Is exclusive distribution legal?
Is exclusive distribution legal?
Isn’t that illegal? A: Exclusive distribution arrangements like this usually are permitted. Although the retailer is prevented from selling competing flat-panel display monitors, this may be the type of product that requires a certain level of knowledge and service to sell.
Do exclusive leases violate antitrust laws?
Exclusive purchase agreements may violate the antitrust laws if they prevent newcomers from competing for sales. The FTC found that this manufacturer’s policy foreclosed a competitor from achieving the sales needed to compete effectively.
Are exclusive dealing contracts illegal?
Overview. Exclusive dealing is not per se or presumptively illegal under either the Sherman Act, 15 U.S.C. Antitrust concerns related to exclusive dealing arrangements are based on the possibility that performance of the contract will foreclose competition in a substantial share of the line of commerce affected.
Why do companies use exclusive distribution?
Businesses That Mostly Use Exclusive Distribution Typically, exclusivity is used for distributing technically complicated or high-quality products that need a specialized level of skill. Employees may require specific training to enable them to sell the goods. An example is the sale of pharmaceutical products.
Are exclusive agreements anti competitive?
But most exclusive-dealing agreements are both pro-competitive and legal under the antitrust laws. But, percentage-wise, most exclusive-dealing arrangements don’t implicate the antitrust laws and are uncontroversial.
Are exclusive agreements anti-competitive?
What is antitrust law example?
Rockefeller’s Standard Oil is one of the most well-known antitrust law examples. The company dropped prices by more than 50 percent and bought up several of its competitors. As its control of the market increased, the company lowered production costs and prices even more while still making bigger profits.
What is an example of exclusive distribution?
Exclusive distribution definition is a kind of distribution a manufacturer or supplier authorizes only one distributor to carry out within a definite region. An example of exclusive distribution is Apple solely authorizing AT to be the distributor of the iPhone to end users.
Who is an exclusive distributor?
Exclusive distributor The term “exclusive distributor” means the wholesale distributor that directly purchased the product from the manufacturer and is the sole distributor of that manufacturer’s product to a subsequent repackager, wholesale distributor, or dispenser.
Are there antitrust restrictions in a distributor agreement?
The cases show that the legality of restrictions in a distributor agreement often turn on the way the applicable clauses are drafted, negotiated and administered. This article discusses general antitrust principles, with specific applications, for the drafting of these important contracts.
Can you bring an antitrust action against an exclusive dealing agreement?
That doesn’t mean that you can’t ever bring an antitrust action and it doesn’t mean you won’t win. But, percentage-wise, most exclusive-dealing arrangements don’t implicate the antitrust laws and are uncontroversial. You can read our article about exclusive dealing at the Bona Law website here.
Why are vertical distribution agreements not illegal under antitrust law?
The restrictions are classified as “vertical” because the agreement is between non-competitors (the supplier and its wholesaler-distributor). Since 1977 the courts have held that vertical non-price restrictions – – such as exclusive distributorship agreements – – are not per se (or always) illegal under the antitrust laws.
What does it mean to have an exclusive distributor agreement?
In an exclusive distributor agreement, the supplier and wholesaler-distributor agree that the wholesaler-distributor will deal exclusively with the supplier for certain products. Such agreements foreclose the supplier’s competitors from accessing the marketplace through the exclusive distribution network.
