Murky Waters: The FTC Dives Into Exclusionary Supply Contracts

Although most supply agreements are a benign business reality, when favorable terms negotiated with a supplier foreclose the buyer's rivals from competing, the antitrust waters can get murky, and buyers, especially those with market power, risk government investigations and private litigation.

In a recent enforcement action, the Federal Trade Commission (FTC) on November 21 entered into a consent order with Pool Corporation, Inc. (Pool Corp.) that required the company to remove any provisions in its agreements with pool supply manufacturers that could prevent new entrants from gaining a foothold in the pool supply distribution market. Two days later, a pool dealer echoed the FTC complaint in a new class action suit against Pool Corp. alleging monopolization and seeking treble damages.