-commerce platforms. Notwithstanding, experts maintain that Italian style is growing (upward 4.8 per cent equally opposed to 2018) slower than other markets considering of limited digitalisation.

Terms and weather

What special considerations would you lot take into account when drafting online terms and atmospheric condition for customers when launching an e-commerce website in your jurisdiction?

Special considerations apply to both business-to-business (B2B) and B2C platforms, while others employ only to B2C platforms.

In both B2B and B2C relationships, the liability of the trader for wilful misconduct or gross negligence cannot exist express or excluded, also in example of death or personal injury. Moreover, article 1341 of the Italian Civil Code requires that burdensome provision of general terms and conditions listed thereunder (eg, limitation of liability, early termination, forum choice, etc), demand a written and separate credence past customers for them to be valid and enforceable. In B2C agreements, these provisions would besides demand to be 'expressly negotiated' with customers to exist valid. Because, nonetheless, B2C full general terms and conditions are not usually negotiated, crushing provisions contained thereunder are unlikely enforceable with regard to consumers, even if accepted past means of a specific 'click'. In terms of warranty to be offered in case of lack of conformity, the off-line subject (ie, 12 months for B2B agreements) also applies to online transactions.

In B2C relationships, rules on consumer information require style traders to provide Italian consumers with minimum information requirements in articulate and comprehensive linguistic communication, in Italian, prior to or afterward (depending on the type of information) the conclusion of a distance contract, including:

  • trader identity and contacts;
  • good chief characteristics;
  • total price (inclusive of taxes, delivery or postal charges and other costs);
  • beingness of a legal guarantee on goods;
  • arrangements for payment, commitment and performance;
  • consumer right of withdrawal within the 14-day cooling-off period and relevant exceptions;
  • return and refund policies;
  • applicable law and jurisdiction (taking into consideration mandatory rules applicable to consumers); and
  • reference to the possibility to solve disputes via the online dispute resolution platform provided by the EU Committee.

Tax

Are online sales taxed differently than sales in retail stores in your jurisdiction?

The sales venue (online or retail stores) does not affect on the tax regime applicable in Italian republic. Indeed, the relevant income is subject to the income and sales taxes based on the ordinary Italian revenue enhancement rules.

The key outcome is determining whether a company is subject to taxation in Italia. This depends on the tax residence of the seller and on whether the sales present a territorial nexus with Italia. The following are subject to taxation in Italy:

  • Italian tax resident sellers, on their worldwide income, which includes both in-store (in Italy and abroad) and online sales; and
  • sellers that are not tax resident in Italy, on their sales performed through an Italian permanent institution.

The definition of 'permanent establishment' was recently broadened to include the 'digital permanent establishment' arising whenever there is a 'significant and continuous economic presence in Italy structured equally to avoid a concrete presence in Italia' (commodity 162 of Presidential Decree No. 917/1986). In the absence of guidelines on its awarding, companies willing to carry out a pregnant and continuous online sale activity in Italian republic might desire to pay special attention to its economic arrangement.

Besides, with Law No. 145/2018 Italy introduced the 'tax on digital services'. Once implemented (almost probable from 1 Jan 2020), this tax will imply, if a number of weather condition are met, the application of a iii per cent taxation on some of the services that are usually continued to e-commerce activities, including, past manner of example, providing advert on a digital interface targeted to users of the same interface.

Intellectual property

Design protection

Which IP rights are applicable to fashion designs? What rules and procedures apply to obtaining protection?

In Italian republic, fashion goods are eligible for protection under pattern, copyright, trademark and unfair contest police. In some circumstances, these rights may overlap.

Design protects non only the terminal product but too patterns, packaging, etc, as long as they are new and accept individual graphic symbol. Protection lasts 25 years but it is possible to file the awarding within 12 months from beginning disclosure. This means that a brand may present a product at a way evidence, probe its success and then apply for registration.

Under European union Regulation six/2002, straight applicable in Italy, any unregistered blueprint meeting the above requirements is granted a three-year protection starting from the showtime disclosure to the public inside the Eu. This right is very useful for fashion products with a curt market life (eg, lasting merely a season).

Copyright arises automatically when a work is created and does non require registration. It is sufficient that the result is original. However, for industrial design works, article 2, No. ten of Italian Copyright Law as well requires creative value. The Court of Milan recognised that the afterwards-ski 'Moon Boots' accept creative value, relying on the fact that Louvre Museum has considered them among the 100 most representative industrial design works of the twentieth century.

Finally, the shape of a production may also be protected equally a 3D trademark, if it is new and has distinctive grapheme (eg, the Hermes 'Birkin' pocketbook) and under commodity 2598 of the Italian Ceremonious Code, regulating unfair contest.

In general, works fabricated for hire eligible for protection under design and copyright law vest to the principle. It is important that the scope of the contractual understanding with designers specifically mentions the conceiving and pattern of goods and that this activeness is properly compensated.

What difficulties ascend in obtaining IP protection for style goods?

Functional elements are excluded from design protection. Also, designs or trademarks contrary to public policy and to accepted principles of morality may not be registered as designs or trademarks.

Moreover, a trademark is excluded from registration that consists exclusively of the shape, or another feature, which results from the nature of the goods, is necessary to obtain a technical result, or gives substantial value to the good. This last ground for refusal is the most dangerous for mode products, as the instance laws states that a shape gives substantial value to a fashion good if information technology plays an important role in consumers' decision to purchase it. In application of this principle, the Court of Venice declared invalid the shape trademark roofing Crocs shoes.

That said, registering a design in Italy is non difficult. The office does not carry out any substantive examination, but simply verifies that formal requirements are met.

Brand protection

How are luxury and fashion brands legally protected in your jurisdiction?

Italian police grants protection to both registered and unregistered trademarks, provided that they are new and distinctive. These may include brand names, product names, patterns, colours and shapes. Domain names, trade names, store signs and any other distinctive signs used by the company can as well be protected under the Italian IP Code.

Licensing

What rules, restrictions and all-time practices utilize to IP licensing in the manner manufacture?

Licensing may concern all or function of the goods for which the trademark is registered or used. Two main restrictions shall be considered:

  • the licence shall not deceive the public as to those product features that are essential in the public's perception; or
  • for not-sectional licences, the licensee shall undertake to use the trademark to distinguish only products identical to those of the licensor or other licensees.

In manufacturing agreements including a trademark licence, it is appropriate to provide that trademark owners may carry out audits to check that the trademark is used correctly and to regulate the procedures to adopt following the termination of the understanding (stocks; unfinished products; render of moulds and documents, etc).

As to copyright, while moral rights cannot exist waived, licensed or assigned, economic rights may. The rights of economic exploitation of the work include the right to create copies of the work, create derivative works, display the work publicly, or sell or assign the rights to third parties.

While like-minded a licence in writing is not mandatory under Italian police force, it is surely appropriate and, as far every bit copyrights are concerned, Italian Copyright Police requires that whatever transfer of copyright is proved in writing.

Enforcement

What options do rights holders take when enforcing their IP rights? Are there options for protecting IP rights through enforcement at the borders of your jurisdiction?

Interim proceedings are the most efficient means through which a brand may stop the manufacturing, promotion or marketing of counterfeits likewise as obtain the disclosure of information on the infringer, its products and action. To file a preliminary injunction, claimants must provide evidence in support of prima facie entitlement to the claim and urgency of the claim.

Interim proceedings commonly final a couple of months (whereas proceedings on the merits may last up to two or three years) and are a good option when the fourth dimension necessary for obtaining a conclusion on the merits would make it useless, as typically happens for some fashion products.

Proceedings concerning IP rights autumn within the exclusive jurisdiction of specialised courts dealing with infringement, not-infringement and invalidity deportment.

Infringements may likewise exist prosecuted as a law-breaking nether the Italian Criminal Lawmaking and Copyright law.

With respect to trademarks, opposition is available to prevent the registration of a trademark that is identical or like to a previously registered i.

Finally, an application for activity with the Italian Customs Bureau under EU Regulation 698/2013 allows correct holders to stop the circulation of goods infringing their IP rights.

Data privacy and security

Legislation

What data privacy and security laws are about relevant to style and luxury companies?

Fashion and luxury companies are required to comply with EU Regulation 679/2016 (General Information Protection Regulation (GDPR)), which came into forcefulness on 25 May 2018. GDPR applies both to companies processing personal data as office of the activities of one of their branches established in the EU, regardless of where the data is processed, and to companies established outside the EU, offering goods or services to individuals in the European union or targeting EU customers by profiling.

Companies processing personal data are also required to comply with the Italian Privacy Code (Legislative Decree No. 196/2003, as amended by Legislative Decree No. 101/2018 to marshal with GDPR) and with the Italian Data Protection Authority'southward guidelines (eg, on marketing and confronting spam of 2013).

Compliance challenges

What challenges do data privacy and security laws present to luxury and manner companies and their business models?

The 'accountability principle' is the most significant challenge, imposing on companies responsible business management, considering the risks associated with the activeness carried out and ensuring full compliance of personal data processing with the applicable legislation.

This includes taking a 'privacy-by-pattern and past-default' approach where brands incorporate data protection into the compages of their services and products, as well by taking appropriate technical and organisational measures ensuring that their organisation complies with GDPR principles of lawfulness, fairness and transparency, purpose limitation, data minimisation, accuracy, storage limitation, integrity and confidentiality. Concretely, these principles shall exist considered when developing new IT services or products (including those deploying innovative technologies such as wearable technologies) that involve processing customers' personal information or new business strategies that may have privacy implications (eg, by assessing whether the data processed are excessive for the intended purpose).

Before GDPR, the Italian Information Protection Authority agreed to extend to vii years the retentiveness period to process client personal data for profiling and marketing purposes through a client human relationship management system to some way brands, because of the lower frequency of luxury goods purchases. This offers a useful indication of what is considered appropriate.

GDPR also includes very physical measures that may impact fashion brands. For example, when carrying out large-scale client profiling, companies shall bear out a data protection bear on assessment (DPIA) (come across answer nineteen) and appoint a data protection officer, who shall directly report to the highest direction and act as point of contact for data subjects for any issue.

Innovative technologies

What data privacy and security concerns must luxury and fashion retailers consider when deploying innovative technologies in association with the marketing of goods and services to consumers?

Earlier processing personal information for operations that are probable to result in a high hazard to the rights and freedoms of natural persons, the GDPR requires conveying out a DPIA.

This shall depict the processing operation, evaluate its necessity and proportionality and manage any risks arising therefrom, by assessing the level of adventure and determining appropriate mitigation measures. In this regard, article 29 of the Guidelines on DPIA of the Working Party, institute that applying new technological or organisational solutions - such as certain Internet of Things (IoT) applications that involve new forms of data collection and usage - may correspond a loftier chance to individuals' rights and freedoms that could have a significant impact on their privacy and daily lives. In such circumstances, a DPIA is required.

Similarly, the Italian Data Protection Authorisation indicates the DPIA as necessary to carry out information processing by using innovative technologies (eg, IoT; bogus intelligence systems; monitoring carried out by article of clothing devices).

Content personalisation and targeted ad

What legal and regulatory challenges must luxury and fashion companies address to support personalisation of online content and targeted advertising based on data-driven inferences regarding consumer behaviour?

GDPR provides that data subjects shall accept the right not to be bound by a determination based solely on automatic processing producing legal effects on him or her, unless such activity is:

  • necessary for concluding, or performance of, a contract between data subject area and information controller;
  • authorised by union or member state law to which the controller is bailiwick; or
  • based on the data subject'southward explicit consent.

The Italian Data Protection Dominance in the 'Guidelines on the processing of personal data for online profiling' specifically provides that any processing of personal data for profiling purposes, other than those necessary for providing the service (eg, virus filters), shall be carried out with the data subject field's informed consent.

Information on data processing must be articulate, consummate, exhaustive and visible from the first folio of the site, to allow data subjects to limited their consent. In any example, the right to revoke the choice must always be guaranteed through a clearly visible link.

In addition, activities aimed at analysing or predicting aspects apropos the information discipline's personal preferences or interests, also carried out online or through apps, crave the information controller to beginning deport out a specific DPIA.

Advertisement and marketing

Law and regulation

What laws, regulations and industry codes are applicable to advertising and marketing communications past luxury and fashion companies?

Misleading and comparative advertising is regulated by Legislative Decree No. 145/2007, implementing Eu Directive 2006/114. Misleading advertising may as well amount to an deed of unfair competition under article 2598 of the Italian Civil Code.

Furthermore, advertising is subject area to the Consumer Code rules and, in item, to articles 21 and 22 punishing misleading omissions and unfair commercial practices.

Finally, the Advertizement Self-Regulatory Torso (IAP) adopts a Self-Regulatory Lawmaking that specifically regulates commercial communications and advertising. The lawmaking is applicable to IAP signatories only, but is regarded every bit an authoritative source for best practices. Some rules are peculiarly interesting for style brands (eg, the use of body images inspired past aesthetic models clearly associated with eating disorders that are harmful to health is forbidden).

Special rules are adopted for specific sectors, such as cosmetics, the ad of which is regulated by Eu Regulation 1223/2009.

Online marketing and social media

What detail rules and regulations govern online marketing activities and how are such rules enforced?

In 2019, the IAP formally adopted the Digital Chart Regulation, which is office of the Cocky-regulatory Code, setting online marketing standards.

While the IAP monitors the marketplace to check compliance with the Cocky-regulatory Code, the Italian Competition Authorization (ICA) is entrusted with enforcing European and Italian consumer protection legislation. They are quite active: in the past three years, the ICA twice sent moral suasion messages to hundreds of influencers and brands.

Generally speaking, influencers' marketing requires higher standards of clarity and transparency that the ICA explained at the cease of an investigation involving Alitalia, Aeffe and some Italian influencers. Co-ordinate to the ICA:

  • Companies must prefer specific 'guidelines' setting the rules of behave for influencers, to be included in any cooperation agreement with them; invite influencers to comply with the legislation when sending them free or modest-value supplies; and transport to business units involved in influencer marketing a formal advice recommending compliance with the legislation on unfair commercial practices.
  • Influencers must, when promoting a production as part of a business agreement, disclose the promotional nature of the content past including advisable hashtags (eg, #advertisement, #sponsoredby).

From a data protection perspective, the most relevant provisions regulating marketing are established in the GDPR, the e-privacy Directive 2002/58, the Italian Privacy Code and the Data Protection Authority'southward guidelines on marketing and against spam. The user's consent is required to carry out marketing activities by means of automated calling or communication systems without human intervention. The same applies to the processing carried out by means of electronic communications performed by e-mail, MMS or SMS or other means.

Product regulation and consumer protection

Product safety rules and standards

What product rubber rules and standards apply to luxury and style goods?

The general rules on product prophylactic are set forth by Consumer Code, implementing EU Directive 2001/95 on general product safe.

Different provisions related to the specific materials and products apply to luxury goods. The most relevant regulation for textiles is EU Regulation 1007/2011. All fabric products made available on the market must be provided with the fibre composition label, in Italian, easily visible and attainable. Labelling and marking requirements on fibre composition utilise to material products containing at to the lowest degree fourscore per cent by weight of textile fibres and some textile components.

Equally to footwear, labelling requirements are set forth past Ministerial Prescript 11 April 1996 (implementing EU Directive 94/11) requiring that labelling provides information on the materials that constitute at least 80 per cent of the surface expanse of the footwear upper, lining and sock, and at least 80 per cent of the outer sole volume.

Legislative Decree No. 190/2017 provides for sanctions for violation of the textile and footwear labelling rules.

Materials used must also comply with general EU legislation related to restrictions on the marketing and use of unsafe substances and preparations (eg, European union Regulations 1907/2006 (REACH), 2019/1021 on persistent organic pollutants and 528/2012 on biocidal products).

Specific restrictions apply to the use of the Italian words for 'leather', 'fur' and 'hide' (including synonyms and words deriving from them) under Law No. 1112/1966.

Production liability

What regime governs product liability for luxury and style goods? Has at that place been whatsoever notable contempo product liability litigation or enforcement action in the sector?

Fashion goods would autumn into the scope of the Consumer Code, implementing also EU Directive 85/374, governing general production liability.

The producer shall be held liable for any damages acquired past its defective product (ie, not ensuring 'the rubber that can exist reasonably expected'). The plaintiff is required to show damage, defect and causation betwixt them. Thus, unlike the Italian full general tort regime, product liability is unrelated to the assessment of any producer'due south fault. However, Italian courts often employ the general tort regime when deciding product liability cases.

No contempo litigation or enforcement action, specifically apropos the sector, has made the news.

M&A and competition issues

One thousand&A and joint ventures

Are there any special considerations for Thousand&A or articulation venture transactions that companies should bear in heed when preparing, negotiating or entering into a deal in the luxury fashion industry?

Whenever a business concern is built effectually a designer's name (oftentimes also a controlling or meaning shareholder) agreements with him or her have to be carefully considered as this business model exposes the investment to a number of risks (eg, termination of the cooperation, major disagreements on brand policies or strategies, etc) that shall be properly addressed in transaction agreements.

IP rights are crucial avails in this industry. A sensible investor should perform an accurate due diligence at least on the manner in which: these rights are protected and enforced; the business is managed to avoid violation of tertiary parties' rights; IP rights have been tending (eg, very long or wide in scope licences or articulation ventures may exist detrimental to the investors' development plans).

The supply chain is similarly crucial and an authentic due diligence on the target'southward organisation is essential. Service quality and brand reputation are indeed key factors in the manner industry and a supply concatenation that is not reliable (in terms of quality and timing) or not compliant with social responsibility standards may be risky.

Finally, in a business organization based on the intangible, talents are essential. Thus, retaining policy, non-compete and non-disclosure agreements with key employees is an area of great attending.

Competition

What competition police force provisions are specially relevant for the luxury and mode industry?

In Italy, gratuitous competition is protected by law No. 287/1990 equally applied in parallel with articles 101 and 102 of the Treaty on the Functioning of the European Matrimony (TFEU) and related European union Regulations and Guidelines (ie, Eu Regulation 330/2010 on Vertical Restraints and related guidelines; guidelines on the applicability of commodity 101 of the Treaty on the Operation of the European Matrimony to horizontal cooperation agreements) as well as the rules set forth for merger and acquisitions.

Selective distribution agreements are especially relevant for the industry. Purely qualitative selective distribution is considered to autumn outside article101(1) TFEU for lack of anticompetitive effects, provided that it does non contain any of the hardcore restrictions gear up out in article 4 of EU Regulation 330/2010 (price; territory; restriction of active or passive sales to end users past selective distributors; cross-supplies) and the three weather condition laid downwards in section 175 of the Guidelines on Vertical Restraints are met. In particular:

  • the nature of the product must necessitate this system;
  • resellers must be selected on the footing of objective criteria of qualitative nature uniformly applied; and
  • the criteria must not go beyond what is necessary.

Even if those conditions are non satisfied, the agreement could yet be eligible for the exemption if it does non contain whatsoever hardcore restrictions and the market share of both supplier and buyer does not exceed 30 per cent.

In 2019, the Courtroom of Milan - in line with the Coty decision, C-230/2016 - ordered an online platform to refrain from marketing and promoting in Italia the products of the well-known brand Sisley, claiming that these sales were in violation of its selective distribution arrangement. The court plant that the commercial conditions submitted to retailers were in line with the applicable rules in view of the 'objective, qualitative and not-discriminatory nature of the criteria on which they are based and their appropriateness and proportionality in relation to the protection objectives of the make commercial prototype and luxury aura', thus recognising the selective distribution organisation validity.

Furthermore, the ICA initiated investigations for anticompetitive agreements that culminated in the imposition of fines on eight major modelling agencies, representing fourscore per cent of Italy'due south market share.

Employment and labour

Managing employment relationships

What employment constabulary provisions should fashion companies be particularly enlightened of when managing relationships with employees? What are the usual contractual arrangements for these relationships?

Collaborations with freelancers are quite common in the sector. Even so, such contractual arrangements (legally, self-employment relationships) frequently actually trigger a typical employment relationship, with consistent risk of reclassification of the relationship as employment. This impacts salary, social security coverage and the full general management of the human relationship.

Accordingly, in building up or increasing the staff, information technology is crucial to have a preliminary assessment of whether new members are really autonomous as to timing and modalities of their performances or, differently, are subject to a strict agenda unilaterally managed and decided by the employer, still whether personally or through a digital platform. In the latter example, it would exist advisable to hire them as employees from the beginning.

Contractual arrangements ordinarily include confidentiality, protection of merchandise secrets, non-compete and management of suppliers' provisions.

Trade unions

Are in that location whatsoever special legal or regulatory considerations for fashion companies when dealing with trade unions or works councils?

No. Each employee is free to join a trade union and cannot exist discriminated considering of his or her registration with (or the lack of registration to) a union. If at that place are more than than 15 employees in a concern unit, each union (there are several unions in each sector, with five main ones) may engage a marriage representative from among the employees.

Clearing

Are at that place any special immigration law considerations for fashion companies seeking to move staff across borders or hire and retain talent?

Italian police force on clearing is quite restrictive equally to non-European union citizens coming to Italy for working reasons. Withal, at that place are various exceptions (concern purposes, high technical skills, etc) that generally allow companies to ship people to Italy with no item issues.

Update and trends

Trends and developments

What are the electric current trends and future prospects for the luxury mode manufacture in your jurisdiction? Accept there been any notable recent market, legal and or regulatory developments in the sector? What changes in constabulary, regulation, or enforcement should luxury and fashion companies exist preparing for?

Equally a worldwide trend, Italian brands will have to think digital-first and exist active with sustainability issues as well equally conscientious with all the above-mentioned changes.