May 01 2007
On March 9 2007 a draft green paper by the Commission on Industry, Tourism and Commerce was published in the Official Journal of the Spanish Parliament. The green paper states that Parliament will review the draft Distribution Agreements Act, which will regulate the relationships between agents involved in the distribution sector (ie, suppliers and distributors).
The green paper proposes to:
Even though the act is mainly the result of the automobile industry's lobbying, it will not apply only to this industry. The act will apply to and protect any party involved in the commercial distribution sector (especially small and medium-sized companies) and will regulate all types of distribution agreement, including franchising.
The draft act is divided into three parts. The first part outlines the scope of the law. The second refers to the negotiations between the parties to a distribution agreement and the general content of such agreements; for example, any investment required by a supplier cannot affect the autonomy of its distributors, and the products and services provided by the supplier must be at fair market value. The third part regulates the causes of and consequences arising from the termination of an agreement (eg, breach of contract and unilateral termination), as well as damages indemnities and compensation to customers. In case of termination of an indefinite contract, the distributor need not be given prior notice if it obtains compensation for the goodwill generated.
Those that called for the passage of the act have criticized the lack of specific regulations on distribution. This lack of regulation also exists in EU law, which regulates only competition matters and allows member states to legislate on contracts between suppliers and distributors. In Spain, the only regulation is the Draft on Distribution Agreements published in February 2006 by the Ministry of Justice, which offers no solution to the current problem.
In addition, the Agency Act 1992 now applies by analogy to distribution agreements of the automobile industry and distribution agreements that are not covered by specific regulations. Therefore, courts interpret the law on a case-by-case basis and most decisions on the same matter are contradictory.
The Parliament's Commission on Industry, Tourism and Commerce approved the proposal unanimously on March 20 2007. The final provisions will not be known until final approval and the entry into force of the act.
For further information on this topic please contact Carmen Esteban García-Bernalt at Gómez-Acebo & Pombo Abogados by telephone (+34 91 582 9100) or by fax (+34 91 582 9114) or by email (email@example.com).
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