Hong Kong Competition Law Series: Part 10

Keywords: competition, Hong Kong, vertical arrangement

Exclusive Arrangements

WHAT ARE EXCLUSIVE ARRANGEMENTS?

Exclusive arrangements are a type of vertical arrangement, whereby one party imposes restrictions on the other's ability to choose with whom, in what or where it deals. It is a common business practice and can take many forms. Often, it requires a buyer (whether a reseller or end-user) to deal exclusively with a seller. In most cases it will not harm competition.

For example, a manufacturer may agree to supply a distributor provided it agrees not to carry the products of the manufacturer's competitors. It can also occur between sellers and consumers such as when consumer agrees to purchase all its requirements of a particular product from a single supplier. It can also involve a seller dealing exclusively with a single buyer.