In order to calculate this compensation, all the circumstances should be considered. The Court has then stated that it cannot be calculated only on the gross margins (difference between purchases prices and resale prices) and granting automatically one year average, but it should also be taken into account that the Supplier will be obliged to carry on the expenses of the distribution (particularly, commercial employees that worked for the former Distributor). The Court decided in this case that there were not elements enough to consider that the clientele will still benefit the Supplier after the termination of the agreement.
In a judgement of December 9, 2014 the Provincial Court of Appeal (Audiencia Provincial) of Madrid has also stated on Goodwill (clientele) compensation in a distribution agreement. In this case, the Court analysed an oral and non-exclusive distribution agreement that continued for more than 20 years.
The manufacturer pretended to have an annual sales agreement but the Court considered that there was in fact an oral agreement with some annual conditions sent to the distributors. The agreement was not exclusive because there were other distributors in the same area and the distributor also sold other competitive products.
Concerning the goodwill indemnity, the Court did not admit it for some reasons: (a) the court stated that it was not easy to accept this compensation in case the Distributor did not operate in an exclusive territory; (b) the fact that the Manufacturer knew the clientele was not relevant because he already had this information from the rest of distributors due to the kind of products sold (veterinary products for animals) and their traceability; and (c) that the evidences examined by the Court (experts reports) did not prove which clients continued their activity with the Manufacturer after the termination of the agreement but only those existing clients in a previous and specific moment.
Ignacio Alonso, IDI agency & distribution country expert for Spain
