Consumers will be the losers if there is a full clampdown as a result of a judgment in the European Court of Justice yesterday on designer products being sold at cheaper prices. The judgment indicated that producers of branded international products such as jeans and compact discs would be able to stop supermarkets buying their products cheaply outside the EU and reselling them within the EU.
The ruling could have important price implications for consumers buying in the so-called "grey market" in which companies like Tesco have recently been buying in designer brands directly from the US, where they often sell at far lower prices, to resell them in Europe.
Yesterday, while the implications of the judgment were still being studied, the Tesco group in Ireland, which also trades as Quinnsworth and Crazy Prices, said it would continue to sell the large selection of designer products in its stores.
The 78 Tesco outlets all sell designer products, including Timberland, which produces shoes and casual clothes, Levi, Calvin Klein, as well as Sony and other products.
The Director of Consumer Affairs, Mr William Fagan, was studying the judgment. "It would be unfortunate for consumers if it did apply here," he said. "If it was to have a general effect, it wouldn't be good news for consumers. The consumers will be the losers." They were not talking about counterfeit products. The judgment went to the heart of the trade marks question, he added.
"My own view is that I'm not terribly happy with a situation where a person's only `crime' is to sell these products." The judgment would have to be studied and might not go as far as to make it all embracing. The idea of having grey imports, unless there were safety or defrauding implications, would largely be to the benefit of consumers.
"I'm largely in favour of grey imports. It keeps people on their toes," Mr Fagan said.
A spokeswoman for Tesco, Ms Sarah Morrison, said that in Ireland they sold quite a number of designer products. Most of their stores sold them to one extent or another; some had quite a large selection.
They intended to continue selling them, as they were going very well. There were reductions of 50 per cent on the top-range products.
"The implications of the judgment will have to be assessed. It could have implications right across the business. Clearly, we are looking at that," Ms Morrison said. In the judgment, the EU's Luxembourg-based court found for an Austrian spectacles company, Silhouette, which had been trying to block the cut-price resale in the EU of its glasses by a Bulgarian company.
The European Court ruled that a producer's rights to control the sale of his goods under an EU trade mark directive were not "exhausted" by virtue of their having been put on the market outside the European Economic Area (EEA - the EU, plus Norway, Switzerland and Iceland). A member-state could not have regulations providing for that exhaustion, the court found. Silhouette will now be able to ask the Austrian court where it took its case to restrain the importer from selling its glasses inside the EEA.
The decision does not affect retailers buying goods within the EU's internal market.
A spokeswoman for the European Commission, Ms Betty Olivi, said the ruling reflected the practice in all the EU's main competitor markets. The trade mark system was ultimately to the benefit of consumers, she said.