Made For Outlet Products in Italy: Problems and Perspectives

elena vareseIn Italy the discipline of outlets is not governed by a State law, but by multiple regional laws. There have been few attempts to regulate outlets in a unitary manner, particularly by Federazione Moda Italia (http://www.federazionemodaitalia.com), but so far such attempts did not lead to conclusive results.

The legal basis for the current division of competences between State and Regions is provided by Article 117, paragraph 4 of the Italian Constitution whereby “it falls within the Regions’ legislative powers to issue law provisions for all the subject matter not expressly reserved to the State’s legislation“.

In light of this, several different Regional laws have been issued to govern outlets, although these created some inconsistencies, especially with respect to the possibility to sell made for outlet products (MFOs).

For instance, Tuscany Law prohibits the sale of MFOs in outlets, which are instead expressly admitted by Veneto and Campania Laws. In case of non-compliance, Article 5 Tuscany Law provides for a fine ranging from 5,000 to 30,000 Euro, with the suspension of sales for a period of 10 to 30 days in case of repetition.

So far, we are not aware of any sanctions issued against fashion houses that offer MFOs in Tuscany, although this might change in the future. The rationale of the Tuscany prohibition is that consumers have a legitimate expectation to find products belonging to previous collections and not to lines specifically dedicated to outlets, inferring from this a deception about the nature of the products and possibly their price.

On the other hand, it could be argued that the alleged breach does not cause any serious deceit in the public or a lack of conformity of the purchased goods or other breaches of the Italian Consumer Code (Legislative Decree 6 September 2005, No. 206). In other words, consumers could be requested to demonstrate that the purchased MFOs are of poor quality or that they have been misled about the characteristics of the products, despite the fact that they had the opportunity to examine the concerned items in the outlets. This would be particularly burdensome to prove, as outlets are distribution channels where consumers are accustomed to find dedicated lines or products that are less refined than those sold in boutiques or items that even present slight manufacturing defects.

Please contact elena.varese@dlapiper.com if you wish to discuss further the above.