BIM35550 - Capital/revenue divide: intangible assets: exclusivity ties
Background
The case law on exclusivity ties revolves around various arrangements entered into by oil companies with garage proprietors. In considering these cases it is useful to bear in mind the background against which they occurred. In April 1950 the rationing of petrol, in force since the outbreak of World War Two, was abolished and competition between the various fuel companies became a feature. Before the end of rationing it was common for garages to offer a variety of fuel brands. The oil companies offered various inducements to garage owners to sell exclusively their brand of fuel. Prima facie such expenditure appears to be made in Lord Cave’s words in Atherton v British Insulated Helsby Cables Ltd [1925] 10TC155 ‘with a view to bringing into existence an asset or advantage for the enduring benefit of a trade’ - see BIM35010. Regent Oil contested this view on two types of exclusivity agreement, winning the first case and losing the second.