The opening of proceedings I879 (Citizen) and I880 (Swatch) by the Italian Competition Authority (AGCM) represents a significant development at the intersection of competition law, intellectual property protection, and distribution models in markets characterized by strong brand presence. Launched simultaneously on December 3, 2025, with inspections at the Italian offices of the companies involved, these proceedings aim to verify potential violations of Article 101 TFEU and Article 2 of Law No. 287/1990 concerning alleged resale price fixing within selective distribution networks, potentially constituting a “hardcore” restriction under Article 4(a) of Commission Regulation (EU) No. 720/2022. According to the Authority’s findings, Citizen and Swatch are alleged to have adopted commercial policies capable of limiting price competition among authorized retailers, by imposing or ensuring uniform retail prices, particularly in online channels. The AGCM suggests that these indications were accompanied by systematic monitoring of compliance with the suggested prices and, where necessary, by commercial measures penalizing non-compliant distributors. In Swatch’s case, the investigation also concerns restrictions on sales via third-party marketplaces, whose compatibility with EU law has long been the subject of complex jurisprudential debate. The issue is of systemic relevance because it touches on one of the most sensitive aspects of European antitrust law: resale price maintenance, classified as a “hardcore” restriction under Regulation (EU) 720/2022 and consistently deemed unlawful by the Court of Justice. Proceedings I879 and I880 therefore fall within a well-defined legal framework: should evidence confirm direct or indirect price fixing, such conduct would be difficult to justify, even within selective distribution networks based on qualitative criteria. Selective distribution constitutes another central axis of legal assessment. As established by the Court of Justice in the Metro cases, selective systems are fully legitimate provided they are based on objective, proportionate, and non-discriminatory criteria strictly aimed at preserving product quality or brand image. This approach has been further clarified in Pierre Fabre and Coty, where the Court specified that absolute online sales bans constitute restrictions by object, while in luxury markets, targeted limitations on marketplace use may be justified if genuinely intended to protect brand perception rather than serve as a covert tool to control retailer behavior. Italian IP Courts have adopted these principles, emphasizing that selective distribution must never become a network for controlling prices or unduly limiting the retailer’s freedom to determine their own commercial strategies. Courts have consistently held that while the producer retains the prerogative to control store quality or brand image consistency, they lose the ability to intervene in the economic terms of resale. This limitation is further grounded in the principle of trademark exhaustion, enshrined in Article 5 of the Italian IP Code and recognized in EU case law starting with Silhouette and Zino Davidoff. Once a product is placed on the market in the European Economic Area by the trademark owner or with their consent, the trademark right is exhausted, meaning the owner can no longer control its subsequent economic exploitation. Accordingly, any attempt by the producer to restrict retailer freedom in setting prices, promotional strategies, or online sales is illegitimate, except for legitimate reasons—i.e., objective needs to prevent serious harm to the quality or image of the branded product. The AGCM investigations into Citizen and Swatch thus sit at the crossroads of competition and selective distribution. They offer an opportunity to assess the boundary where legitimate brand protection overlaps and potentially conflicts with retailer autonomy and the European principle of intrabrand competition. Moreover, the presence of clauses in selective distribution agreements containing fundamental restrictions under antitrust law may have strategic consequences in disputes with third parties, as they preclude invoking legitimate grounds that would otherwise prevent the operation of trademark exhaustion. Pending the developments of these investigations, proceedings I879 and I880 represent a significant test for the branded watch sector and, more broadly, for all industries where selective distribution is a key tool for managing brand identity. The AGCM’s final decisions may have substantial implications for balancing quality protection with retailer autonomy, further defining the boundaries between industrial property rights and competition rules.
2026 - Morri Rossetti
