Your leader on grey trading (MW February 20) asks “what immutable principle… makes it legal to source grey goods within the European Union, but not beyond it?”
The answer is straightforward. The EU has been a single market since 1992 with an increasingly common framework for business across member states. There has also been the introduction of a single currency.
This is in stark contrast to the rest of the world. There are enormous differences in economies, taxation, duty, subsidies, legislation and business regulation between, say, India and Argentina. That is before taking into consideration differences in culture, climate and consumer taste.
Of course grey trade damages brand equity. Few marketers will relish being constrained in meeting the differing needs of local consumers around the world. Similarly, few want their hands tied on price. Developing new markets with promotional pricing or responding to price wars in low-cost markets will no longer be options should the law change on grey trading.
There are many legitimate reasons why prices vary around the world, differences in the cost of doing business for a start. To call such differences “price rigging” is pure propaganda. A change in legislation will simply shift revenues from manufacturers to traders, with little if any benefit being passed to consumers.
Essentially grey traders and their supporters are suggesting that products should be sold in the UK at the lowest price prevailing anywhere in the world. That is not a viable business model that I recognise.
The British Brands Group