Is An Exclusivity Clause Enforceable in Australia?
Exclusivity clauses are enforceable as contract terms in Australia, but are subject to the Competition and Consumer Act 2010's prohibition on exclusive dealing that has the purpose or effect of substantially lessening competition. Most ordinary commercial exclusivity arrangements between parties without significant market power fall well short of that threshold.
This page describes the general approach Australia law takes to this clause type — it is informational, not legal advice on any specific contract. Enforceability in a real dispute depends on the exact wording, the specific facts, and current law, all of which can change. Have your actual clause reviewed by a lawyer before relying on it.
How Australia approaches this
The Competition and Consumer Act 2010 contains specific "exclusive dealing" provisions addressing arrangements that restrict a party from dealing with competitors — these are only prohibited where the arrangement has the purpose, effect, or likely effect of substantially lessening competition in a relevant market, not simply because exclusivity exists.
For most ordinary commercial exclusivity arrangements — a supplier granting a distributor exclusivity in a defined territory, for example — the parties typically lack the market power for the arrangement to raise a genuine substantial-lessening-of-competition concern, and the clause is enforced as an ordinary contract term.
Exclusivity arrangements involving parties with significant market share, or combined with other restrictive terms, warrant a closer competition-law assessment before being finalised, since the analysis turns on actual market effect rather than the clause's wording alone.
What determines the outcome
- The market power of the parties involved and their actual share of the relevant market
- Whether the arrangement, in combination with other terms, could substantially lessen competition
- Whether the exclusivity is time-limited and proportionate to a legitimate commercial purpose
Practical guidance
- Assess the parties' market power before finalising a significant exclusivity arrangement
- Keep the exclusivity's duration and scope proportionate to its legitimate commercial purpose
- Get a competition-law assessment where either party has meaningful market share
Frequently asked questions
Is an exclusivity clause enforceable in Australia?
Exclusivity clauses are enforceable as contract terms in Australia, but are subject to the Competition and Consumer Act 2010's prohibition on exclusive dealing that has the purpose or effect of substantially lessening competition. Most ordinary commercial exclusivity arrangements between parties without significant market power fall well short of that threshold.
Is this legal advice?
No. This page describes the general approach Australia law takes to exclusivity clauses — it is not legal advice on any specific contract. Enforceability in a real dispute depends on the specific wording, facts, and current law. Have the actual clause reviewed by a lawyer before relying on it.
Exclusivity Clause in other jurisdictions
Other clauses in Australia
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