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Exclusive dealing refers to when a retailer or wholesaler is ‘tied’ to purchase from a supplier on the understanding that no other distributor will be appointed or receive supplies in a given area. When the sales outlets are owned by the supplier, exclusive dealing is because of vertical integration, where the outlets are independent exclusive dealing is illegal due to the Restrictive Trade Practices Act, however, if it is registered and approved it is allowed.
Exclusive dealing can be a barrier to entry, it can be defended on the grounds that it is beneficial to consumers as it can allow after sales service to be better.
Examples of exclusive dealing
- Tied petrol stations that only deal with one petroleum supplier.
- Public houses tied to breweries.
- Toshiba exclusively sells large capacity 1.8" hard drives to Apple Computers
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