Exclusive Dealings Contracts, Anti-trade, Monopolies
The law in Missouri regarding employer-employee restrictive covenants (ie., non-compete agreements, non-solicitation agreements and confidentiality agreements) is well developed. Those agreements are generally enforceable if they protect an employer’s legitimate interests against unfair competition. The law in Missouri regarding “exclusive dealings” agreements between businesses, however, is not as clearly defined.
An “exclusive dealings” agreement is one in which two (and potentially more) business agree that they may only perform a certain type of business with the other indefinitely or for a certain period of time. Under Section 416.031, RSMo, every contract in restraint of trade or commerce in Missouri is unlawful. Specifically, it is unlawful for any person engaged in commerce in this state to make a contract where the effect is to substantially lessen competition to tend to create a monopoly in any area of commerce. The rationale for this law is to protect the general public by encouraging a free and competitive market. Section 416.031, RSMo is analgous to federal law’s Sherman Anti-trust Act. Unlike federal law, though, Missouri state law does not have nearly as many cases applying this statute. To maintain a federal suit under the Sherman Act, one must prove that (1) the defendants contract/agreed with each other, (2) that the agreement produced adverse, anticompetitive effects within a relevant industry and geographic market, (3) that the objects of the agreement were illegal and (4) that the plaintiff was injured as a result of the agreement. Martin v. Glauser Dodge Co. v. Chrysler Corp. 570 F.2d 72, 81 (3rd Cir. 1997). The typical plaintiff in these types of suits are consumers who are adversely affected by the anti-competitive agreement.
These provisions are often contained in Missouri business contracts. For example, they are often included in franchisor-franchisee agreements and contracts between suppliers and distributors. Presently, there are few cases at the state level interpreting and applying this statute to a specific agreement/contract. Therefore, one will have to rely on federal cases interpreting and applying the similar Sherman Act and the prospect of future court decisions to have a better understanding and appreciation for the legality of these agreements.
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