The High Court yesterday handed down a potentially devastating blow for brand owners when it ruled that grey market goods can be sold in the UK.
The ruling is the first time in years that importers have won a case against brand owners. It will also give the green light for supermarkets such as Tesco and Asda to continue to import discounted branded goods made by the likes of Levi’s, Nike and Adidas.
The case was brought by Zino Davidoff, which makes cigars and the fragrances Cool Water and Davidoff Cool. Davidoff complained that A&G Imports imported its perfumes to the UK without permission and at cut-price. The retailer argued that it could not ensure the quality of the goods and that this also caused confusion with consumers as to whether these goods were high quality.
A&G argued along established principles of English common law, which state that once a manufacturer has sold its goods it implicitly gives consent for those goods to be sold on anywhere at any price, as long as the goods arrive in acceptable condition.
Guy Heath, a partner at commercial lawyers Nabarro Nathanson, says: “This is going to come as a real shock for brand owners. This ruling says there is a limit to the control they have over their goods once they have sold them.”
A spokeswoman for Asda says: “We welcome anything that enables us to purchase brands at lower prices that we can pass on to customers.”
The Department of Trade & Industry, which previously backed supermarkets’ bid to sell lower priced goods, was last night studying the ruling.
Davidoff immediately appealed to the European Court against the decision. The European Court is not expected to rule until autumn. In the meantime, observers expect Tesco and Asda to use that period to launch more price cutting campaigns.