Exclusive Deals Have Been a Menace in Our Society for 150-Years, They Should be Banned

I hope everyone enjoyed the holiday.

I spend much of my time reading about the history of business and how businesses exploit loopholes and cracks in the law to use predatory, exclusionary, or otherwise unfair tactics to monopolize markets. Exclusive deals are one such tactic that monopolies have used for 150-years.

Exclusive deals are agreements or coercive behavior that forces a firm to deal exclusively with another (typically dominant) firm.

In my latest article, published in ProMarket, I explain how Western Union and a host of other dominant firms used exclusive deals in the late 19th century to monopolize markets. Fortunately, the Federal Trade Commission has broad rulemaking power to ban these agreements. After thoroughly analyzing the history, the agency should do so.

As always, if you have any questions be sure you let me know. Enjoy.

Here is the introduction to the article. The full article can be read here.

Throughout history, monopolists have been able to implement a myriad of unfair tactics that fortify and extend their dominance. Among those, exclusive deals have been a critical legal tool for dominant firms to obtain and maintain control over a market. 

Exclusive deals are contracts, implied agreements, or asserted practices that force dependent firms to engage exclusively with a firm. These contracts restrict the freedom of customers, distributors, and suppliers to conduct business with a corporation’s rivals. Rather than arising from an equal bargaining process, these agreements are often the result of a dominant firm imposing exclusivity on a smaller company merely because of their superior bargaining position and market power. Consequently, exclusive deals can block or marginalize a dominant firm’s rivals and permit them to unfairly perpetuate their market position.