A NEWSLETTER prepared by Graham & James LLP, Milan Office

October, 1999

E-Commerce in Italy. The "State of Play" of Italian Law and its Prospects for Development. Over the last few months Italy has adopted two important pieces of legislation which will have a decisive impact on the development of electronic commerce in the Italian market. The government is, in fact, working on a series of measures dedicated to further encourage the use of personal computers, increase the number of internet users, and to facilitate computer literacy which will all help create the necessary cultural and technical platform for the takeoff of the "technological market."

To this end the Italian government has recently adopted legislative decree N. 185 of May 22, 1999, entitled "Implementation of Directive 97/7/CE for Consumer Protection in Distance Contracts."

Previously, the Italian government had taken another important step forward with the decree of the President of the Council of Ministers of February 8, 1999, N.153, containing the "Technical Rules for the Formation, Transmission, Conservation, Duplication, Reproduction, Validation, and Date Verification of Electronic Documents."

Legislative decree N. 185/99 refers to the so-called "distance contracts" for the sale of goods or services, formed by a merchant and a customer (a non-professional user) who avail themselves of a system of sales supplied by the merchant which is based exclusively on the use of "distance" communication such as telephone, radio, videophone, electronic mail (and therefore the internet), and fax.

A key element of this decree is related to the right to withdraw. The consumer has the right to withdraw from any "distance contract" without penalty and without having to specify the reason for withdrawal by sending a letter to the merchant’s address, within a specified period of time, which, depending on the particular matter, may vary from 10 to 90 days. The letter must be sent by certified mail with a return receipt requested (but the withdrawal may also be sent by telegram or fax followed within 48 hours by the letter).

Of course, in case of withdrawal, the merchant must refund the customer the entire amount paid. The refund is free of any handling fees and must be made within 30 days of the date when the merchant learns of the customer’s desire for a refund. This new protection granted to customers is certain to have a deeply felt impact.

On the other hand, the Decree N. 153/99 on the technical rules for electronic signatures, inspired and underwritten by the Undersecretary to the President of the Council, Franco Bassanini, definitively sanctions the legal validity of electronic documents and electronic signatures as introduced by law N. 59 of 1997 (known as "Bassanini 1").

As noted, an electronic signature will be given the same effect as a written signature and will render certain and secure the origin and authenticity of the signature on a document by application of both a private and a public program code which will be furnished by authorized certification companies.

In order to use the electronic signature the signer must engage the services of a certifier who meets specific financial and technical prerequisites and is a listed member of a special order.

On the occasion of the announcement of the decree, the President of the Council remarked that "these rules will bring Italy to the forefront on an international level."

Amendment of the "Prodi Law". By ironic coincidence, just as Prof. Prodi is taking office as head of the new European Commission, an Italian law which he originally inspired, is now being amended in order to comply with EU competition rules.

Law no. 95 of 1979, commonly known as "Prodi Law", which contains special provisions for the administration of insolvent large enterprises has been amended by Legislative Decree no. 270 of July 8, 1999 (published in the Official Gazette no. 185 of August 9, 1999), effective August 24, 1999.

The "Prodi Law", and particularly section 2 bis of that law, which provides for a state guarantee in favor of enterprises admitted to extraordinary administration, was held by the European Commission to conflict with section 92 of the EU Treaty which prohibits state aid. In fact, the European Commission held that the whole set of rules concerning the extraordinary administration of insolvent enterprises was in effect state aid, since it eliminated bankruptcy proceedings for large enterprises, which were artificially kept on the market to the detriment of other competing enterprises.

The amended legislation has been brought into line with European rules and provides that any kind of state aid involved in the restructuring plan or sale plan, to which enterprises admitted to extraordinary administration are subject, must be authorized in advance by the European Commission.