Denim ruling gives consumer groups a case of the blues

Date: 22/11/01

By Peter Chapman

A court ruling in favour of jeans giant Levi Strauss is a licence for big business to commit "one-way globalisation", according to European consumers' group BEUC.

The European Court of Justice ruled on Tuesday (20 November) that the world's biggest jeans maker had the right to stop UK supermarket chain Tesco from selling cut-price jeans it had bought on the "grey market" outside the EU.

The judgement said such "parallel imports" could only be accepted if the consent of the trademark owner could be "unequivocally demonstrated" or if the products had been acquired in an EU member state. In the latter case, retailers benefit from "community exhaustion" of trademark rights.

Levi Strauss said the decision would allow the company to continue to invest in products for specific markets, such as Europe, and to choose how they are distributed and by whom.

However, Jim Murray, director of BEUC, said the ruling would allow brand owners to rip off consumers: "Large trans-national corporations use trademark law to restrict competition and charge higher prices in Europe. This is trade liberalisation on the suppliers' terms or one-way globalisation." His view was echoed by MEP Phillip Whitehead, consumer affairs spokesman for the UK's Labour group. He said: "This is a real blow to consumers who seek to buy legitimate branded goods at the best available price throughout the EU.

"When the law turns out to be an ass you change the law, and this will renew pressure on the European Commission to rectify the absurdities of EU trademark legislation which has nothing to do with counterfeiting and everything to do with ring-fencing specific markets for branded goods."

Joe Middleton, president of Levi Strauss Europe, Middle East and Africa, hit back, declaring: "We know what our customers want and we work with our retail partners - 17,000 of them across Europe both large and small - that are committed to honouring the promise of the Levi's brand.

"It is reassuring to think that there is a legal system where issues like this can be discussed and clarity be found. This is a victory for fair play.

"Despite tough market conditions, we have revitalised our business and the whole denim sector by bringing new products to the market and upgrading our distribution system to better meet consumers' demands. Confirmation of this law allows us to continue to focus on these business priorities."

Reaction to the ECJ ruling of 20 November 2001 that jeans maker Levi Strauss had the right to stop UK supermarket chain Tesco from selling cut-price jeans it had bought on the 'grey market' outside the EU.