I work at Big 5 Sporting Goods. I want to work at Foot Locker. I went in for the interview at Foot Locker and told them that I work at Big 5 but am willing to quit if I was hired at Foot Locker. The manager I was interviewing with stopped me, said there was a conflict of interest because they are competitors and the interview was over. Was this legal to do? Is there a conflict of interest?
Disclaimer: for legal advice go see a lawyer.
It depends. You should check what exact paper work you have signed with your current employer. It's possible that Big 5 has an extensive non-compete and that they have already been in a fight with Foot Locker (or another competitor) on that. In which case the hiring manger will treat you like a dead rat: no potential employee is worth a prolonged and painful legal battle.
If nothing if this sort is going on, it's a bid odd. Hiring from the same business segment is perfectly normal since that's where the actual skill set is. General Motors hires people from Chrysler all the time (and vice versa).
Now, you don't say what position you occupy and would occupy. The higher-up folk in each company might have non-compete agreements (which the competition might be aware of).
The only other way I can see this making sense is if you are in a high up marketing or other position where you'd have deep knowledge of Big 5's operations. In such a case, Foot Locker may not want the appearance of impropriety by hiring you - the fact that you know you need to leave the trade secrets and such at the Big 5 door doesn't mean someone isn't going to think you didn't.
Beyond that it's perfectly normal to hire your competitor's employees in every business. It's certainly not a conflict of interest (how the heck else are you going to get experienced people?), and in fact agreements to not do so are generally fraught with legal peril. Apple and friends found that out the hard way.
I think the problem is in the way you couched your answer. "Willing to quit" is different than "Intending to quit."
While it is legitimately possible to work for both of those companies at the same time as a line-level clerk, it is not possible to do so in any sort of leadership position. Even as a line-level employee, you are aware of corporate communications and promotions before the public is, and there is legitimate concern. If you keep the information to yourself, you are being true to company A. If you share the information, you are being true to company B. It isn't possible to be true to both.
I worked in a production company that produced commercials for concerts. We had tour information weeks before the press. I had a colleague who worked with me duplicating the productions (This was before everything was done over the Internet). He got a part-time job at a radio station. They paid him a bonus for getting the tour dates for that market before they were publicly available. That cut the concert promoter out of some arrangements with local businesses and other media. The person had to be fired. There wasn't a way for him to be loyal to both companies.
You should have made it clear in the beginning that you were looking to CHANGE jobs, not to ADD a side job. What you (probably) intended was the right thing to do, but it's not what you communicated to the hiring manager.
Chalk this up under "Lessons Learned." Communication without regard to perception is dangerous.
Best of luck to you in your job search.