You have found out that exclusive dealing arrangements impose some type of condition or restriction on the sale of a product or service. It is important to note that these arrangements are generally only prohibited if they may result in a substantial lessening of competition in the market for the particular product or service.

It is not always easy to determine when a substantial lessening of competition may occur from particular conduct. In fact often it is only determined in a Court, where full consideration is given to a range of factors like the type of product sold and the number of available competitors. Generally speaking, a Court may find that an exclusive dealing arrangement has the purpose, effect or likely effect of substantially lessening competition if the degree to which competition is reduced in the market due to the arrangement is great enough that the public will suffer from that lessening of competition.

For example, Roy Hobbs lives in a small country town in which only three financial institutions are represented. The Outback Building Society offered Roy financial incentives on the condition that he deals exclusively with them. The Outback Building Society has 70% of the market, with the remaining 30% divided between the two financial institutions. It could be argued that this behaviour results in a substantial lessening of competition because Roy is not free to obtain services from either of the other financial institutions.