Re. Maybe I'm missing something
"But surely admitting that you gave money to another company to only sell your product is against competition law?"
Toshiba didn't give anyone money to "only sell their product"; they gave money as part on an agreement on technology usage, to ensure exclusivity. It's not illegal, companies do this all the time, so that they can "assist" companies to buy into their technology. The example here is Toshiba paying for production facilities etc. so that the studio doesn't have to assume all the financial risk of setting up with a new technology.
The fact that HD-DVD failed shows that the studio was right to get some financial assistance from Toshiba; at least they won't be completely out of pocket on this.
Without financial assistance like this from technology providers, companies won't be eager to commit to a new technology, resulting in very slow uptake.
It's just normal business practice.
But you'd have to wonder why Dream Works' lawyers didn't put an escape clause in the contract in the case of Toshiba ending HD-DVD production.