Italy implements the 'Omnibus' Directive
Published on 20th Mar 2023
New information requirements, unfair commercial practices and sanctions are among the provisions that apply from April
On 18 March 2023, Legislative Decree no. 26/2023 implementing Directive 2019/2161 for better enforcement and modernisation of Union consumer protection rules, known as the Omnibus Directive, was published in the Italian Official Journal. The new rules will apply starting from 2 April 2023. The only exception concerns the provisions regarding the "prior price" in the framework of announcements of a price reduction which shall apply starting from 1 July 2023.
The Legislative Decree amends provisions of the Italian Consumer Code (Legislative Decree No 206/2005).
In a nutshell
The new rules bring in a broad range of changes that can be summarised as:
- New information requirements in distance contracts between the trader and the consumer.
- Application of certain rules of the Consumer Code extended to contracts where the consumer provides personal data as consideration.
- New rules on announcements of a price reduction: obligation to indicate the prior price as the lowest price applied in the 30 days prior to the discount.
- Statutory withdrawal period extended to 30 days for contracts concluded during unsolicited home visits or excursions.
- New cases of unfair commercial practices added (concerning "dual quality", search results, secondary ticketing and reviews).
- New parameters for assessing misleading omissions.
- Maximum fine for unfair commercial practices increased to €10 million.
- New fine for infringements of EU relevance, up to 4% of the trader's annual turnover in Italy or in the EU Member States concerned by the breach.
- These fines will also apply in the case of unfair terms; that is, in the event that the Italian Competition and Market Authority ascertains the unfairness of one or more clauses in the contract concluded between the trader and the consumer (subject to the legal consequence that such clauses are not binding on the consumer).
New information requirements
The scope of information to be provided to consumers prior to the conclusion of contracts has been widened, especially with regard to distance and off-premises contracts. One of the main amendments relates to the obligation to provide consumers with the trader's telephone number, which previously had to be provided only "where available".
The trader is also required to specify whether the price has been "personalised on the basis of automated decision-making".
With regard to goods with digital elements, digital services and digital content, in addition to a reminder of the existence of the legal guarantee of conformity, the trader is required to provide information on the functionality (including applicable technical protection measures), compatibility, interoperability.
New article added
Lastly, an entire article has been added (article 49-bis) that provides for additional information requirements for the marketplaces, it provides for information on the main parameters determining the ranking of offers presented to the consumer as a result of the search query and the importance of those parameters compared to other parameters.
It also provides for information on the legal status of the contractual counterparty; that is, whether the third party offering goods, services or digital content through the marketplace is a trader or another consumer. The provision expressly provides that this information must be based on the declaration made by the third party to the provider of the marketplace and, therefore, any duty to actively verify the legal qualification of such third party by the provider of the marketplace seems excluded.
However, this provision will have to be coordinated with article 30 (2) of Regulation (EU) 2022/2065 on a Single Market For Digital Services and amending Directive 2000/31/EC, known as the Digital Services Act (which is applicable from 17 February 2024, subject to certain exceptions). This provision requires the provider of the online platform (of the marketplace, in this case) to make its best efforts to assess whether the information provided by the third-party trader is reliable and complete, by making use of any freely accessible official online database or online interface made available by a Member State or the European Union or by asking the trader to provide supporting documents from reliable sources. If the third party is not a trader, the consumer must be informed that consumer rights do not apply to the contract concluded between the consumer and the third party;
The new article 49 also provides for information on the allocation of obligations towards consumers. In the event that, in addition to the third party offering goods, services or digital content, the provider of the marketplace also assumes obligations in connection with the contract concluded by the consumer, the latter must be informed on how those obligations are shared between the third party and the provider of the marketplace, without this affecting the responsibilities of each of the parties involved.
Personal data as consideration
The legislative decree provides that certain rules of the Italian Consumer Code on information requirements, statutory right of withdrawal, delivery obligations, means of payment, fees for communicating with the trader, additional payments and administrative and judicial protection of the consumer also apply to contracts in which the trader provides the consumer with digital content by means of a non-tangible medium or a digital service and the consumer provides or undertakes to provide personal data to the trader. The exception to this is where the personal data provided by the consumer are exclusively processed by the trader either for supplying the digital content or digital service or for allowing the trader to comply with legal requirements to which the trader is subject – and for no other purpose.
This is in line with the modern issue regarding the provision of personal data as consideration, which has already been subject to a recent regulatory action (as well as by the Italian Competition and Market Authority). From 1 January 2022, the rules on the provision of personal data as consideration have applied, in particular with reference to the conformity of digital content and digital services with the contract between the consumer and the trader, following the implementation into the Consumer Code of Directive 2019/770 on aspects of contracts for the supply of digital content and digital services.
Price reduction announcements
The provisions on the announcements of a price reduction with the addition of an entire article to the Italian Consumer Code (article 17-bis) will be applicable from 1 July 2023. The trader will be obliged to indicate in each announcement of a price reduction the prior price and the current price of the product.
As a general rule, "prior price" means the lowest price applied by the trader during a period of time not shorter than 30 days prior to the application of the price reduction. For example, if the trader increases the price of a good 30 days before applying a discount from €20 to €25, the prior price is €20.
If during a single sales campaign, the price reduction is progressively increased, the prior price is the one identified for the first price reduction (that is, it does not change). For example, a good that is previously sold at €20 that is discounted to €10 for 20 days, then to €8 for the next 20 days and then to €5 for a further 20 days. The indication of the prior price "€20" does not change during these additional discount periods uninterruptedly applied.
The "30 days" rule does not apply to announcements of a price reduction relating to perishable agricultural and food products. It also does not apply to products that have been on the market for less than 30 days; in which case, however, both the prior price and the period of time during that it has been actually applied must be indicated.
Sales below cost are out of the scope of these provisions.
Article 17-bis applies also in order to identify the "prior price" in the framework of the extraordinary sales (that is, winding-up sales and end-of-season sales, as well as promotional sales.
In any case, every announcement of a price reduction must also indicate the percentage discount applied. This obligation does not stem from the Omnibus Directive but derives from article 15 (5) of Legislative Decree no. 114/1998.
In case of infringements of the rules on announcements of a price reduction administrative fines from €516 to €3,098 may be issued. In any case, displaying information on price reductions in a misleading manner – for example, displaying a prior price higher than that actually applied prior to a promotional campaign – triggers the provisions on unfair commercial practices; that is, administrative fines up to €10 million.
Right of withdrawal
The usual statutory withdrawal period of 14 days is extended to 30 days for contracts concluded in the context of unsolicited visits by a trader to a consumer's home or excursions organised by a trader with the aim or effect of promoting or selling products to consumers. Furthermore, in these cases, certain exceptions to the right of withdrawal under article 59 of the Italian Consumer Code are not applicable. For example, consumers are entitled to withdraw from a contract where they have purchased and opened sealed goods, which are usually not suitable for return due to hygiene reasons.
However, the extension of the withdrawal period to 30 days does not apply to contracts concluded in the context of home visits requested by the consumer (unless these visits are organised by the consumer in a collective form; that is, they are also for other consumers.
Unfair commercial practices
New cases of unfair commercial practices have been added. Under the new rules, misleading commercial practices include:
- Any marketing of a good in one Member State as being identical to a good marketed in another Member States, when the good has significantly different composition or characteristics (unless this is justified by legitimate and objective factors) – which is known as "dual quality".
- Providing results in response to a consumer’s online search query without clearly disclosing that the result has an advertising nature because it has been influenced or it depends on a payment carried out by an advertiser that benefits from higher ranking of products compared to what would have appeared without that payment.
- Reselling events tickets to consumers if the trader acquired them by using automated means to circumvent any limit imposed on the number of tickets that a person can buy or any other rules applicable to the purchase of tickets;
- Stating that reviews of a product are submitted by consumers that have actually used or purchased the product without taking reasonable and proportionate steps to check that they originate from such consumers (in other words, the lawmakers identifies an obligation of transparency towards consumers, who must be informed as to whether or not – and, should it be the case, how – the trader verifies the reviews).
- Submitting – even where instructed by another legal or natural person – false consumer reviews or endorsements, or misrepresenting consumer reviews or social endorsements, in order to promote products.
In addition, new parameters are introduced for the assessment of unfair commercial practices that are carried out through misleading omissions.
New sanctions regime
The maximum amount of the administrative fines issued by the Competition and Market Authority for unfair commercial practices is increased from €5 million to €10 million. In addition, a new sanctions regime is introduced for infringements of EU relevance: the Italian Competition and Market Authority may issue administrative fines up to 4% of the trader's annual turnover in Italy or in the EU Member States concerned (if information on the annual turnover is not available, the maximum amount of the fine is equal to €2 million).
The sanctions regime, which is provided for unfair commercial practices, also applies to unfair terms. Accordingly, in the event that the Italian Competition and Market Authority declares that one or more terms applied in contracts between consumers and a trader are unfair, the trader will not only have to amend those terms (however null and void), but will also have to pay an administrative fine of up to €10 million or, in the case of infringements of EU relevance, up to 4% of the trader's annual turnover in Italy or in the EU Member States concerned.
Clearer criteria have been provided for application of the fines by the Italian Competition and Market Authority, and in particular:
- the nature, gravity, scale and duration of the infringement;
- any redress provided by the trader to consumers for the harm caused;
- any repeated infringement carried out by the trader;
- the financial benefits gained or losses avoided by the trader as a result of the infringement, if the relevant data are available;
- penalties imposed on the trader for the same infringement in other EU Member States, in cases of EU relevance, where these data are available;
- any other aggravating or mitigating factors applicable to the circumstances of the case (there is no indication of what such aggravating or mitigating factors might be, thus the Italian Competition and Market Authority may consider new factors from time to time, depending on the specific case).
Finally, the maximum amount of the administrative fine in the event of non-compliance with the Italian Competition and Market Authority's measures and with the undertakings presented the regulator is increased to €10 million.