Are exclusivity clauses allowed under competition law?

Often yes, especially under the vertical block exemption, but exclusivity that appreciably restricts competition can be void under Mw article 6 and TFEU article 101.

How does exclusivity differ from a non-compete?

Exclusivity channels dealings to one partner, while a non-compete bars competing activity altogether. The two are often combined.

Can a party terminate for breach if the other side deals outside the exclusivity?

Yes, if the exclusivity obligation is a material term and the breach is sufficiently serious. The contract typically also provides for an injunction and a damages claim. Establishing and quantifying the loss can be complex when the exclusive market is shared.

What performance obligations typically accompany an exclusivity clause?

Minimum purchase volumes, sales targets, active promotion obligations, or a best-efforts obligation to develop the market. These ensure the exclusive party delivers real commercial value in exchange for the restriction.

Can exclusivity be granted for an unlimited territory?

Broad territorial exclusivity (such as global or EU-wide) is permissible if it satisfies competition-law requirements, but attracts greater scrutiny. Very large territories combined with high market shares are unlikely to benefit from the block exemption and require individual justification.

Exclusivity clause

A provision committing a party to deal only with the other for defined goods, services or territory.

Definition

An exclusivity clause obliges a party to source from, sell to, or deal exclusively with the other party for a defined product, service, customer group, or territory. It provides commercial certainty and protects investment, but because it restricts who the parties may trade with, it is scrutinised under competition law. The Dutch cartel prohibition and TFEU article 101 limit exclusivity that appreciably restricts competition, subject to block exemptions for vertical agreements.

Example

Under the exclusivity clause the distributor may sell the brand's products in the Benelux and source them from no other supplier.

Why this is a business risk

An exclusivity clause limits a party's ability to diversify: a customer locked into a single supplier is exposed if that supplier underdelivers, exits the market, or is acquired. A supplier granting broad exclusivity may forgo significant revenue from other customers. If an exclusivity clause is void under competition law, the party relying on it has no contractual recourse and may have structured its entire commercial model around an unenforceable restriction.

How to manage it

Define the scope of exclusivity precisely: product, territory, customer group, and duration.
Carry out a market-share analysis before agreeing: the vertical block exemption requires both parties below 30%.
Include performance obligations on the exclusive party (minimum purchase volumes, active selling obligations) so exclusivity is conditional on real commitment.
Set a review mechanism so exclusivity can be renegotiated if market conditions change materially.
Obtain legal advice on the competition-law position before agreeing to exclusivity in markets where either party has significant share.

Legal references

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

Frequently asked questions

Common questions about this term.