Exclusive Agreements

Exclusivity is not an exotic legal concept. It is a routine commercial tool. A supplier may want one distributor in a territory. A platform may guarantee a launch window. A brand may insist that a particular retailer not simultaneously carry direct rivals in certain channels. Sometimes that is efficient. It gives the distributor confidence to invest, reduces free-riding, supports training and after-sales service, and may help a new product gain visibility. That is why Indian competition law does not treat exclusivity as automatically unlawful. It asks when exclusivity crosses the line into foreclosure.

The statutory framework sits in Section 3(4). After the 2023 amendment, the Act refers to exclusive dealing agreement and exclusive distribution agreement. Older Indian practice often used the phrase exclusive supply agreement for similar concerns, and many earlier cases and commentaries still use that older language. Whatever the label, the legal question remains the same. Does the arrangement cause or likely cause an appreciable adverse effect on competition by shutting rivals out of a channel, customer base, territory, or source of supply in a meaningful way.

The MakeMyTrip Goibibo and OYO matter is the clearest Indian illustration. The Commission found an agreement or understanding between OYO and MMT-Go in the nature of an exclusive arrangement and directed modification of the relevant agreement. The case is important because it showed the Commission looking beyond formal drafting to the real commercial effect of preferential visibility and listing exclusivity on a digital platform. When a platform is a major gateway for discovery, exclusivity can do more than allocate sales. It can shape which rivals are visible enough to compete at all.

That case also helped clarify what makes exclusivity worrying. Scale of the intermediary matters. Duration matters. Share of the market covered matters. Availability of alternative channels matters. So does the point in the distribution chain where exclusivity is imposed. Short-term exclusivity for launch investment may be much easier to justify than broad exclusivity imposed by a powerful intermediary across a major part of demand. Indian law is therefore interested in commercial coverage and market impact, not in the word “exclusive” standing alone.

E-commerce cases show why context is everything. In All India Online Vendors Association v Flipkart, the Commission initially closed the matter under Section 26(2), but that procedural history later became contested on appeal, with the Supreme Court in 2026 remanding the matter to the NCLAT for fresh consideration. The safer lesson from that line of cases is not that platform exclusivity allegations are weak or strong in the abstract, but that e-commerce exclusivity analysis depends heavily on evidence, market definition, and procedural stage. By contrast, in Delhi Vyapar Mahasangh v Amazon and Flipkart, the Commission formed a prima facie opinion under Section 26(1) based on a more developed allegation set involving exclusive arrangements, preferential listing, and deep discounting. The two matters are best read together. They show that exclusivity analysis is highly fact-sensitive and can shift when the evidence and procedural stage change.

The same caution applies outside platforms. Exclusive territorial or channel arrangements can be perfectly sensible where the market remains open to entry, buyers retain options, and rival brands still have realistic distribution routes. The law becomes interested where exclusivity acts cumulatively, especially in concentrated markets, so that a rival is not just inconvenienced but blocked from effective scale. The competition question is not whether one firm got a preferred arrangement. It is whether enough of the route to market has been sealed off to blunt rivalry.

A useful practical test is to ask three things. First, what investment or efficiency is the exclusivity supposed to protect. Second, what realistic alternatives remain for rivals and customers. Third, how much of the market is tied up, and for how long. If the answers show real efficiency with limited foreclosure, exclusivity is often defensible. If the answers show broad lock-up by a key gateway with no strong efficiency explanation, the risk rises sharply. That is the pattern visible across Indian platform and distribution cases.

For founders and commercial teams, the takeaway is not “never use exclusivity.” It is “know what the exclusivity is for.” An exclusivity clause that looks modest on paper can become problematic when attached to a platform or distributor that controls access to demand. Indian law is increasingly alert to that point. The more central the channel, the more carefully the arrangement should be tied to a real and proportionate commercial need.