Exclusive Agreement Antitrust

The FTC`s proposed approval order generally prohibits Invibio and its parent company, Vitrex, from entering into future contracts with certain exclusivity clauses. The ban contains provisions setting minimum purchase requirements, providing discounts on a customer`s purchase from Invibio and providing retroactive quantity discounts. The approval order also allows consumers to amend existing contracts and requires Invibio to implement a compliance program for employees to comply with agreements and abuse of dominance. An exclusive commercial contract comes into effect when a seller agrees to sell to a particular buyer all or most of the provision of a particular product or service, or when a buyer agrees to purchase all of his needs or, for the most part, all of his needs for a particular product or service from a particular seller. In some cases, producers may use exclusive trade to reduce competition between them. For example, the FTC challenged exclusive provisions in sales contracts used by two major manufacturers of combustion vehicle pumps. Each company sold pumps to fire engine manufacturers on the condition that additional pumps were purchased by the manufacturer that was already supplying them. These exclusive supply contracts functioned as a customer award agreement between the two pump manufacturers, so that they no longer competed for each other`s customers. Similarly, in 2005, the Third Circuit found, in the context of Dentsply, that Dentsply`s practice of refusing sale to distributors with artificial teeth from other manufacturers was contrary to Section 2 for illegally maintaining Dentsply`s monopoly power. (55) This practice has left Dentsply`s competitors behind with distribution methods that have resulted in „significantly higher transaction costs, increased credit loads and credit risks“ (56), leaving „competing tooth sales below the critical level required for each rival to pose a real threat to Dentsply`s market share.“ (57) The finding that Dentsply`s policy „excludes its competitors from access to distributors“ (58) was found by the Tribunal that Dentsply`s reasons for effectiveness were „anticipated“ and „did not excuse their exclusionary practices“. In particular, the Dentsply court has distinguished the allegations of several other courts that short-term exclusive trading contracts are presumed to be legitimate (60), in which it is stated that a policy of non-action by customers who also dominate a competitor „can realistically conclude the agreements . . .

. As effective as in written treatises. (61) 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.