Ski Manufacturers Hit For Off-Piste Non-Compete

When it comes to the US Federal Trade Commission, healthy competition for ski manufacturers is just as important off the slopes as on. Ski equipment makers, Tecnica Group and Marker Völkl, learned this lesson on Monday when they agreed to settle FTC charges that they unlawfully agreed not to compete for each company's respective ski endorsers or employees.1 This case serves as an important reminder that non-compete agreements remain an area of focus for the US antitrust authorities.

Ski Manufacturers Barred from Non-Compete Agreements

In 1992, Tecnica Group and Marker Völkl entered into a legitimate collaboration to market and distribute complementary ski equipment. At the time, Tecnica was an Italian manufacturer of ski boots, and the Swiss-based Marker Völkl sold skis. Around 2004, in conjunction with their collaboration, the companies agreed not to compete with each other for prominent skiers' endorsements.

Ski equipment companies typically compete to secure a skier's endorsement. Endorsements from prominent skiers are an effective tool for marketing ski equipment and increasing sales, but the compensation, support services and discounted gear can make such endorsements costly. According to the FTC, the alleged purpose of the non-compete agreement was to prevent Tecnica and Marker Völkl from bidding up the cost of securing a skier's endorsement.

During the course of the collaboration, Tecnica acquired ski brands Nordica and Blizzard, product lines that competed directly with Marker Völkl. Although Tecnica's ski brands remained outside the scope of the marketing and distribution collaboration, the non-compete provision applied company-wide to all products. In 2007, the companies expanded the scope of their 2004 agreement not to solicit, recruit or contact any skier who had previously endorsed their rival's skis to also apply to each company's employees. The collaboration ended in 2008. Although the FTC's Complaint provides no details, it appears that the non-compete agreements may have survived past the end of the marketing and distribution collaboration.

In its Complaint, the FTC alleged that the agreements not to compete were "not reasonably necessary for the formation or efficient operation of the collaboration between the companies." According to the FTC, the companies' failure to provide a "legitimate (cognizable and plausible) efficiency justification" for the non-competes supported its determination that the non-competition...