Non-compete clause in the distribution contract in Italy.

The non-competition covenant between supplier and distributor under the Italian Law.

In the distribution contract, supplier and distributor may agree a non-compete clause (or non-competition covenant) that regulates the activity of the distributor during and after the termination of the contract. Accepting the non-compete clause, the distributor agrees not to carry out a similar activity in favor of other suppliers during the term of the contract and after the termination of the contract.

Therefore, it represents a restriction on the freedom of economic initiative of the distributor in order to avoid damages to the supplier.

The non-competition covenant must be evidenced in writing. Italian law doesn't require that the non-competition covenant is included in the distribution agreement, because the parties could agree that clause even after.

The non-compete clause is valid only if limited to a specific area or to a particular activity, but it can not exceed a period of five years. If the duration of the non-competition covenant is not determined or it is established for a period exceeding five years, the covenant is valid for a period of five years.

The non-compete covenant is valid even when a fee for the non-competition was not agreed by the parties (as is the case of most distribution contracts in Italy, that don't establish a compensation). There is no obligation to establish a clause of non-competition in the distribution contract in Italy, but generally the supplier always requires that clause in order to protect its business.

If you need legal advice on distribution contract in Italy, please contact Lawyers in Italy.

Please, see also:

Distribution contract in Italy

Contract Law in Italy

Law of contract in Italy: the written form

Termination clause and essential term in Italy

Termination of the contract for non-performance and the notice to comply

Special court for foreign companies in Italy

Sponsorship contract in Italy

Agency contract in Italy

The obligations of the Agent under the Italian Law

Exclusivity clause in agency and distribution contracts in Italy