Exclusive agreement

Exclusive agreement
See also

Exclusive agreement is the agreement of purchase the exclusive right [1]. Parties are tied up with some special contract which defines level of exclusiveness. Such contract is always time-specific. Sometimes exclusive agreement is used to gain or maintain market power[2]. It is also special form of competition, when companies are inviting for example manufactures to give the best prices and win this competition-for-the-contract [3].

Short-term exclusive agreements[edit]

Jacobson J. M. writes that some courts suggested that short-term exclusive agreements cannot be unlawful. Despite concurrence is excluded, they may still bid and work on input. It is suggested that in one company already has a monopoly on market and gains even more exclusive agreements, unnecessary agreements or the unnecessary part of the agreements should be illegal <[4].

Long-term exclusive agreement[edit]

In document Code of Federal Regulations: 2000. Office of the Federal Register there is written that long-term exclusive agreement might be generally approved from legal perspective, but duration of such agreements cannot be longer than five years. When these condition is met, there have to exist some special circumstances. To prove them, detailed documents should be provided. Firstly, these special circumstances should be shared for example there is requirement to improve capital for soma facility. Secondly, copy or a draft of final leasing contract should be shared. In general, exclusive agreement is allowed if[5]:

  1. There are special local circumstances on the market, that make is important to create long-term exclusive agreement,
  2. Regional civil officer approves the plan of long-term exclusive agreement,
  3. There are followed special procedures.

Network of exclusive agreements[edit]

Jiménez T. and others describe situation of whole networking of exclusive agreements between Internet Service Providers (called ISPs) and Content Providers (called CPs). Such situation is called vertical monopoly in the literature. Authors assume that between Internet Service Providers and Content Providers are pairs of exclusive agreements which might be strategy (kind of market game) to gain together more market share and higher benefits[6].

Example of exclusive agreement[edit]

Every one or two years companies such as General Motors, Ford and Chrysler invite manufacturers of tires to bid for exclusive rights so that their tires will be used by manufacturers - General Motors, Ford and Chrysler. The consequences are, the market is hard to enter (especially in mid-year) are prices offered by tires manufacturers are each year going down which on the other hand, brings benefit to final customers[7].

Footnotes[edit]

  1. United States. Federal Communications Commission, (1953)
  2. Jacobson J. M., (2006), p. 405
  3. Jacobson J. M., (2003), p. 350
  4. Jacobson J. M., (2006), p. 405 - 410
  5. U.S. General Services Administration, (2003), p. 196
  6. Jiménez T., Hayel Y., Altman E., (2012), p. 212 - 213
  7. Jacobson J. M., (2003), p. 350

References[edit]

Author: Anna Bodura