[Federal Register Volume 79, Number 101 (Tuesday, May 27, 2014)]
[Notices]
[Pages 30143-30145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-12046]



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FEDERAL TRADE COMMISSION

[File No. 121 0004]


Marker V[ouml]lkl (International) GmbH and Tecnica Group, SpA.; 
Analysis of Agreements Containing Consent Orders to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreements.

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SUMMARY: The consent agreements in these matters settle alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis of Proposed Consent Orders to Aid Public Comment 
describes both the allegations in the draft complaints and the terms of 
the consent orders--embodied in the consent agreements--that would 
settle these allegations.

DATES: Comments must be received on or before June 18, 2014.

ADDRESSES: Interested parties may file comments at https://ftcpublic.commentworks.com/ftc/skimanufacturerconsent online or on 
paper, by following the instructions in the Request for Comments part 
of the SUPPLEMENTARY INFORMATION section below. Write ``Ski 
Manufacturers--Consent Agreement; File No. 121-0004'' on your comment 
and file your comment online at https://ftcpublic.commentworks.com/ftc/skimanufacturerconsent by following the instructions on the web-based 
form. If you prefer to file your comment on paper, mail your comment to 
the following address: Federal Trade Commission, Office of the 
Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610, (Annex D), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW., 5th Floor, Suite 5610, (Annex D), Washington, DC 
20024.

FOR FURTHER INFORMATION CONTACT: Mark Taylor, Bureau of Competition, 
(202-326-2287), 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreements 
containing consent orders to cease and desist, have been filed with and 
accepted, subject to final approval, by the Commission, having been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreements, and the allegations in the complaints. An 
electronic copy of the full text of the consent agreement packages can 
be obtained from the FTC Home Page (for May 19, 2014), on the World 
Wide Web, at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before June 18, 2014. 
Write ``Ski Manufacturers--Consent Agreement; File No. 121-0004'' on 
your comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comment online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/skimanufacturerconsent by following the instructions on the web-
based forms. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``Ski Manufacturers--
Consent Agreement; File No. 121-0004'' on your comment and on the 
envelope, and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610, (Annex D), Washington, DC 20580, or deliver your comment to 
the following address: Federal Trade Commission, Office of the 
Secretary, Constitution Center, 400 7th Street, SW., 5th Floor, Suite 
5610, (Annex D), Washington, DC 20024. If possible, submit your paper 
comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before June 18, 2014. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing consent order (``Agreement'') from 
Marker V[ouml]lkl (International) GmbH (``Marker V[ouml]lkl'') and a 
separate Agreement from Tecnica Group SpA. (``Tecnica''). Marker 
V[ouml]lkl and Tecnica are hereinafter sometimes referred to 
collectively as ``Respondents.''
    Respondents are manufacturers of various types of ski equipment. 
The Agreements settle charges that Marker V[ouml]lkl and Tecnica both 
violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, 
by agreeing with each other not to compete for the services of athlete 
endorsers and not to compete for the services of employees.
    The Agreements have been placed on the public record for 30 days 
for receipt of comments from interested members

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of the public. Comments received during this period will become part of 
the public record. After 30 days, the Commission will again review the 
Agreements and comments received, and will decide whether it should 
withdraw from the Agreements or make final the orders contained in the 
Agreements.
    The purpose of this Analysis to Aid Public Comment is to invite and 
facilitate public comment concerning the proposed orders. It is not 
intended to constitute an official interpretation of the Agreements and 
proposed orders, or in any way to modify their terms.
    The proposed orders are for settlement purposes only and do not 
constitute an admission by the Respondents that they violated the law 
or that the facts alleged in the Complaint, other than jurisdictional 
facts, are true.

I. The Complaints

    This action addresses anticompetitive conduct in the ski equipment 
industry. The allegations of the Complaints are summarized below.

A. Background

    Marker V[ouml]lkl and Tecnica manufacture, market, and sell ski 
equipment. The most effective and most costly tool for marketing ski 
equipment consists of securing endorsements from prominent ski 
athletes.
    Endorsement agreements between a ski equipment company and a ski 
athlete are typically of short duration, and are subject to renewal. 
Commonly, the ski athlete: (i) Authorizes the company to use the 
athlete's name and likeness in promotions and in advertisements, (ii) 
agrees to use and promote the company's equipment on an exclusive 
basis, (iii) agrees to display the company's equipment when the athlete 
can attract media exposure, such as by holding up the skis at the end 
of a race, or taking the skis to the podium when receiving a medal, 
and/or (iv) agrees to appear at promotional events on behalf of the 
company. The association of a ski equipment brand with a prominent ski 
athlete generates sales, goodwill, and other benefits for the company.
    As consideration for the ski athlete's endorsement services, the 
ski equipment company commonly provides the ski athlete with monetary 
compensation (keyed to the athlete's success in competitions), support 
services at competitions, free or discounted equipment, and/or travel 
expenses.
    Ordinarily, ski equipment companies compete with one another to 
secure the endorsement services of prominent ski athletes. At the 
expiration of an endorsement agreement, a ski athlete can be induced to 
switch from one company to another in return for greater compensation, 
in much the same way that an employee can be induced to change 
employers in return for a higher salary or better benefits.
    Endorsement agreements are the primary source of income for 
professional ski athletes.

B. The Marker V[ouml]lkl/Tecnica Collaboration

    In 1992, Marker V[ouml]lkl began collaborating with Tecnica in the 
marketing and distribution of certain complementary ski equipment: 
V[ouml]lkl brand skis, and Tecnica brand ski boots. Initially, these 
companies were not competitors: Tecnica did not have a ski; Marker 
V[ouml]lkl did not have a ski boot.
    In 2003, Tecnica acquired the Nordica ski equipment unit from 
Benetton Group SpA. Nordica manufactured and sold both skis and ski 
boots. Tecnica acquired a second ski manufacturer, Blizzard GmbH 
(``Blizzard''), in 2006.
    The ski brands acquired by Tecnica (Nordica and Blizzard brands) 
were not included in the Marker V[ouml]lkl/Tecnica collaboration. That 
is, Tecnica independently manufactures, markets, and distributes 
Nordica skis and Blizzard skis, in competition with V[ouml]lkl skis.

C. The Challenged Conduct

    Marker V[ouml]lkl and Tecnica agreed not to compete with one 
another to secure the services of ski athletes and employees.
    Beginning in or about 2004, Marker V[ouml]lkl and Tecnica agreed 
not to compete with one another to secure the endorsement services of 
ski athletes. Specifically, Marker V[ouml]lkl agreed not to solicit, 
recruit, or contract with a ski athlete who previously endorsed 
Tecnica's skis, or who was otherwise claimed by Tecnica. Tecnica agreed 
not to solicit, recruit, or contract with a ski athlete who previously 
endorsed Marker V[ouml]lkl's skis, or who was otherwise claimed by 
Marker V[ouml]lkl.
    In 2007, Marker V[ouml]lkl and Tecnica agreed to expand the scope 
of their non-compete agreements. Marker V[ouml]lkl and Tecnica agreed 
not to compete for the services of any employee. Specifically, Marker 
V[ouml]lkl agreed not to solicit, recruit, or contract with any 
employee of Tecnica. Tecnica agreed not to solicit, recruit, or 
contract with any employee of Marker V[ouml]lkl.
    Marker V[ouml]lkl and Tecnica intended that these non-compete 
agreements would enable them to avoid bidding up (i) the cost of 
securing athlete endorsements, and (ii) the salaries paid to employees.
    Respondents' conduct had the purpose, capacity, tendency, and 
likely effect of (i) restraining competition unreasonably, (ii) harming 
the economic interests of ski athletes, and (iii) harming the economic 
interests of the affected employees of Marker V[ouml]lkl and Tecnica.

II. Legal Analysis

    The Complaint alleges that both the athlete non-compete agreement 
and the employee non-compete agreement violate Section 5 of the Federal 
Trade Commission Act, 15 U.S.C. 45.
    These agreements are appropriately analyzed under the framework 
articulated by the Commission in the Polygram case.\2\ Agreements 
between competitors not to compete for professional services, for 
employees, or for other inputs, are presumptively anticompetitive or 
inherently suspect, if not per se unlawful.\3\
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    \2\ In the Matter of Polygram Holding, Inc., et al., 136 F.T.C. 
310 (F.T.C. 2003), aff'd, 416 F.3d 29 (D.C. Cir. 2005). See also 
North Texas Specialty Physicians v. FTC, 528 F.3d 346 (5th Cir. 
2008); In the Matter of Realcomp II Ltd., A Corp.., 2009-2 Trade 
Cas. (CCH) ] 76784 (F.T.C. Oct. 30, 2009).
    \3\ See, e.g., United States v. Brown, 936 F.2d 1042 (9th Cir. 
1991); Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 
U.S. 219, 235 (1948). See also Todd v. Exxon Corp., 275 F.3d 191, 
198 (2d Cir. 2001) (stating that per se rule would ``likely apply'' 
to allegations of actual agreement among competitors to fix employee 
salaries); Knevelbaard v. Kraft Foods, Inc., 232 F.3d 979, 988-89 
(9th Cir. 2000) (``Most courts understand that a buying cartel's low 
prices are illegal. . . . Clearly mistaken is the occasional court 
that considers low buying prices pro-competitive or that thinks 
sellers receiving illegally low prices do not suffer antitrust 
injury.''); NBA v. Williams, 45 F.3d 684, 687 (2d Cir. 1995) 
(``Absent justification under the Rule of Reason or some defense, 
employers who compete for labor may not agree among themselves to 
purchase that labor only on certain specified terms and conditions . 
. . Such conduct would be per se unlawful.''); Vogel v. Am. Soc'y of 
Appraisers, 744 F.2d 598, 601 (7th Cir. 1984) (Posner, J.) 
(``[B]uyer cartels, the object of which is to force the prices that 
suppliers charge the members of the cartel below the competitive 
level, are illegal per se.''); U.S. v. eBay, 968 F. Supp. 2d 1030 
(N.D. Cal. 2013) (denying defendant's motion to dismiss government's 
claim that an agreement between employers not to solicit or hire 
each other's employees was a naked restraint of trade subject to per 
se or quick look analysis).
    These cases must be distinguished from (1) non-compete 
agreements between employers and their employees and (2) a no-hire 
agreement between the seller of a business and its buyer. Non-
compete or no-hire agreements in those contexts do not generally 
receive per se condemnation to the extent that the courts deem the 
restraints ancillary to a legitimate and procompetitive transaction.
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    When an agreement is deemed inherently suspect, a party may avoid 
summary condemnation under the antitrust laws by advancing a legitimate

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(cognizable and plausible) efficiency justification for the 
restraint.\4\
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    \4\ PolyGram Holding, Inc. v. FTC, 416 F.3d 29, 35-36 (D.C. Cir. 
2005).
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    Here, the Commission finds reason to believe that the athlete non-
compete agreement and the employee non-compete agreement serve no pro-
competitive purpose. More specifically, these restraints are not 
reasonably necessary for the formation or efficient operation of the 
marketing collaboration between Marker V[ouml]lkl and Tecnica. That the 
restraints are, at a minimum, overbroad is demonstrated by the fact 
that the agreements adversely affect competition for--and the 
compensation available to--athletes and employees who have no 
relationship with the collaboration.\5\ Further, Respondents cannot 
plausibly claim that the restraints serve to align the incentives of 
the companies in a manner that promotes the cognizable efficiency goals 
of their collaboration. Rather, the ski businesses of Tecnica (the 
Nordica and Blizzard brands) were at all times outside of and apart 
from the collaboration.\6\ In sum, the Respondents did not provide 
evidence demonstrating why Marker V[ouml]lkl and Tecnica cannot 
cooperate in the marketing of certain ski products, yet at the same 
time compete for the services of endorsers and employees.
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    \5\ Cf., Federal Trade Comm'n and U.S. Dep't of Justice, 
Antitrust Guidelines for Collaborations Among Competitors (2000) 
Sec.  3.36(b).
    \6\ See In the Matter of Polygram Holding, Inc., et al., 136 
F.T.C. 310, 322, 357-63 (F.T.C. 2003).
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    The athlete non-compete agreement and the employee non-compete 
agreement serve to protect Marker V[ouml]lkl and Tecnica from the 
rigors of competition, with no advantage to consumer welfare. The 
justifications for the non-compete agreements proffered by the 
Respondents were neither supported by the evidence nor cognizable under 
the antitrust laws. Because there is no plausible and cognizable 
efficiency rationale for the non-compete agreements, these inherently 
suspect agreements constitute unreasonable restraints on trade, and are 
properly judged to be illegal.

III. The Proposed Orders

    The proposed Orders are designed to remedy the unlawful conduct 
charged against Respondents in the Complaints and to prevent the 
recurrence of such conduct.
    The proposed Orders enjoin Marker V[ouml]lkl and Tecnica from, 
directly or indirectly, entering into, or attempting to enter into, an 
agreement with a ski equipment competitor to forbear from competing for 
U.S. athletes to sign endorsement contracts for the company's ski 
equipment. The proposed Orders also enjoin Marker V[ouml]lkl and 
Tecnica from entering into an agreement with a ski equipment competitor 
to forbear from competing for the services of any U.S. employee. A 
proviso to the cease and desist requirements allows reasonable 
restraints ancillary to a legitimate joint venture.
    The proposed Orders will expire in 20 years.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2014-12046 Filed 5-23-14; 8:45 am]
BILLING CODE 6750-01-P