{ "id": "epzwhdhx3r", "slug": "exclusive-dealing", "title": "Exclusive dealing", "updated": "2026-10-15", "topic_path": [ { "id": "society", "label": "Society and history", "api_url": "https://www.edgepedia.org/api/v1/topics/society" }, { "id": "society.economy", "label": "Economics and business", "api_url": "https://www.edgepedia.org/api/v1/topics/society.economy" }, { "id": "society.economy.economics", "label": "Economics", "api_url": "https://www.edgepedia.org/api/v1/topics/society.economy.economics" }, { "id": "society.economy.economics.econ_theory_methods", "label": "Economic theory and methods", "api_url": "https://www.edgepedia.org/api/v1/topics/society.economy.economics.econ_theory_methods" }, { "id": "society.economy.economics.econ_micro", "label": "Microeconomics", "api_url": "https://www.edgepedia.org/api/v1/topics/society.economy.economics.econ_micro" }, { "id": "society.economy.economics.econ_micro.market_structures_competition", "label": "Market structures, competition, and industrial organization", "api_url": "https://www.edgepedia.org/api/v1/topics/society.economy.economics.econ_micro.market_structures_competition" } ], "geo": [ { "id": "geo.us.t1800.society.economy.economics.econ_micro", "label": "United States · 1800 to 1945: Microeconomics", "api_url": "https://www.edgepedia.org/api/v1/geo/geo.us.t1800.society.economy.economics.econ_micro", "path": [ { "id": "geo.us", "label": "United States", "api_url": "https://www.edgepedia.org/api/v1/geo/geo.us" }, { "id": "geo.us.t1800", "label": "United States · 1800 to 1945", "api_url": "https://www.edgepedia.org/api/v1/geo/geo.us.t1800" }, { "id": "geo.us.t1800.society", "label": "Society and history", "api_url": "https://www.edgepedia.org/api/v1/geo/geo.us.t1800.society" }, { "id": "geo.us.t1800.society.economy", "label": "Economics and business", "api_url": "https://www.edgepedia.org/api/v1/geo/geo.us.t1800.society.economy" }, { "id": "geo.us.t1800.society.economy.economics", "label": "Economics", "api_url": "https://www.edgepedia.org/api/v1/geo/geo.us.t1800.society.economy.economics" }, { "id": "geo.us.t1800.society.economy.economics.econ_theory_methods", "label": "Economic theory and methods", "api_url": "https://www.edgepedia.org/api/v1/geo/geo.us.t1800.society.economy.economics.econ_theory_methods" }, { "id": "geo.us.t1800.society.economy.economics.econ_micro", "label": "Microeconomics", "api_url": "https://www.edgepedia.org/api/v1/geo/geo.us.t1800.society.economy.economics.econ_micro" } ] } ], "excerpt": "Exclusive dealing is a vertical restraint in which a buyer agrees to buy most or all requirements from one supplier, judged under the rule of reason in the US.", "snippet": "Exclusive dealing is a vertical restraint in which a buyer agrees to buy most or all requirements from one supplier, judged under the rule of reason in the US.", "node": "society.economy.economics.econ_micro.market_structures_competition", "markdown": "# Exclusive dealing\n\n**Exclusive dealing** is a vertical restraint in which a buyer agrees, expressly or in effect, to purchase most or all of its requirements of a product from one supplier, or a supplier agrees not to sell to the buyer's competitors, so that rivals are denied access to that customer or channel[1](https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-supply-chain/exclusive-dealing-or-requirements-contracts) • [2](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_UCW_Ch5.pdf). It sits at the center of a long-running tension in competition policy: most such contracts encourage dealers to specialize in promoting a brand, yet a web of them can lock up distribution and keep an entrant from ever reaching the scale needed to compete[1](https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-supply-chain/exclusive-dealing-or-requirements-contracts).\n\n| Key fact | Detail |\n|---|---|\n| Definition | An arrangement inducing a buyer to purchase most or all requirements for a period from one supplier; judged under the rule of reason in the US[1](https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-supply-chain/exclusive-dealing-or-requirements-contracts) • [3](https://download.pli.edu/WebContent/pm/357816/pdf/10-12-2023_0905_141661_Handout2.pdf) |\n| US thresholds | Older agency guidance describes foreclosure of 30% or less as generally safe; Section 1 concern usually requires 40–50%; no safe harbor for monopolists under Section 2[4](https://appliedantitrust.com/20_exclusive_contracts/doj_section2_report_exclusive_dealing.pdf) • [5](https://www.thesedonaconference.org/sites/default/files/publications/43-50%20Baker_0.pdf) |\n| EU thresholds | Vertical block exemption requires supplier and buyer shares each at or below 30%; non-competes capped at five years; cumulative networks above 50% can lose exemption[6](https://eur-lex.europa.eu/eli/reg/2022/720/oj/eng) |\n| Landmark US cases | Standard Stations (1949), Tampa Electric (1961), Dentsply (2005), Microsoft (2001), Surescripts, Google (2025)[7](https://www.thesedonaconference.org/sites/default/files/publications/51-56%20Rosch_0.pdf) • [8](https://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=2495&context=thirdcircuit_2005) • [9](https://www.ftc.gov/enforcement/competition-matters/2026/02/how-loyalty-discounts-between-firms-harm-competition-when-there-are-network-effects-ftc-v-surescripts) |\n| Economic mechanism | With a minimum efficient scale, an incumbent can profitably exclude by signing enough customers that no rival can reach scale; 86 of 100 customers can suffice when the scale threshold is 15[10](https://rasmusen.org/published/Rasmusen_91.AER.exclusion.htm) |\n| Efficiency rationale | Exclusivity protects relationship-specific investments (special equipment, training) and encourages dealer marketing support[2](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_UCW_Ch5.pdf) • [11](https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=intcom%3AC%282022%294238) |\n\n## What exclusive dealing is\n\nThe term covers a family of arrangements with the same economic effect. An exclusive dealing contract prevents a distributor from selling the products of a different manufacturer; a requirements contract prevents a manufacturer from buying inputs from a different supplier[1](https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-supply-chain/exclusive-dealing-or-requirements-contracts). The International Competition Network's workbook adds the reverse case, where a downstream purchaser requires an upstream seller not to sell to competing downstream purchasers, and notes that exclusivity can arise de facto through discounts or rebates conditional on buying all or a substantial part of requirements from one supplier[2](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_UCW_Ch5.pdf).\n\nExclusivity is distinct from tying. Tying is an agreement to sell one product only on condition that the buyer also purchases a different product, and it remains the vertical restraint to which the per se rule nominally applies; exclusive dealing instead induces a buyer to concentrate purchases over time with one supplier[3](https://download.pli.edu/WebContent/pm/357816/pdf/10-12-2023_0905_141661_Handout2.pdf). Loyalty rebates and fidelity discounts achieve the same concentration of purchases through pricing rather than contract terms, and Section 1 of the Sherman Act covers de facto and partial exclusive dealing achieved this way[3](https://download.pli.edu/WebContent/pm/357816/pdf/10-12-2023_0905_141661_Handout2.pdf). Recent US case law extends the concept further: in *CoStar Group v. CoStar Exchange* (9th Cir. 2025) the Ninth Circuit held that technological barriers and contractual terms preventing customers from dealing with competitors constitute de facto exclusive agreements sufficient to state a claim[12](https://verdict.com/case-law/topics/national/restraint-of-trade/exclusive-dealing-substantial-foreclosure-doctrine-tc7p1w).\n\n## How the mechanism works\n\n**Foreclosure through scale.** The core concern is that exclusive contracts restrict rivals' access to inputs, distribution, customers, or complements, raising rivals' costs and enabling the defendant to gain pricing power[13](https://antitrustcasebook.org/download/Chapter%20VI%20-%20Vertical%20Restraints.pdf). The mechanism turns on minimum efficient scale, the smallest volume at which a firm can produce competitively. If several exclusive arrangements in a market are staggered so that only a few come up for renewal in any given year, only a small portion of demand is contestable at any time; even arrangements covering most but not all of a partner's purchases can produce substantial foreclosure because rivals cannot reach the scale they need[2](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_UCW_Ch5.pdf). Dentsply illustrates the point: its direct-selling competitors Ivoclar and Vita held only about 5% and 3% market shares, showing that selling outside the dealer channel posed little threat[8](https://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=2495&context=thirdcircuit_2005).\n\n**Divide and conquer.** Economic models sharpen the mechanism. Rasmusen, Ramseyer, and Wiley showed that with 100 customers and a minimum efficient scale of 15, a monopoly need only lock up 86 customers to forestall entry, exploiting customer disorganization so that exclusion is profitable even though each customer would be better off refusing[10](https://rasmusen.org/published/Rasmusen_91.AER.exclusion.htm). Segal and Whinston showed the incumbent need not rely on disorganization at all: by exploiting externalities among buyers with discriminatory offers, a divide-and-conquer strategy can profitably exclude rivals; conversely, when offers must be nondiscriminatory and buyers can coordinate, exclusion never succeeds[14](https://web.stanford.edu/~isegal/comment.pdf). In two-sided platform markets the arithmetic compounds: with loyalty contracts on both sides each covering 90% of volume, contestable demand falls to 1% of total transactions, since (1 − 0.9) × (1 − 0.9) = 1%[9](https://www.ftc.gov/enforcement/competition-matters/2026/02/how-loyalty-discounts-between-firms-harm-competition-when-there-are-network-effects-ftc-v-surescripts).\n\n**The efficiency side.** The same contracts can solve real problems. Non-compete type restrictions help overcome free riding between suppliers and address the [hold-up problem](https://www.edgepedia.org/hold-up-problem) from relationship-specific investments such as specific equipment or training[11](https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=intcom%3AC%282022%294238). The FTC states that most exclusive dealing contracts are beneficial because they encourage marketing support for the manufacturer's brand, such as trained salespeople, inventory, and fast warranty service[1](https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-supply-chain/exclusive-dealing-or-requirements-contracts). The classic example is the 1919 GM–Fisher contract, which Klein attributed to the need to protect Fisher's investments in stamping machines and dies specific to GM's car designs[15](https://web.stanford.edu/~isegal/rje_Winter'00_Segal.pdf).\n\n## By the numbers\n\nUS law has accumulated a set of percentage benchmarks, none of them absolute:\n\n- **30% safe harbor.** An ICN report summarized U.S. agency statements as describing a 30% safe harbor and saying that in most instances foreclosure must exceed 50% to raise competitive concern[16](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_SR_SingBrndExcDealing.pdf). The DOJ's report recognized a safe harbor below 30% while stressing that above 30% was neither automatically nor presumptively illegal[4](https://appliedantitrust.com/20_exclusive_contracts/doj_section2_report_exclusive_dealing.pdf).\n- **40–50% for Section 1.** In *United States v. Microsoft*, Judge Jackson held Microsoft's exclusive dealing arrangements were legal under Section 1 because they did not foreclose as much as 40% of the market; on appeal the D.C. Circuit stated in dicta that a \"40% or 50% share is usually required\" for a Section 1 violation[5](https://www.thesedonaconference.org/sites/default/files/publications/43-50%20Baker_0.pdf).\n- **Case shares.** Standard Fashion held about 40% of the US dress-pattern market[17](https://www.wsgr.com/a/web/179/jacobson_foreclosure.pdf); Dentsply held a 75–80% revenue share (67% on a unit basis)[18](https://www.wsgr.com/PDFSearch/AntitrustSource_may05_sher.pdf); Surescripts held 95% and its loyalty contracts foreclosed at least 70% of each market[9](https://www.ftc.gov/enforcement/competition-matters/2026/02/how-loyalty-discounts-between-firms-harm-competition-when-there-are-network-effects-ftc-v-surescripts).\n- **Low-end benchmarks.** Courts generally find that an arrangement foreclosing 20% or less of the relevant market presumptively does not adversely affect competition[3](https://download.pli.edu/WebContent/pm/357816/pdf/10-12-2023_0905_141661_Handout2.pdf), and a general rule of thumb requires a market share of at least 55% to demonstrate market power[18](https://www.wsgr.com/PDFSearch/AntitrustSource_may05_sher.pdf).\n\nTwo case figures are reported differently across sources. For Standard Stations, one account gives the individual agreement's foreclosure as 6% of the market[7](https://www.thesedonaconference.org/sites/default/files/publications/51-56%20Rosch_0.pdf) while another gives 6.7% of gasoline sales[5](https://www.thesedonaconference.org/sites/default/files/publications/43-50%20Baker_0.pdf). For [Tampa Electric](https://www.edgepedia.org/tampa-electric), one account puts the contract at about 1% of total eastern US bituminous coal sales[17](https://www.wsgr.com/a/web/179/jacobson_foreclosure.pdf) while another gives 0.77% of the relevant market[3](https://download.pli.edu/WebContent/pm/357816/pdf/10-12-2023_0905_141661_Handout2.pdf). Both figures make the same qualitative point: the foreclosed share was tiny.\n\n## Legal treatment: United States\n\n**Statutory bases.** Courts have condemned exclusive dealing under four provisions: Section 1 and Section 2 of the Sherman Act, Section 3 of the Clayton Act, and Section 5 of the FTC Act[4](https://appliedantitrust.com/20_exclusive_contracts/doj_section2_report_exclusive_dealing.pdf). The Clayton Act of 1914 specifically prohibited certain exclusive dealing agreements, among other practices, reducing the judicial discretion left by the Sherman Act[19](https://ios23.classes.ryansafner.com/files/readings/Kovacic-Shapiro-2000.pdf). Before 1914, exclusive dealing was regarded as a \"partial\" restraint and generally upheld except where it created an actual monopoly[17](https://www.wsgr.com/a/web/179/jacobson_foreclosure.pdf).\n\n**The doctrinal arc.** In *Standard Oil Co. v. United States* (Standard Stations, 1949) the Court rejected per se treatment and held legality turns on whether competition has been foreclosed in a substantial share of the commerce affected; the individual agreement foreclosed only about 6% of the market, but the aggregate of such agreements foreclosed 65%, held sufficient for illegality under Clayton Section 3[7](https://www.thesedonaconference.org/sites/default/files/publications/51-56%20Rosch_0.pdf). In *Tampa Electric* (1961) the Supreme Court replaced this \"quantitative substantiality\" test with a \"qualitative substantiality\" analysis considering duration, purpose, and effect[7](https://www.thesedonaconference.org/sites/default/files/publications/51-56%20Rosch_0.pdf). The FTC's 1982 Beltone decision marked the shift toward rule-of-reason treatment, upholding exclusive dealing covering 16% of the hearing aid market, and post-Beltone decisions routinely sustained arrangements with foreclosure of 40% or less[17](https://www.wsgr.com/a/web/179/jacobson_foreclosure.pdf). In *Barry Wright Corp. v. ITT Grinnell*, Judge Breyer upheld a purchase agreement accounting for some fifty percent of annual sales in the relevant market, citing the buyer's desire for assurance of adequate supply; since 1997 courts increasingly focus on the effect of the arrangement on the defendant's market power rather than bare foreclosure percentages[17](https://www.wsgr.com/a/web/179/jacobson_foreclosure.pdf).\n\n**Duration and terminability.** The Seventh Circuit in *Roland Machinery* (1984, Posner) held that exclusive dealing contracts terminable in less than a year are presumptively lawful under Section 3, and required proof of exclusion of a significant competitor plus probable price-raising effects[7](https://www.thesedonaconference.org/sites/default/files/publications/51-56%20Rosch_0.pdf). The Dentsply court distinguished such assertions, holding that exclusive dealing arrangements terminable at will can be as effective as written contracts in foreclosing competition[8](https://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=2495&context=thirdcircuit_2005).\n\n**Section 2 cases.** In *Dentsply* (Third Circuit, 2005), the court held that Dentsply's refusal to sell to distributors carrying other manufacturers' artificial teeth violated Sherman Act Section 2 by unlawfully maintaining monopoly power, keeping sales of competing teeth below the critical level needed for any rival to pose a real threat; its efficiency justifications were found pretextual[4](https://appliedantitrust.com/20_exclusive_contracts/doj_section2_report_exclusive_dealing.pdf). In 2001 the D.C. Circuit upheld condemnation of exclusivity agreements between Microsoft and OEMs, internet access providers, independent software vendors, and Apple under Section 2 because they barred rivals from means of distribution[4](https://appliedantitrust.com/20_exclusive_contracts/doj_section2_report_exclusive_dealing.pdf). Unlike Section 1, no safe harbor exists for monopolists under Section 2[5](https://www.thesedonaconference.org/sites/default/files/publications/43-50%20Baker_0.pdf).\n\n**Recent decisions.** In *FTC v. Surescripts*, the court ruled Surescripts held a 95% market share since 2010 in electronic prescription routing markets and has had monopoly power since that time; its web of loyalty contracts foreclosed at least 70% of each market, eliminating competitive attempts such as Emdeon's[9](https://www.ftc.gov/enforcement/competition-matters/2026/02/how-loyalty-discounts-between-firms-harm-competition-when-there-are-network-effects-ftc-v-surescripts). In *United States v. Google LLC* (D.D.C. 2025), the court found Google's exclusive distribution agreements with browser developers, OEMs, and carriers locked up the most efficient search-distribution channels [12](https://verdict.com/case-law/topics/national/restraint-of-trade/exclusive-dealing-substantial-foreclosure-doctrine-tc7p1w). By contrast, in *Sanofi-Aventis v. Mylan* (10th Cir. 2022) summary judgment was affirmed despite over 90% market share and long contract durations, because there was no evidence of actual consumer harm such as higher prices or reduced output[12](https://verdict.com/case-law/topics/national/restraint-of-trade/exclusive-dealing-substantial-foreclosure-doctrine-tc7p1w).\n\n## Legal treatment: European Union\n\nThe EU addresses exclusive dealing both under Article 101 for vertical agreements and under Article 102 for dominant firms. The 2022 Vertical Guidelines state that [vertical restraints](https://www.edgepedia.org/vertical-restraints) can lead to foreclosure, softening of competition, or collusion, and that the degree of market power required for a restriction under Article 101(1) is less than that required for dominance under Article 102[11](https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=intcom%3AC%282022%294238).\n\n**The VBER.** Regulation (EU) 2022/720 exempts vertical agreements under Article 101(3) on condition that the supplier's and the buyer's market shares each do not exceed 30% of the relevant markets[6](https://eur-lex.europa.eu/eli/reg/2022/720/oj/eng). The exemption of non-compete obligations is limited to obligations not exceeding a duration of five years[6](https://eur-lex.europa.eu/eli/reg/2022/720/oj/eng), and where parallel networks of similar vertical restraints cover more than 50% of a relevant market, the Commission may declare the Regulation inapplicable[6](https://eur-lex.europa.eu/eli/reg/2022/720/oj/eng). The Regulation entered into force on 1 June 2022, replacing Regulation 330/2010, which expired on 31 May 2022[6](https://eur-lex.europa.eu/eli/reg/2022/720/oj/eng) • [20](https://competition-policy.ec.europa.eu/antitrust-and-cartels/legislation/vertical-block-exemptions_en).\n\n**Article 102 case law.** The CJEU in *Michelin II* inferred that any loyalty-inducing rebate system applied by a dominant undertaking has foreclosure effects prohibited by Article 102, creating what commentators describe as a near-irrebuttable presumption against dominant firms[21](https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1134&context=law_econ_current). In *Delimitis*, the Court articulated a two-part test for exclusive dealing-type agreements: whether the agreement foreclosed market participation by rivals, and the significance of the agreement at issue[21](https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1134&context=law_econ_current). In *Van den Bergh*, the Court of First Instance held that an undertaking with a market share of more than 75% tying outlets in the relevant market by an exclusivity clause constituted an abuse[16](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_SR_SingBrndExcDealing.pdf). The German Bundeskartellamt found anti-competitive foreclosure in long-term gas supply contracts where 70% of customers were tied to the dominant supplier through contracts covering 100% of their respective demand[16](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_SR_SingBrndExcDealing.pdf).\n\n**2025 developments.** On 8 May 2025, the CJEU held in *Beevers Kaas* (C-581/23) that the mere absence of active sales by non-exclusive distributors is insufficient to satisfy the block-exemption conditions for exclusive distribution; a supplier must impose a parallel active-sales ban on its other distributors, shown by an express restriction or by explicit or tacit acquiescence following the *Super Bock* \"concurrence of wills\" approach[22](https://www.ashurstperkinscoie.com/en/insights/cjeu-sharpens-stance-on-active-sales-bans-in-exclusive-distribution/). The Commission has also adopted new Guidelines on exclusionary abuses of dominance under Article 102, dated 3 September 2026, covering exclusive dealing, loyalty rebates, tying, self-preferencing, and other conduct[23](https://competition-policy.ec.europa.eu/document/download/ac0e592e-2c8e-4a45-aae5-d82e7327b022_en?filename=Guidelines_on_exclusionary_abuses_of_dominance_102TFEU.pdf).\n\n## How economists model exclusion\n\n**Naked exclusion.** Rasmusen, Ramseyer, and Wiley's 1991 model requires no precommitment to future prices, liquidated damages, or cost differences; entry is certain absent exclusionary tactics, yet exclusion can still be profitable[10](https://rasmusen.org/published/Rasmusen_91.AER.exclusion.htm). Their reply states the conditions for profitable, socially inefficient exclusion: a minimum efficient scale, and customers who expect exclusion to succeed and cannot coordinate to defeat it; at a theoretical limit the excluding firm can gain exclusionary rights for free[24](https://www.rasmusen.org/published/Rasmusen_00.AER.exclusion.pdf). They also note that the leading Supreme Court cases (Standard Stations, Tampa Electric, Jefferson Parish) violate the assumptions of the theory, so it does not support a per se ban on exclusive dealing[24](https://www.rasmusen.org/published/Rasmusen_00.AER.exclusion.pdf).\n\n**Investment protection and its limits.** Segal and Whinston formally examined when exclusive contracts protect noncontractible relationship-specific investments, distinguishing complementary from substitutable investment effects[15](https://web.stanford.edu/~isegal/rje_Winter'00_Segal.pdf). But when the external source's investment is an entry cost, exclusivity discourages entry, and the buyer and supplier have a socially excessive incentive to use it, as in Aghion and Bolton[15](https://web.stanford.edu/~isegal/rje_Winter'00_Segal.pdf). A 2012 *Journal of Industrial Economics* paper shows a model in which exclusive dealing both promotes the incumbent seller's investment and can exclude a more efficient entrant, inviting a more cautious attitude toward investment-promotion defenses[25](https://onlinelibrary.wiley.com/doi/10.1111/joie.12006).\n\n**Ambiguity and newer theories.** Bernheim and Whinston (1998) show that exclusionary contractual provisions may be irrelevant, anticompetitive, or efficiency-enhancing, depending on the setting, including anticompetitive effects in markets other than the ones in which exclusive dealing is practiced[26](https://www.journals.uchicago.edu/doi/10.1086/250003). Calzolari and Denicolò (AER 2015) propose a theory in which a dominant firm with a competitive advantage and privately informed buyers can impose exclusive contractual restrictions without necessarily compensating buyers, making exclusive dealing both profitable and anticompetitive[27](https://ideas.repec.org/a/aea/aecrev/v105y2015i11p3321-51.html). Calzolari, Denicolò, and Zanchettin (RAND 2020) show that with distorted prices, exclusive dealing can be directly profitable and anticompetitive when the dominant firm enjoys a competitive advantage, gaining from a demand boost when buyers sign exclusive contracts[28](https://onlinelibrary.wiley.com/doi/10.1111/1756-2171.12338).\n\n## Loyalty rebates and other exclusivity variants\n\nLoyalty rebates and fidelity discounts reach the same result as outright exclusivity but through pricing. In Europe the contingency governing loyalty rebates is called a \"suction effect\", the heavy pressure on the buyer near the end of the contract period to continue purchasing from the original supplier[29](https://scholarship.law.umn.edu/cgi/viewcontent.cgi?article=1894&context=faculty_articles). A scholarly account describes EU enforcement as applying an as-efficient-competitor standard to predation, loyalty rebates, and bundling[29](https://scholarship.law.umn.edu/cgi/viewcontent.cgi?article=1894&context=faculty_articles), and *Michelin II* was read to presume that loyalty-inducing rebates by a dominant firm have foreclosure effects[21](https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1134&context=law_econ_current).\n\nUS courts have begun applying reduced thresholds to such programs. In *American President Lines v. Matson* (D.D.C. 2022), a loyalty discount program requiring a 90% volume commitment was held to be de facto exclusive dealing, with a reduced foreclosure threshold of approximately 35% because the defendant was a monopolist[12](https://verdict.com/case-law/topics/national/restraint-of-trade/exclusive-dealing-substantial-foreclosure-doctrine-tc7p1w). In *LePage's Inc. v. 3M*, the Third Circuit saw 3M's bundle pricing as a mechanism for excluding LePage's transparent tape, achieving the results of predatory pricing without selling any item below cost[29](https://scholarship.law.umn.edu/cgi/viewcontent.cgi?article=1894&context=faculty_articles). The FTC's Section 5 policy statement identified loyalty rebates, tying, bundling, and exclusive dealing arrangements that have the tendency to ripen into violations as exemplary violations, and as an incipiency statute Section 5 requires no showing of actual harm[30](https://download.pli.edu/WebContent/pm/357689/pdf/05-01-2023_1600_140240_Falls.pdf).\n\n## Recent developments\n\nThree developments mark the recent shift. First, the Surescripts settlement prohibits Surescripts from using exclusivity or loyalty contracts requiring 50% or more of a customer's transactions[9](https://www.ftc.gov/enforcement/competition-matters/2026/02/how-loyalty-discounts-between-firms-harm-competition-when-there-are-network-effects-ftc-v-surescripts). Second, the 2025 Google decision found exclusive distribution agreements locked up the most efficient search-distribution channels [12](https://verdict.com/case-law/topics/national/restraint-of-trade/exclusive-dealing-substantial-foreclosure-doctrine-tc7p1w). Third, in the EU the *Beevers Kaas* judgment tightened the conditions for relying on the vertical block exemption for exclusive distribution[22](https://www.ashurstperkinscoie.com/en/insights/cjeu-sharpens-stance-on-active-sales-bans-in-exclusive-distribution/), and the Commission adopted new Article 102 exclusionary-abuse Guidelines covering exclusive dealing and loyalty rebates[23](https://competition-policy.ec.europa.eu/document/download/ac0e592e-2c8e-4a45-aae5-d82e7327b022_en?filename=Guidelines_on_exclusionary_abuses_of_dominance_102TFEU.pdf). As of 2023, other notable matters included FTC v. Syngenta and Corteva (\"pay to block\") and Qualcomm/Apple cases[30](https://download.pli.edu/WebContent/pm/357689/pdf/05-01-2023_1600_140240_Falls.pdf).\n\n## References\n\n1. [Exclusive Dealing or Requirements Contracts, Federal Trade Commission](https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-supply-chain/exclusive-dealing-or-requirements-contracts)\n2. [Unilateral Conduct Workbook Chapter 5: Exclusive Dealing, ICN](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_UCW_Ch5.pdf)\n3. [Interactions with Customers and Suppliers: Marketing and Distribution Issues in Antitrust Law (PLI handout)](https://download.pli.edu/WebContent/pm/357816/pdf/10-12-2023_0905_141661_Handout2.pdf)\n4. [Competition and Monopoly: Single-Firm Conduct Under Section 2 — Exclusive Dealing chapter, DOJ](https://appliedantitrust.com/20_exclusive_contracts/doj_section2_report_exclusive_dealing.pdf)\n5. [Thoughts on Exclusive Dealing & Related Practices, The Sedona Conference (D. Baker)](https://www.thesedonaconference.org/sites/default/files/publications/43-50%20Baker_0.pdf)\n6. [Commission Regulation (EU) 2022/720 (VBER)](https://eur-lex.europa.eu/eli/reg/2022/720/oj/eng)\n7. [Evolution of Exclusive Dealing Law, The Sedona Conference (J. Rosch)](https://www.thesedonaconference.org/sites/default/files/publications/51-56%20Rosch_0.pdf)\n8. [USA v. Dentsply International (3d Cir. 2005 opinion)](https://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=2495&context=thirdcircuit_2005)\n9. [How Loyalty Discounts Between Firms Harm Competition When There Are Network Effects: FTC v. Surescripts, FTC](https://www.ftc.gov/enforcement/competition-matters/2026/02/how-loyalty-discounts-between-firms-harm-competition-when-there-are-network-effects-ftc-v-surescripts)\n10. [Naked Exclusion (Rasmusen, Ramseyer & Wiley, American Economic Review, 1991)](https://rasmusen.org/published/Rasmusen_91.AER.exclusion.htm)\n11. [Commission Notice — Guidelines on vertical restraints (C(2022) 4238 final)](https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=intcom%3AC%282022%294238)\n12. [Exclusive Dealing — Substantial Foreclosure Doctrine (case-law survey)](https://verdict.com/case-law/topics/national/restraint-of-trade/exclusive-dealing-substantial-foreclosure-doctrine-tc7p1w)\n13. [Vertical Restraints (Antitrust Casebook chapter)](https://antitrustcasebook.org/download/Chapter%20VI%20-%20Vertical%20Restraints.pdf)\n14. [Naked Exclusion: Comment (Segal & Whinston, American Economic Review, 2000)](https://web.stanford.edu/~isegal/comment.pdf)\n15. [Exclusive Contracts and Protection of Investments (Segal & Whinston, RAND Journal of Economics, 2000)](https://web.stanford.edu/~isegal/rje_Winter'00_Segal.pdf)\n16. [Report on Single Branding/Exclusive Dealing, ICN Unilateral Conduct Workbook](https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/07/UCWG_SR_SingBrndExcDealing.pdf)\n17. [Exclusive Dealing, 'Foreclosure,' and Consumer Harm (Antitrust Law Journal, D. Jacobson)](https://www.wsgr.com/a/web/179/jacobson_foreclosure.pdf)\n18. [An Analysis of the Third Circuit's Dentsply Decision (The Antitrust Source, May 2005)](https://www.wsgr.com/PDFSearch/AntitrustSource_may05_sher.pdf)\n19. [Antitrust Policy: A Century of Economic and Legal Thinking (Kovacic & Shapiro 2000)](https://ios23.classes.ryansafner.com/files/readings/Kovacic-Shapiro-2000.pdf)\n20. [Block Exemptions — Vertical Agreements, European Commission](https://competition-policy.ec.europa.eu/antitrust-and-cartels/legislation/vertical-block-exemptions_en)\n21. [Toward a Unified Theory of Exclusionary Vertical Restraints (Wright & Patel, Michigan Law)](https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1134&context=law_econ_current)\n22. [CJEU sharpens stance on active sales bans in exclusive distribution (Case C-581/23 Beevers Kaas)](https://www.ashurstperkinscoie.com/en/insights/cjeu-sharpens-stance-on-active-sales-bans-in-exclusive-distribution/)\n23. [Guidelines on exclusionary abuses of dominance under Article 102 TFEU (C(2026) 6118 final)](https://competition-policy.ec.europa.eu/document/download/ac0e592e-2c8e-4a45-aae5-d82e7327b022_en?filename=Guidelines_on_exclusionary_abuses_of_dominance_102TFEU.pdf)\n24. [Naked Exclusion: Reply (Rasmusen, Ramseyer & Wiley, American Economic Review, 2000)](https://www.rasmusen.org/published/Rasmusen_00.AER.exclusion.pdf)\n25. [Exclusive Dealing: Investment Promotion May Facilitate Inefficient Foreclosure (Journal of Industrial Economics, 2012)](https://onlinelibrary.wiley.com/doi/10.1111/joie.12006)\n26. [Exclusive Dealing (Bernheim & Whinston, Journal of Political Economy, 1998)](https://www.journals.uchicago.edu/doi/10.1086/250003)\n27. [Exclusive Dealing and Market Dominance (Calzolari & Denicolò, American Economic Review, 2015)](https://ideas.repec.org/a/aea/aecrev/v105y2015i11p3321-51.html)\n28. [The demand-boost theory of exclusive dealing (Calzolari, Denicolò & Zanchettin, RAND Journal of Economics, 2020)](https://onlinelibrary.wiley.com/doi/10.1111/1756-2171.12338)\n29. [Towards a Coherent and Workable Antitrust Policy on Vertical Restraints](https://scholarship.law.umn.edu/cgi/viewcontent.cgi?article=1894&context=faculty_articles)\n30. [Evolving Law on Vertical Restraints, Exclusionary Contracts, and Resale Price Maintenance (Orrick, 2023)](https://download.pli.edu/WebContent/pm/357689/pdf/05-01-2023_1600_140240_Falls.pdf)\n\n---\n*Topic: Encyclopedia › Society and history › Economics and business › Economics › Economic theory and methods › Microeconomics › Market structures, competition, and industrial organization*\n\n*Initially written Oct 10, 2026 · Edited: Oct 11, 2026; Oct 15, 2026*\n\n*Copyright 2026 EdgeChat AI, a subsidiary of Biostate AI.*\n\nLicense: Edgepedia Community License 1.0, https://www.edgepedia.org/edgepedia/license\n", "same_as": [ "https://web.stanford.edu/~isegal/comment.pdf", "https://web.stanford.edu/~isegal/rje_Winter'00_Segal.pdf" ], "url": "https://www.edgepedia.org/exclusive-dealing", "markdown_url": "https://www.edgepedia.org/exclusive-dealing.md", "license": { "name": "Edgepedia Community License 1.0", "url": "https://www.edgepedia.org/edgepedia/license", "summary": "Free with credit, commercial use included. AI training is open to everyone. For other uses, organizations over USD 100M in revenue or 100M monthly users license separately.", "spdx": "LicenseRef-Edgepedia-Community-1.0" }, "credit": "\"Exclusive dealing\", Edgepedia (EdgeChat), https://www.edgepedia.org/exclusive-dealing. Edgepedia Community License 1.0.", "credit_md": "\"[Exclusive dealing](https://www.edgepedia.org/exclusive-dealing)\", Edgepedia (EdgeChat), [https://www.edgepedia.org/exclusive-dealing](https://www.edgepedia.org/exclusive-dealing). [Edgepedia Community License 1.0](https://www.edgepedia.org/edgepedia/license).", "credit_html": "\"Exclusive dealing\", Edgepedia (EdgeChat), https://www.edgepedia.org/exclusive-dealing. Edgepedia Community License 1.0.", "speakable": "Exclusive dealing is a vertical restraint in which a buyer agrees to buy most or all requirements from one supplier, judged under the rule of reason in the US." }