Decision Point: Negotiating an Exclusive Dealing Contract

In recent years, a new company called Endless Range Meats has been making a name for itself due to its high-quality meats and its prominent focus on humane processing practices and sustainability. Based in Colorado, Endless Range is very popular in the western part of the United States but hasn't gone national yet. You want to change that.

Endless Range offers the perfect products to further your outreach to Millennials. Endless Range products are already a big seller in your western stores, and your data show that the primary consumers are under age 45.

You approach the managers of Endless Range with a deal that will give them national recognition. Rather than just using Endless Range in the West, you will use their products in all of your stores nationwide. In return, they must sign an exclusive dealing contract with Gustable'smeaning that they can no longer sell their products to any retailer or supermarket chain other than Gustable's.

Your legal department hears about this deal and expresses some concern that it could violate Section 3 of the Clayton Act regarding conditional sales. They will need a day to review the deal.

Now having time to rethink this deal through the lens of what you know about the Clayton Act, do you think your legal department will sign off on this deal?