Court leaves buyers in legal limbo on grey market goods

25 April 2001
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26 April 2001 | Robin Parker

Buyers of parallel imports are no clearer on the legality of "grey market" supplies after the European Court of Justice's ambiguous initial verdict on Tesco's sale of cut-price Levi's jeans.

Both companies claimed victory from the advocate-general's recommendations to the court, which recognised "the right of the trademark proprietor freely to determine the conditions under which he wishes to market his product and control its distribution", while conceding, "importers have interests which merit protection and which must be taken into account".

Tesco, which has its own range of clothing, began selling Levi's jeans bought from the grey market in 1997.

"Levi Strauss refused to sell its clothes in the same store as food products," said Christine Cross, Tesco's non-food sourcing director. "They have their own set of criteria for supply, but they wouldn't give it to us, so we don't even know where we fell foul."

She argued that Levi Strauss was restricting supply to keep prices artificially high.

Asda has long used parallel suppliers for skincare and perfume products and sells designer sunglasses, including Ray-Ban, at up to 60 per cent cheaper than high-street prices.

"These manufacturers won't sell to us," said an Asda spokesperson. "They claim that we won't sell their products in the right atmosphere. But how much atmosphere is there on an aeroplane?"

The eventual outcome of the Tesco case would provide welcome clarification. "The current ambiguity is causing concern," said the spokesperson.

Parallel imports were on the increase in the West, said Gary Lux, legal adviser for the Parallel Traders Association. The association is lobbying the European Parliament to change the law. "Once a manufacturer has placed its goods anywhere in the world, it should have no control over where they are sold," said Lux.

The European Court will make a final judgment on the case later this year.


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