Exclusive dealing arrangements

Exclusive dealing arrangements in international trade are aimed at restricting the channels through which particular goods may be imported or exported, thereby ensuring control over the distribution, sale and resale of the products. Where trade marks are used in respect of the products in question and the parties to the exclusive dealing arrangement can invoke trade mark rights to prevent parallel imports by third parties of such products, the importer/distributor has an effective monopoly over the distribution of the product in the importing country.

Exclusive dealing arrangements enable an enterprise, when in a dominant position of market power in respect of the supply of a product, to engage in differential pricing policies as between each importing market, the price being set on the basis of the highest that each market can bear. Such policies can have detrimental effects on the balance of payments of the importing country. Exclusive dealing arrangements, when engaged in by enterprises in a dominant position of market power, are also likely to adversely affect the ability of new entrants to penetrate the market, either as domestic manufacturers or as competing importers/distributors.