To the extent that there is "delivery in USA", the following may not be relevant:
Shopping A grey market
Dec 3rd 1998 From The Economist print edition
A recent European Union ban on ³grey-market² imports is unleashing aseries of law suits which will drive up prices
FANCY a bottle of Chanel perfume, some Versace sunglasses, or perhaps a pair of Levi jeans this Christmas? If you are looking for a bargain, you may be out of luck. A recent European Court of Justice judgment that allows companies to prevent importers from buying branded goods more cheaply outside the European Union, and then selling them at discounted prices inside the EU, has dealt a potentially deadly blow to dealers who specialise in importing famous names at hefty discounts.
Grey marketeers, or parallel traders as they like to be called, tend to deal in designer brands such as clothing, perfume and sunglasses, as well as in motor cycles, cars and electrical goods. There is no barrier to parallel trading within the EU, as manufacturers are unable to restrict the resale of trademarked goods within the community. But most grey-market goods are imported from the United States and Asia, where prices can be up to 50% lower. The European Court decided earlier this year that manufacturers were entitled to prevent the resale of such goods. Its judgment in favour of Silhouette, an Austrian spectacle-frame company, which sought to block the resale of a shipment of spectacles it had offloaded cheaply in Bulgaria, has had far-reaching consequences for free trade.
The fall-out from Silhouette is already evident in Britain in a spate of legal threats and court actions brought against retailers, dealers and importers. This week Honda began legal action in the High Court against four dealers who refused to give undertakings to stop selling unauthorised imports at up to £3,000 less than list price. Honda, which claims to have lost as much as a quarter of its British sales to grey imports, says it has been forced to act ³in the interests of consumer safety and to protect the integrity of the Honda brand.² Jack Glover, one of the dealers targeted by Honda, denounced the move as ³a legal manoeuvre to stifle competition, maintain artificially high prices in the UK and deprive consumers of choice.²
Britain¹s biggest supermarket chain, Tesco, has several actions pending against it. It had been given two weeks by lawyers representing Levi-Strauss ³to cease and desist² from selling Levi jeans at £30 a pair, up to £25 cheaper than authorised outlets. Far from caving in, the supermarket chain has issued a counter-writ against Levi-Strauss claiming that its business has been damaged by unjustified threats. Another American clothing manufacturer, Guess? Inc, which makes a range of T-shirts, is also seeking an injunction against Tesco on the ground that it is selling discounted Guess? shirts that have not been bought direct from the manufacturer.
A retailer as big as Tesco is not worried by legal threats. Such rows offer excellent value-for-money publicity. And a quiet retreat is always possible when the brouhaha has died down. Trade sources claim that Tesco has already backed down in the face of threats from Gillette. But smaller companies dare not take the risk. The chilling effect is already evident in the drying up of discounted branded goods reaching retailers. Andre Frenkel of Ramlort Ltd, a Manchester parallel trader in toiletries, says that he has had to cease importing goods from outside Europe. He points out that under the current legislation, his whole stock could be seized and destroyed.
The high value of the pound makes Britain a particularly attractive market for parallel importers. But similar legal battles are now going on across Europe. Christian Dior, for example, sued Kruidvat, a Dutch discount chain, after it advertised its Poison and Fahrenheit high-priced perfumes alongside a line of lurex underpants.
To protect their market, British grey marketeers have established the Parallel Traders Association (PTA). It has written to the chancellor, Gordon Brown, urging him to remove obstacles to grey imports, and is meeting next week to lobby the consumer-affairs minister, Kim Howells. The PTA¹s legal adviser, Garry Lux, points out that it is the consumer who is paying the price for defects in EU law: ³If you take away parallel trading, prices will inevitably rise. That is really the nub of this.²
The PTA has popular backing for its campaign. A MORI poll commissioned by the association found that 83% supported supermarkets that continue to sell designer goods imported from outside the EU at discount prices, and that 79% believe the government should press for a change in the law. But the attitude of ministers is ambiguous. The government supported the Silhouette ruling despite its stated commitment to a competitive market place. It has also so far made no representations in another important trademark case now being considered by the European Court. The Sebago case involves one of the key arguments made by parallel importers, that trademark owners who sell their goods in Europe must be taken to have consented to the sale of other goods that are essentially the same. The European Commission meanwhile is conducting a review of the economic impact of the trademark directive which could lead to reform.
Much is at stake. There are few reliable figures about the extent of parallel trading. It is a secretive business with sources of supply kept confidential. But what is certain is that until very recently the market in discounted branded goods has been growing rapidly throughout Europe. The Dutch Merchants¹ Association, a parallel trade organisation, estimates that the British grey market amounts to more than £1.25 billion a year. The chairman of Sony Music (UK), Paul Burger, has said that as many as one in five sales in Britain of some pop albums are grey imports.
With so much to play for, it is not surprising that the grey market has become a lawyer¹s paradise. However, it is absurd that legislation designed to afford protection against counterfeiting rather than competition should have become the main weapon in this legal battleground. The real victim is the consumer, a fact yet to be acknowledged by either the British government or the European Commission.