February 19, 2026
February 19, 2026
Quasi-monopoly in procurement? Negotiating with strength despite single sourcing – real cases, real results from industry
Listen to this article
Introduction
1.1 Problem definition and context
How much bargaining power does the procurement function have if the OEM suddenly threatens to withhold service or equipment in an emergency?
For me, this question was not a theoretical simulation exercise, but part of my everyday professional life in the chemical industry. Single-source setups, virtually no real price transparency, and suppliers who knew exactly how dependent we were on their equipment and spare parts.
In such situations, systematic cost modeling and design-to-cost approaches can help create transparency, at least at the level of the cost structure—even if list prices and discounts are hardly comparable at first glance.
A market with only a few relevant suppliers feels like a monopoly to procurement—especially when it comes to production-critical materials, spare parts, and services.
Excessive price-increase demands, one-sided contract terms, and security or compliance arguments designed to nip any alternative in the bud are, unfortunately, still a reality in many cases.
In our work with companies, we repeatedly see suppliers who appear to hold all the cards: technological advantage, regulatory hurdles, decades of installation experience with their customers.
It is precisely in such situations that I have learned there are still levers to be found—not always in the price itself, but, for example, in risk allocation, availability, service levels, total cost of ownership, and in the design of the overall “partnership.”
1.2 Objective and structure of the article
In this article, I draw on my personal experience from international projects to highlight specific perspectives and levers that procurement organizations can use to achieve robust, positive results—even when dealing with (quasi-)monopolists.
1.2.1 What constitutes quasi-monopolies and single sourcing in practice
In theory, a monopoly is clearly defined—one supplier, no real competition.
In practice, procurement encounters quasi-monopolies and single-source situations far more frequently: formally, alternatives exist, but in reality switching is often extremely time-consuming, expensive, or virtually impossible at short notice.
How do such constellations arise? Typical examples include unique technological features, IP-protected solutions, high certification and qualification costs, or an installed base that has grown over many years and integrates the supplier deeply into the customer’s processes and production.
Added to this are self-inflicted monopoly situations: a low level of supplier-independent specifications, specific “special solutions” that are repeated again and again, a lack of standardization, or a historically grown “the supplier is a given” mindset in the specialist departments.
During my time in the process and plant industry, we faced exactly this situation: on paper there were several suppliers, but in reality only the original OEM was able to meet our specific safety and quality requirements without major modifications.
Formally, competition existed—but in reality it was a single-source situation with high opportunity costs.
At the relationship level, quasi-monopolies often reveal themselves through a recurring pattern: self-assured to arrogant negotiation tactics, “take it or leave it” conditions, little willingness to compromise, and the constant elephant in the room—“in the end, you’ll have to buy from us anyway.”
It is not uncommon in such situations to see service and quality performance neglected—simply because there is no real pressure from the threat of substitution. This is often quickly compounded by a lack of enthusiasm for continuously improving the products on offer.
It is therefore crucial for procurement professionals to first diagnose these constellations objectively:
Is it a genuine market monopoly, a functional quasi-monopoly, or a self-made single-source scenario that has arisen from specifications, processes, and history? The dependency risk should also be explicitly assessed—including scenarios such as OEM insolvency, prolonged production downtime, or geopolitical restrictions that could jeopardize delivery capability and access to service.
This clarity is the basis for consciously moving out of “crisis mode” and toward a strategic approach to dependency in the next step.
2. Practical case study: change of strategy, crisis management, and finding a solution with a long-standing OEM
One particularly instructive case I remember involved an OEM with whom we had enjoyed a close partnership for decades, supplying special production equipment and the related maintenance services.
The supplier provided the machines as well as maintenance services and original spare parts, and was therefore deeply embedded in our critical infrastructure—a classic single-source setup with a high degree of technical dependency.
2.1 Initial situation: partnership, dissatisfaction, and initial countermeasures
This partnership functioned stably for many years—until, above all, service prices gradually drifted away from a market-driven level.
At this point, we had already clearly communicated to the supplier that we were dissatisfied with the price development and the lack of competitiveness—and had launched an internal project to qualify third-party suppliers where necessary.
To remain competitive, third-party suppliers were identified and gradually qualified to take over maintenance and, in some cases, the supply of spare parts—a deliberate step to reduce both costs and dependencies.
Together with colleagues from engineering, production, R&D, and finance, I invested a great deal of time in this qualification process: technical approvals at the suppliers, training courses, test cases, and clear governance on which tasks third-party providers were allowed to take on and where OEM expertise remained essential.
On paper, the OEM remained the main supplier, but in practice a cautious diversification began—a classic attempt to gradually weaken a quasi-monopoly.
2.2 Unexpected change of strategy at the OEM and mounting pressure
At some point the OEM noticed the declining service volume, but did not comment on it openly at first.
After some time, there was an abrupt change of strategy: the supplier demanded that services for new and existing machines be procured exclusively through them—otherwise, they would no longer guarantee troubleshooting in emergencies or the supply of spare parts if components had been purchased from third-party suppliers.
During the subsequent crisis negotiations, intensive questioning revealed that a change in management and a new business strategy lay behind this: the focus was now on high-margin customers and emerging markets such as clean energy, while traditional industrial customers were increasingly seen as a necessary base—high volume, but lower margins.
However, this new direction had not been communicated early or transparently—the pressure was more of a late reaction to poor business results with us as an existing customer.
2.3 Crisis management: present a united front, clarify the rules of the game
The OEM’s actions led to several crisis meetings at management level.
In these discussions, we stated clearly and unequivocally that a unilateral service commitment and the implicit threat of withholding support in an emergency were unacceptable to us—both economically and from the perspective of operational security and governance.
At that time, we did three things simultaneously:
Price benchmark: hourly rates and spare-parts conditions of the OEM versus third-party suppliers and other OEMs.
Risk analysis and scenario models: What consequences would the OEM’s demands have for plant availability, compliance, and delivery capability compared with using third-party suppliers under continued pressure from the OEM? We also explicitly considered scenarios such as a longer-term supplier failure or a possible OEM insolvency in order to derive options for action and contingency plans.
Unified approach: We brought the weight of the entire company to bear in the negotiations. Procurement, engineering, management, and local units presented a united front and took a common line. This combination of figures, risk arguments, and unity significantly shifted the starting position in the negotiations—away from a “customer begging for service” toward a dialogue on equal terms.
2.4 Finding a solution: volume bundling, contract term, and a balanced partnership
In the end, there was no “victory” for either side, but rather a workable compromise.
The OEM eventually backed down from its maximum demand and accepted that certain service packages would continue to be provided by qualified third-party providers.
In this way, a viable multi-sourcing setup could be achieved.
At the same time, it was clear that the partnership would only remain stable if the supplier also saw an economic perspective in it.
Therefore, two elements were combined:
Volume bundling: Instead of individual, small-scale orders, a substantial service volume was bundled—across sites and time periods.
Longer term: What had originally been intended as a short-term deal became a five-year contract with clearly defined terms, price-escalation mechanisms, and service levels.
For us, this meant price stability and better terms for several years, without entirely giving up the option of third-party providers.
For the OEM, it meant predictable capacity utilization and an attractive, concentrated service volume—a far more solid foundation for a professional business relationship than the previous logic of escalation.
3. Five practical levers for negotiating with quasi-monopolists
From this and other cases, five levers can be derived for negotiating effectively with quasi-monopolists and in single-source constellations.
Lever 1: Demystify the monopoly status – facts instead of gut feeling
The first step is to take a sober look at the situation: Is there really no alternative to this supplier—or is it simply difficult to find a replacement at short notice?
This includes benchmarks against other OEMs or third-party providers, TCO analyses over several years, and an evaluation of factors such as energy efficiency, failure risks, and follow-on costs of the existing solutions. It is supplemented by consistent cost-modeling approaches in which materials, manufacturing, logistics, and typical margins are derived in a structured way—often in collaboration with engineering and controlling. On this basis, target prices and lines of argument can be developed that go well beyond mere “discount demands.”
In a similar project, I set up a benchmark across six comparable manufacturers; it became clear that the energy efficiency of some existing machines was rather low—with clearly quantifiable additional costs over the planned remaining service life.
This transparency made it possible to demand compensation in the service negotiations: better spare-parts prices, additional discounts, or a contribution from the OEM toward the additional costs caused by the lower efficiency.
Lever 2: Expand the playing field – don’t negotiate immediately, and don’t negotiate only on price
In monopoly situations, simply trying to push down the price of the service technician or the spare part is often the weakest lever.
Instead, it pays to expand the playing field: contract terms, volume bundling, service levels, response times, training, spare-parts packages, warranties, or risk-sharing models all offer good opportunities.
In the situation described, we used exactly this lever: instead of merely discussing individual daily rates or spare-parts discounts, we ended up with a five-year deal with bundled volume, clear service indicators, and defined price escalations.
The result was a package with a higher overall value for both sides—and thus more room for negotiation than a pure focus on price would ever have allowed.
Lever 3: Mobilize corporate influence – Procurement & Business together
Negotiating with a monopolist is not a solo discipline for procurement, but a team effort involving the most important stakeholders.
The more apparent it becomes that engineering, operations, management, and possibly sales stand behind the negotiating position, the harder it is for the supplier to play individuals off against each other or to rely on informal channels.
In practice, I saw very clearly how much the situation changes when the company presents a united front—it sent an unmistakable signal to the supplier.
This unity creates clarity and respect—and usually changes the dynamics of the conversation more than any single figure in the negotiation document.
Lever 4: Build a network within the supplier – don’t just talk to the KAM
Successful negotiations with quasi-monopolists depend heavily on the quality of the relationships on both sides.
It is rarely sufficient to speak only with the key account manager or the sales manager; contacts with company management, engineering, service management, and regional profit & loss owners are just as crucial.
In projects in Russia and the Middle East in particular, I have experienced how valuable a broad network within the supplier organization is—from local service managers to engineering to regional management.
You gain a better understanding of internal constraints and priorities, which enables you to make your case in a more targeted way.
Lever 5: Build long-term alternatives and resilience
Perhaps the most important lever is the least spectacular one: systematically preparing alternatives and actively managing procurement risks.
This includes supplier scouting, third-party qualification, standardization of specifications, simulation of plant and site shutdowns, and the development of contingency plans for critical spare-parts supply and services.
Looking back, it was precisely these seemingly unspectacular steps that enabled us to introduce multi-sourcing in the first place and to remain capable of acting in crisis situations instead of falling back into one-sided dependency.
4. Takeaways
Since procurement in day-to-day business is often tied up in operational “firefighting,” clearly reserved, strategic time slots are needed for these issues—otherwise the company will keep revolving around the same patterns of dependency.
Three key takeaways:
First, diagnose quasi-monopolies accurately
Not every single-source situation is a genuine monopoly. Those who understand the technical, commercial, and organizational causes of dependency can make targeted adjustments rather than merely “negotiating” prices.
Second, consistently use crises to bring about a change of strategy
Price shocks or impending service restrictions are not only a risk, but also a lever: for better governance, clear escalation logic, volume bundling, and a playing field that encompasses more than daily rates and discount scales.
Third, systematically prepare practical measures – don’t wait until the situation escalates
Benchmarks, TCO analyses, qualification of alternatives, internal alliances, and networks within the supplier organization are not “nice-to-have” topics, but prerequisites for negotiating with (quasi-)monopolists on an equal footing.
Listen to this article
Introduction
1.1 Problem definition and context
How much bargaining power does the procurement function have if the OEM suddenly threatens to withhold service or equipment in an emergency?
For me, this question was not a theoretical simulation exercise, but part of my everyday professional life in the chemical industry. Single-source setups, virtually no real price transparency, and suppliers who knew exactly how dependent we were on their equipment and spare parts.
In such situations, systematic cost modeling and design-to-cost approaches can help create transparency, at least at the level of the cost structure—even if list prices and discounts are hardly comparable at first glance.
A market with only a few relevant suppliers feels like a monopoly to procurement—especially when it comes to production-critical materials, spare parts, and services.
Excessive price-increase demands, one-sided contract terms, and security or compliance arguments designed to nip any alternative in the bud are, unfortunately, still a reality in many cases.
In our work with companies, we repeatedly see suppliers who appear to hold all the cards: technological advantage, regulatory hurdles, decades of installation experience with their customers.
It is precisely in such situations that I have learned there are still levers to be found—not always in the price itself, but, for example, in risk allocation, availability, service levels, total cost of ownership, and in the design of the overall “partnership.”
1.2 Objective and structure of the article
In this article, I draw on my personal experience from international projects to highlight specific perspectives and levers that procurement organizations can use to achieve robust, positive results—even when dealing with (quasi-)monopolists.
1.2.1 What constitutes quasi-monopolies and single sourcing in practice
In theory, a monopoly is clearly defined—one supplier, no real competition.
In practice, procurement encounters quasi-monopolies and single-source situations far more frequently: formally, alternatives exist, but in reality switching is often extremely time-consuming, expensive, or virtually impossible at short notice.
How do such constellations arise? Typical examples include unique technological features, IP-protected solutions, high certification and qualification costs, or an installed base that has grown over many years and integrates the supplier deeply into the customer’s processes and production.
Added to this are self-inflicted monopoly situations: a low level of supplier-independent specifications, specific “special solutions” that are repeated again and again, a lack of standardization, or a historically grown “the supplier is a given” mindset in the specialist departments.
During my time in the process and plant industry, we faced exactly this situation: on paper there were several suppliers, but in reality only the original OEM was able to meet our specific safety and quality requirements without major modifications.
Formally, competition existed—but in reality it was a single-source situation with high opportunity costs.
At the relationship level, quasi-monopolies often reveal themselves through a recurring pattern: self-assured to arrogant negotiation tactics, “take it or leave it” conditions, little willingness to compromise, and the constant elephant in the room—“in the end, you’ll have to buy from us anyway.”
It is not uncommon in such situations to see service and quality performance neglected—simply because there is no real pressure from the threat of substitution. This is often quickly compounded by a lack of enthusiasm for continuously improving the products on offer.
It is therefore crucial for procurement professionals to first diagnose these constellations objectively:
Is it a genuine market monopoly, a functional quasi-monopoly, or a self-made single-source scenario that has arisen from specifications, processes, and history? The dependency risk should also be explicitly assessed—including scenarios such as OEM insolvency, prolonged production downtime, or geopolitical restrictions that could jeopardize delivery capability and access to service.
This clarity is the basis for consciously moving out of “crisis mode” and toward a strategic approach to dependency in the next step.
2. Practical case study: change of strategy, crisis management, and finding a solution with a long-standing OEM
One particularly instructive case I remember involved an OEM with whom we had enjoyed a close partnership for decades, supplying special production equipment and the related maintenance services.
The supplier provided the machines as well as maintenance services and original spare parts, and was therefore deeply embedded in our critical infrastructure—a classic single-source setup with a high degree of technical dependency.
2.1 Initial situation: partnership, dissatisfaction, and initial countermeasures
This partnership functioned stably for many years—until, above all, service prices gradually drifted away from a market-driven level.
At this point, we had already clearly communicated to the supplier that we were dissatisfied with the price development and the lack of competitiveness—and had launched an internal project to qualify third-party suppliers where necessary.
To remain competitive, third-party suppliers were identified and gradually qualified to take over maintenance and, in some cases, the supply of spare parts—a deliberate step to reduce both costs and dependencies.
Together with colleagues from engineering, production, R&D, and finance, I invested a great deal of time in this qualification process: technical approvals at the suppliers, training courses, test cases, and clear governance on which tasks third-party providers were allowed to take on and where OEM expertise remained essential.
On paper, the OEM remained the main supplier, but in practice a cautious diversification began—a classic attempt to gradually weaken a quasi-monopoly.
2.2 Unexpected change of strategy at the OEM and mounting pressure
At some point the OEM noticed the declining service volume, but did not comment on it openly at first.
After some time, there was an abrupt change of strategy: the supplier demanded that services for new and existing machines be procured exclusively through them—otherwise, they would no longer guarantee troubleshooting in emergencies or the supply of spare parts if components had been purchased from third-party suppliers.
During the subsequent crisis negotiations, intensive questioning revealed that a change in management and a new business strategy lay behind this: the focus was now on high-margin customers and emerging markets such as clean energy, while traditional industrial customers were increasingly seen as a necessary base—high volume, but lower margins.
However, this new direction had not been communicated early or transparently—the pressure was more of a late reaction to poor business results with us as an existing customer.
2.3 Crisis management: present a united front, clarify the rules of the game
The OEM’s actions led to several crisis meetings at management level.
In these discussions, we stated clearly and unequivocally that a unilateral service commitment and the implicit threat of withholding support in an emergency were unacceptable to us—both economically and from the perspective of operational security and governance.
At that time, we did three things simultaneously:
Price benchmark: hourly rates and spare-parts conditions of the OEM versus third-party suppliers and other OEMs.
Risk analysis and scenario models: What consequences would the OEM’s demands have for plant availability, compliance, and delivery capability compared with using third-party suppliers under continued pressure from the OEM? We also explicitly considered scenarios such as a longer-term supplier failure or a possible OEM insolvency in order to derive options for action and contingency plans.
Unified approach: We brought the weight of the entire company to bear in the negotiations. Procurement, engineering, management, and local units presented a united front and took a common line. This combination of figures, risk arguments, and unity significantly shifted the starting position in the negotiations—away from a “customer begging for service” toward a dialogue on equal terms.
2.4 Finding a solution: volume bundling, contract term, and a balanced partnership
In the end, there was no “victory” for either side, but rather a workable compromise.
The OEM eventually backed down from its maximum demand and accepted that certain service packages would continue to be provided by qualified third-party providers.
In this way, a viable multi-sourcing setup could be achieved.
At the same time, it was clear that the partnership would only remain stable if the supplier also saw an economic perspective in it.
Therefore, two elements were combined:
Volume bundling: Instead of individual, small-scale orders, a substantial service volume was bundled—across sites and time periods.
Longer term: What had originally been intended as a short-term deal became a five-year contract with clearly defined terms, price-escalation mechanisms, and service levels.
For us, this meant price stability and better terms for several years, without entirely giving up the option of third-party providers.
For the OEM, it meant predictable capacity utilization and an attractive, concentrated service volume—a far more solid foundation for a professional business relationship than the previous logic of escalation.
3. Five practical levers for negotiating with quasi-monopolists
From this and other cases, five levers can be derived for negotiating effectively with quasi-monopolists and in single-source constellations.
Lever 1: Demystify the monopoly status – facts instead of gut feeling
The first step is to take a sober look at the situation: Is there really no alternative to this supplier—or is it simply difficult to find a replacement at short notice?
This includes benchmarks against other OEMs or third-party providers, TCO analyses over several years, and an evaluation of factors such as energy efficiency, failure risks, and follow-on costs of the existing solutions. It is supplemented by consistent cost-modeling approaches in which materials, manufacturing, logistics, and typical margins are derived in a structured way—often in collaboration with engineering and controlling. On this basis, target prices and lines of argument can be developed that go well beyond mere “discount demands.”
In a similar project, I set up a benchmark across six comparable manufacturers; it became clear that the energy efficiency of some existing machines was rather low—with clearly quantifiable additional costs over the planned remaining service life.
This transparency made it possible to demand compensation in the service negotiations: better spare-parts prices, additional discounts, or a contribution from the OEM toward the additional costs caused by the lower efficiency.
Lever 2: Expand the playing field – don’t negotiate immediately, and don’t negotiate only on price
In monopoly situations, simply trying to push down the price of the service technician or the spare part is often the weakest lever.
Instead, it pays to expand the playing field: contract terms, volume bundling, service levels, response times, training, spare-parts packages, warranties, or risk-sharing models all offer good opportunities.
In the situation described, we used exactly this lever: instead of merely discussing individual daily rates or spare-parts discounts, we ended up with a five-year deal with bundled volume, clear service indicators, and defined price escalations.
The result was a package with a higher overall value for both sides—and thus more room for negotiation than a pure focus on price would ever have allowed.
Lever 3: Mobilize corporate influence – Procurement & Business together
Negotiating with a monopolist is not a solo discipline for procurement, but a team effort involving the most important stakeholders.
The more apparent it becomes that engineering, operations, management, and possibly sales stand behind the negotiating position, the harder it is for the supplier to play individuals off against each other or to rely on informal channels.
In practice, I saw very clearly how much the situation changes when the company presents a united front—it sent an unmistakable signal to the supplier.
This unity creates clarity and respect—and usually changes the dynamics of the conversation more than any single figure in the negotiation document.
Lever 4: Build a network within the supplier – don’t just talk to the KAM
Successful negotiations with quasi-monopolists depend heavily on the quality of the relationships on both sides.
It is rarely sufficient to speak only with the key account manager or the sales manager; contacts with company management, engineering, service management, and regional profit & loss owners are just as crucial.
In projects in Russia and the Middle East in particular, I have experienced how valuable a broad network within the supplier organization is—from local service managers to engineering to regional management.
You gain a better understanding of internal constraints and priorities, which enables you to make your case in a more targeted way.
Lever 5: Build long-term alternatives and resilience
Perhaps the most important lever is the least spectacular one: systematically preparing alternatives and actively managing procurement risks.
This includes supplier scouting, third-party qualification, standardization of specifications, simulation of plant and site shutdowns, and the development of contingency plans for critical spare-parts supply and services.
Looking back, it was precisely these seemingly unspectacular steps that enabled us to introduce multi-sourcing in the first place and to remain capable of acting in crisis situations instead of falling back into one-sided dependency.
4. Takeaways
Since procurement in day-to-day business is often tied up in operational “firefighting,” clearly reserved, strategic time slots are needed for these issues—otherwise the company will keep revolving around the same patterns of dependency.
Three key takeaways:
First, diagnose quasi-monopolies accurately
Not every single-source situation is a genuine monopoly. Those who understand the technical, commercial, and organizational causes of dependency can make targeted adjustments rather than merely “negotiating” prices.
Second, consistently use crises to bring about a change of strategy
Price shocks or impending service restrictions are not only a risk, but also a lever: for better governance, clear escalation logic, volume bundling, and a playing field that encompasses more than daily rates and discount scales.
Third, systematically prepare practical measures – don’t wait until the situation escalates
Benchmarks, TCO analyses, qualification of alternatives, internal alliances, and networks within the supplier organization are not “nice-to-have” topics, but prerequisites for negotiating with (quasi-)monopolists on an equal footing.
