Legal Definitions - reciprocal dealing

Reciprocal dealing refers to a business arrangement where a powerful buyer uses its significant economic leverage to force a seller to also purchase goods or services from the buyer. Essentially, the buyer agrees to continue purchasing from the seller only if the seller agrees to buy something in return from the buyer. This practice often violates antitrust laws because it can stifle competition and unfairly disadvantage other businesses.

Here are some examples to illustrate reciprocal dealing:

• Example 1: Retailer and Supplier

  Imagine "MegaMart," a dominant national supermarket chain, is a major buyer of organic produce from "GreenFields Farm," a much smaller supplier. MegaMart informs GreenFields Farm that it will only continue to stock GreenFields' vegetables in its stores if GreenFields agrees to purchase all its new delivery trucks exclusively from "MegaFleet," a vehicle leasing company recently launched by MegaMart's parent corporation.

  How this illustrates reciprocal dealing: MegaMart, as the powerful buyer, is leveraging its purchasing power over GreenFields Farm. It is making its continued business conditional ("only if") on GreenFields Farm buying a separate service (truck leasing) from a related entity of MegaMart. This arrangement forces GreenFields Farm to become a buyer from MegaMart, potentially at a disadvantageous price or terms, simply to retain MegaMart's business.

• Example 2: Automotive Manufacturer and Parts Supplier

  Consider "Global Motors," a leading automobile manufacturer, which purchases a significant volume of specialized electronic components from "Techtronics Inc." Global Motors informs Techtronics that it will renew its multi-year contract for components only if Techtronics agrees to switch its corporate banking and financial services to "Global Finance," a subsidiary of Global Motors.

  How this illustrates reciprocal dealing: Global Motors, with its substantial economic power as a major buyer of Techtronics' components, is dictating that Techtronics must also become a customer of Global Finance. Techtronics might prefer to use its existing bank or another financial institution, but the pressure from Global Motors creates a reciprocal buying obligation to secure the lucrative components contract.

• Example 3: Software Giant and Hardware Vendor

  "Apex Software," a dominant provider of operating systems and office productivity suites, tells "CompTech," a smaller computer hardware manufacturer, that Apex will pre-install its popular operating system on CompTech's new line of laptops only if CompTech also agrees to bundle Apex's less popular web browser as the default browser on all its devices.

  How this illustrates reciprocal dealing: Apex Software, holding significant market power with its operating system, is using its position as a "seller" (of the OS license) to CompTech to force CompTech to become a "buyer" (by bundling and making default) of Apex's web browser. This creates a reciprocal arrangement where CompTech must promote Apex's browser to gain access to the essential operating system, potentially limiting consumer choice and competition for web browsers.