Fabio Bortolotti Contracts whereby a supplier is granted an area within a department store, shopping mall or other similar organization. A general overview 2012 IDI Conference - Venice

Agreements which grant the supplier an exclusive area within a retail organization (“distributor”) The distributor can be: a department store a shopping mall/commercial center a factory outlet center an airport The area granted may be: a section of the store an individual shop a space within the store: corner/espace démonstration

-Concession agreement -Corner -Shop-in-shop -Agreement for the management of a department (“affidamento in gestione di reparto”) -Contrat de démonstration -Contrat de vente à condition/Consignment agreement Various terms used in practice

-Where? Near to which competitors? -Right of the distributor to change location? -Is the supplier free to decide the fit-out (design, decoration)? -Who carries out and/or pays the fit-out? -Maintenance and upgrading The area granted to the supplier “commercial” issues

-Lease of the area or lease of a business activity? -How to avoid rules on commercial lease contracts or how to comply if avoiding them is impossible? -Possible administrative constraints on supplier: need for a license for retail sales. The area granted to the supplier “legal” issues

-Annual/monthly fee? -Percentage calculated on turnover? -Paid annually/monthly -Deducted by the distributor from sums cashed -Fixed fee + percentage -Minimum guaranteed amount + percentage The consideration for the use of the area

The Supplier sells with his own personnel through his own cash registers. The Supplier sells with his own personnel through the distributor’s cash registers. The Supplier uses his own personnel for offering the products, but these are sold by the distributor through its cash registers. The products are sold by the personnel of the distributor. Parties may agree that employees of the distributor must follow indications/training by the supplier. Who manages the area

Exclusive responsibility of the supplier for his personnel. Obligation to comply with al rules of the store. Full coverage of opening hours. Labour law problems: risk that supplier’s employees pretend to be employees of the distributor. Problems arising when the supplier does not have a subsidiary in the distributor’s country. Issues regarding the supplier’s personnel

The supplier sells directly to the consumer (through his own cash registers or through those of the distributor). The supplier puts the goods at the distributor’s disposal on a consignment basis and the distributor sells them to the consumer. Two alternative solutions: Conditional sale: goods are sold to the distributor when the distributor (re)sells them to the consumer. Distributor acting as commission agent: the distributor sells the goods of the supplier in his own name but on behalf of the supplier. The distributor purchases the goods and resells them (with or without right to return unsold goods). Passing of the products from the supplier to consumer

The supplier sells in his own name:  no problem. The distributor resells the goods:  prohibition of resale price maintenance. The distributor sells in his own name but on behalf of the supplier:  price fixing admissible, provided he is to be qualified as “true” agent (in case of EU antitrust). Determining the price to consumers Possible antitrust problems

Long term contracts (one to five years). Contracts for an undetermined period with right to terminate observing a period of notice. Right to early termination in case of breach. Term and termination

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