FTC Consent Decree Bars Transitions Optical From Entering Into Exclusive Dealing Agreements With Downstream Customers


Continuing its recent focus on business practices that have the effect of helping dominant firms maintain their market position against competitors, the Federal Trade Commission (FTC) last week announced it had entered into a settlement with Transitions Optical, the leading provider of photochromic treatments for corrective eyeglasses in the United States. The FTC alleged that Transitions had maintained its monopoly power by engaging in exclusionary conduct since 1999, such as entering into exclusive dealing agreements or de facto exclusive dealing agreements that foreclosed its rivals from critical channels of distribution and deterred potential rivals from entering the market. When read in conjunction with the FTC’s complaint against Intel, the Transitions consent decree signals a cautionary note that firms with significant market shares must tread carefully when designing business strategies in response to potential competitive threats. Terminating relations with customers who do business with rivals and requiring customers to enter into exclusive deals raise red flags in today’s antitrust environment.

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