Tesco loses cheap jeans fight
LONDON (Reuters) - Tesco has conceded defeat in its long-running battle with Levi Strauss over whether it can source cut-price jeans from outside Europe. Tesco, fighting alongside privately owned discount retailer Costco, threw in the towel on its four-year battle on Wednesday after the High Court backed a decision by the European Court of Justice last November that retailers need the permission of the trademark owner to go shopping outside European Economic Area.
The ruling spelt victory for brand owners seeking to control the distribution of their products through authorised dealers to prop up prices. "It is the end of the legal road for us," Tesco told Reuters. "It was our last opportunity to challenge the European Court's ruling." Tesco had bought Levi products from wholesalers and manufacturers in the U.S. without Levi's permission, what is known as the "grey market". It argued that the ban on purchasing jeans outside Europe was an infringement of human rights, leading to consumers being ripped off.
The chain is currently selling Levi 501s in its stores for 32.99 pounds, compared with a recommended retail price of around 50 pounds. It has obtained those jeans along with sportswear and designer fragrance from within the EU and will continue to do so, but if it had been allowed to buy grey market products it reckons it could have reduced the price to customers to around 25 pounds and doubled its supply.
The Consumers' Association expressed "deep disappointment" with the ruling and congratulated Tesco on becoming the consumers champion in a case that will have far reaching consequences for manufacturers, retailers and consumers.
"The real loser is the consumer," said the organisation's Principal Policy Adviser Phil Evans. "The European Commission has to decide if it is happy to allow brands to rip off consumers or if it wants consumers to benefit from freer trade and greater competition."