Federal Trade Commission Extends 'In Re Polygram’s' 'Inherently Suspect' Anticompetitive Analysis To Endorsements

The Federal Trade Commission's ("FTC") recent settlement with ski manufacturers Marker Volkl (International) GmbH ("Marker Volkl") and Tecnica S.p.A. ("Tecnica") continues to expand the scope of "inherently suspect" business practices under In re Polygram's quick-look analysis. That doctrine, initially articulated by the FTC in In the Matter of Polygram Holding, Inc., evaluates conduct that is not quite considered per se unlawful, but may be condemned if the parties cannot come forward with cognizable efficiency goals (even without inquiry into whether the conduct caused actual competitive harm or even whether the parties have sufficient market power to cause such harm). 136 FTC 310 (FTC 2003), aff'd, 416 F.3d 29 (D.C. Cir. 2005).

The FTC last week settled charges that Swiss company Marker Volkl, the leading seller of skis in the United States, and Tecnica, the fourth largest seller, agreed not to compete for one another's ski endorsers or employees. In the Matter of Tecnica Group, SpA., FTC File No. 121-0004 (May 19, 2014), and In the Matter of Marker Volkl (International) GmbH, FTC File No. 121-0004 (May 19, 2014).

Specifically, the FTC alleged that beginning around 2004, Marker Volkl and Tecnica agreed not to solicit, recruit or contact any skier who had previously endorsed their rival's skis. The companies then expanded the scope of their agreement in 2007 to cover all employees, all in violation of Section 1 of the Sherman Act and Section 5 of the Federal Trade Commission Act. Noting that the most effective and costly tool for marketing ski equipment is securing endorsement agreements from well-known ski athletes, the FTC alleged that the purpose of the agreements was to avoid bidding up the cost of securing endorsements from skiers, as well as the salaries of the companies' employees. Typically, ski equipment companies compete to secure the...