Back in 2011, theworld's largest provider of chipsets for devices (e.g.smartphones, tablets) running on 4G network signed an agreement with one of the leading device manufacturers, committing to make significant payments to this manufacturer on condition that the manufacturer would exclusively use its chipsets. This was found to be violating competition law.

a) Use economic theory to explain why such an agreement violates competition law and can hinder competition in the market. If you are working for the chipsets provider, how can you use economic theory to defend your company?