310 / 516
In line with established practices of the Supreme Court of
Cassation as well as the doctrine (in parallel with the European Union
regulations), goodwill indemnity is to be calculated taking into con-
sideration the clientele created by the distributor and the increase in the
business volume of the supplier resulting from the distributor’s activi-
ties. The method adopted to make such a calculation is to take the aver-
age of the distributor’s net profit accrued during the last five-year peri-
od. If the contract duration was less than five years, then the average of
the whole activity period shall be taken into consideration.
The TCC specifically states that if the agent (in our case, the exclu-
sive distributor) himself terminates the contract or the producer com-
pany terminates the contract with legitimate cause, he shall not be enti-
tled to claim goodwill indemnity. An advance waiver of the goodwill
indemnity claim is not accepted by the TCC and claims must be raised
within one year following termination of the contract.
The burden of proof to establish that the conditions for goodwill
indemnity are met lies with the distributor. Unless it brings sufficient
proof, the distributor will lose its right to claim goodwill indemnity.
Apart from goodwill indemnity, based on this provision of Article
121 of the TCC, the distributor should also be compensated for the
actual losses arising from termination of the distributor contract with-
out just cause and without having received three month notice.
Distribution under Turkish Competition Law
Article 4 of the Law on the Protection of Competition No. 4054
(“Competition Law”) establishes the principles of restrictive agree-
ments between undertakings, decisions by associations of undertakings
and concerted practices. It reads as follows: “All agreements between
undertakings, decisions by associations of undertakings and concerted
practices which have as their object or effect or possible effect the pre-
vention, restriction or distortion of competition within a product or ser-
vice market shall be unlawful and prohibited”.
Article 4 of the Competition Law applies to both horizontal and
vertical agreements. Vertical agreements are defined as agreements
between undertakings active at different levels of the production chain
relating to the conditions under which the parties may purchase, sell or
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NEWSLETTER 2012