Exclusive Agreements Competition Law

Exclusive contracts can benefit competition in the market by providing sources of supply or points of sale, reducing contractual costs or creating dealer loyalty (…) Exclusive contracts between manufacturers and suppliers, or between manufacturers and distributors, are generally legitimate because they improve competition between brands of different manufacturers (Interbrand competition). However, if the company that uses exclusive contracts is a monopoly, the focus is on whether these contracts prevent new firms from entering the market or existing small businesses to strengthen their presence. Monopoly could attempt to impede the entry or expansion of new competitors, as this competition would undermine its market position. Antitrust laws condemn certain acts of a monopoly that drive rivals away from the market or prevent new products from reaching consumers. The risk of competition by exclusive contracts increases with: (1) the duration of the contract; (2) the more opportunities or sources there are at no cost; and (3) fewer alternative outlets or uncovered sources. Exclusive delivery contracts prevent one supplier from selling inputs to another buyer. If a buyer is in a monopoly position and obtains exclusive delivery contracts, so that a new entrant may not be able to obtain the inputs he or she needs to compete with the monopoly, the contracts may be considered an exclusionary tactic in violation of Section 2 of the Sherman Act. For example, the FTC prevented a major drug manufacturer from imposing 10-year exclusive supply contracts for an essential component of its drugs, for which suppliers would have received a percentage of the drug`s profits. The FTC found that the drug manufacturer was using exclusive supply agreements to keep other pharmaceutical manufacturers out of the market by controlling access to the essential ingredient. The drug manufacturer was then able to increase the price of its drug by more than 3000%. (…) © FTC On 16 October 2019, the European Commission adopted a decision asking Broadcom to no longer apply certain provisions contained in agreements with six of its main customers in the television and modem markets. According to the Commission`s press release, Broadcom was considered prima facie as (…) The European Commission has opened a formal procedure for reviewing cartels and abuse of dominance to determine whether Broadcom could, in violation of EU rules, restrict competition through exclusive practices.

The Commission intends, as part of the investigation, to take interim measures with regard to tv and modem chipsets (…) The Enforcement Office of the Philippine Competition Commission (PCC) has filed a complaint against a construction market promoter for antitrust violations by participating in an exclusive Internet service on its land in Tondo, Manila. In a statement of grievances of 27 March, the CCP (…) Most EU competition law is transposed into UK law. In particular, beyond Brexit, the EU category exemption is maintained in UK law, which means that distribution agreements can continue to benefit from the category exemption for vertical agreements. The main theory of harm suffered by exclusive supply agreements is that it can lead to market silos of competing suppliers and potential suppliers. This market silos can in turn have negative effects on inter-brand competition. With regard to the pro-competitive effects/justifications that the ICC can take into account in exclusivity agreements, (i) branding protection8 for quality products, (ii) the prevention of “freeriding” – another distributor that unduly exploits the advertising efforts of another distributor, etc. The agreement: the Commission imposes interim measures on Broadcom in the TELEVISION and fashion markets – The European Commission has ordered Broadcom to no longer apply certain provisions contained in the agreements with six of its main customers.