Federal Trade Commission Extends In re Polygram’s “Inherently Suspect” Anticompetitive Analysis to Endorsements

by Mintz Levin
Contact

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 endorsement of prominent skiers, and when an agreement (which is generally of short duration) expires, the companies try to induce the skier to switch from one company to another.

In its analysis of its action, the FTC likened the agreements between Marker Volkl and Tecnica with those at issue in In the Matter of Polygram Holding, Inc., where distributors of musical recordings entered into a joint venture to distribute a concert album and agreed to suspend discounts and advertising related to that album. Consequently, the FTC concluded, agreements between competitors not to compete for professional services, whether employees or endorsers, are “presumptively anticompetitive or inherently suspect.” The FTC moreover found that the agreements served no pro-competitive purpose in that they were not required for the marketing collaboration between the parties and that the parties failed to provide efficiency justifications for the agreements.

As evidenced by this case, as well as private cases and those handled by the Department of Justice (“DOJ”) involving “do not poach” arrangements among Silicon Valley companies, antitrust scrutiny is not limited to price and customer agreements with competitors. Moreover, the FTC’s action here demonstrates that while such agreements are not assumed to be per se unlawful, the FTC will quickly condemn them without a succinct and understandable efficiency rationale.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Mintz Levin | Attorney Advertising

Written by:

Mintz Levin
Contact
more
less

Mintz Levin on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.