Personally, I think that all the stuff like this should also be illegal, even without a monopoly. Exclusivity contracts and stuff with that goal should be illegal.
However, we'll have to pass new laws to get there.
Personally, I think that all the stuff like this should also be illegal, even without a monopoly. Exclusivity contracts and stuff with that goal should be illegal.
However, we'll have to pass new laws to get there.
If I make wheat and you run a bakery I might offer you a 30% discount for the next 5 years, but only if I'm your only wheat supplier.
This sort of arrangement allows us to spread the risk of market uncertainties over that period.
I can then build extra capacity, and you get a cheaper product, or one with less price uncertainty.
Maybe we should do away with this, and say that bakeries must buy wheat like airlines buy fuel, i.e. through more complex financial instruments.
Now, I may be doing this because I'm one of only two companies making wheat, and I'm looking to drive the other one out of business. That's basically what Intel was doing here.
But it's not clear to me that we should conclude that exclusivity deals in general are bad.
Say I'm a local wheat producer. I sign a deal with the local bakery. That stops a multi-national from undercutting me.
The contract cements the benefit that both I and the bakery have from mutually working together, and removes the risk to both parties of some outside party damaging both of us.
In other words exclusivity works for small companies in spaces dominated by behemoths.
Think craft beer and local pub.
Even if you were to get there first, when the contract comes up for renewal the multi-national can offer terms that would be unsustainable for a small producer.
I would be bummed if my local tap roomed signed an exclusivity contract with a local brewery. These days there often many local breweries and new ones open regularly. It would be a shame for the local taproom to miss out on offering a wider range of beers because they got locked into an exclusivity contract.
If you are providing a discount or kickback or whatever for exclusivity, that is an anticompetitive behavioral, regardless of size.
If Intel comes to my computer company and offers me a sweet rebate, what do I know about what they're doing with my competitors?
So if it were illegal to receive money to help a company monopolize their market, how would the company receiving the funds be able to determine that's the case?