The consortium

Italian regulation and classification

«Through the consortium contract, several entrepreneurs establish a common organization for the regulation or performance of certain stages of their respective enterprises».

Art. 2602 Civil Code

The definition of consortium found in the Italian Civil Code, as a result of the 1976 reform, is broad and refers to an associative scheme between entrepreneurs, thus encompassing two distinct phenomena:

• anti-competitive consortium: a consortium whose purpose is to regulate and limit mutual competition in the market between entrepreneurs engaged in the same or similar activities;
• coordination consortium: a consortium established for the performance of certain stages of the respective enterprises. In other words, it is an instrument of inter-firm cooperation.

These forms of cooperation are mainly resorted to by small and medium-sized enterprises in order to achieve and recover market competitiveness through the reduction of overhead costs.

For the first type of consortia, it is necessary to activate control and enforcement mechanisms so that monopolistic phenomena - in contrast with both national and EU antitrust law - do not occur.

The second type, on the other hand, is favored by the legislator, which in fact provides some tax breaks, as not only do such consortia promote the survival of medium and small enterprises, but also help preserve the competitive structure of the market.

According to the civil code regulation, a further distinction is important, between:

• consortia with internal activity;
• consortia with external activity.

In both there is a common organization, but in the former such an organization serves only to regulate relations between enterprises. In the latter, on the contrary, the parties establish a common office that carries out activities with third parties in the interests of the participating enterprises.

The consortium contract

The main features of the consortium contract, which can be deduced from the provisions laid down in Articles 2602 et seq. of the Civil Code, can be summarized as follows:

• it can be concluded only between entrepreneurs;
• it is a formal contract, that is, it must be stipulated in writing under penalty of nullity;
• it is a contract of duration, which can be freely determined by the parties. In the silence of the parties it lasts for 10 years;
• it tends to be an open contract, which means that new entrepreneurs can be part of it without requiring the consent of all other participants. However, in order for this feature to be maintained, the parties must stipulate the conditions for admission of new consortium members.

Consortia with internal activity

Essential structural character of consortia is the creation of a common organization. This organizational structure is based on the presence of

• a body with deliberative functions composed of all consortium members (assembly);
• a body with management and executive functions (governing body).

Consortia with external activity

Such consortia represent only one of the possible organizational forms for the collective exercise of business activities.

The regulation of such consortia aims to govern both ongoing and completed relations between the consortium and third parties.

They differ from the ones with only internal activity mainly for the following reasons:

• there is a legal disclosure regime for them, in the sense that an excerpt of the consortium contract must be registered into the commercial register;
• the contract must specify the subjects vested with the presidency, management and representation of the consortium, together with a description of their powers;
• there is also express provision for the formation of a capital fund, consisting of the initial and subsequent contributions of the consortium members and the assets acquired by such contributions.

The essential rules on liability can be summarized as follows:

• for obligations assumed in the name of the consortium, the consortium is exclusively liable, and creditors may assert their rights only against the consortium fund;
• for obligations assumed by the bodies of the consortium on behalf of individual consortium members, both the consortium members and the consortium fund are jointly and severally liable.

References

M. Campobasso, Diritto commerciale, vol. 1, Diritto dell'impresa, Utet, 2022, pp. 265-275.

For further details see Consortiums: Meaning, Types, and Examples, available at https://thestrategystory.com/blog/consortiums-meaning-types-and-examples/#:~:text=A%20consortium%20of%20companies%20refers,pursuit%20of%20a%20specific%20objective.