Arrangements are analyzed under the rule of reason, examining foreclosure of the market, duration, terminability, and procompetitive justifications. Substantial foreclosure of a relevant market is required.
Short and terminable arrangements rarely violate.
Alternative Names:
Exclusive Dealing Arrangement|Requirements Contract
Why it Matters?
Duration and terminability are the practical defenses, since arrangements terminable on short notice foreclose little because rivals can compete for the business at each renewal, and courts have held that contracts terminable within a year rarely support liability. Calculating foreclosure requires a defined market, which returns the analysis to market definition. Procompetitive justifications including investment protection and free-riding prevention are available.
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Frequently asked questions
What are the practical defenses?
What justifications are available?
