A year after launching its Giro cycling footwear category, Easton Bell-Sports has sued Specialized Bicycles, alleging the Morgan Hill-based bicycle manufacturer – with its own extensive range of branded footwear – sent a dealer agreement addendum to Specialized’s US retail partners, asking them to desist from stocking and selling Giro shoes. Mike Sinyard, President of Specialized, presented his own case in an email to the company’s retailers yesterday.
Fighting over a seemingly diminishing pool of quality bicycle retail outlets, bicycle brands are becoming bolder and less flexible with their on-paper B2B trading terms. Mostly, these terms of trade lie within legal commercial boundaries, but sometimes a brand (or its appointed distributor) will go too far in an attempt to crowd out competitors.
One of the most well-known examples of this in the Australian bicycle industry involved Netti Atom – at the time, Scott’s Australian distributor – in 2007. Ruling in favour of the Australian Competition and Consumer Commission (ACCC), which bought the case to court, Netti Atom was ordered to pay AUD121,250 for being in breach of the 1974 Trade Practices Act, after it was proven the bicycle distributor attempted to enforce minimum price provisions upon its dealers.
In the “world center of litigation” however, many practices (such as minimum retail price maintenance) are not necessarily illegal – depending on how talented a wordsmith a company’s contract lawyer may be.
Documents filed with the Superior Court of California, 9 September 2011, by Easton-Bell Sports’ legal department stated Specialized’s dealer addendum had “unlawfully restrained and will continue to unlawfully restrain the sale of Giro cycling shoe” and “will substantially prevent Giro cycling shoes from competing with Specialized’s cycling shoes”. Whilst the case is being argued in the courts, Specialized’s President, Mike Sinyard, took the opportunity to send the following email to the company’s US dealers
If Easton-Bell Sports emerge from the court triumphant, the company’s legal woes are far from over. In July of this year, more than 75 former and present National Football League players filed a suit against the League and its equipment manufacturers – including helmet manufacturer Riddell Group, subsidiary of Easton-Bell Sports – for head injuries inflicted during their careers.
[UPDATE: Bicycle Retailer reported 22 Nov that Giro dropped the case against Specialized]