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MPs call for end to power of the brand.

Designer brand makers should be denied the power to control markets, allowing consumers to benefit from lower prices, a committee of MPs said yesterday.

Backing high-profile campaigns by supermarket chains like Asda and Tesco, the MPs called for an end to restrictions on the so-called grey market, which allows retailers to buy in brand names from abroad at lower prices.

Some retailers have clashed with manufacturers over the sale of cut-price brand name products.

And in the report, the influential House of Commons trade and industry committee backed the arguments put forward by the stores that the trade mark owners of designer brands such as Levi jeans, Calvin Klein perfumes and Prada bags should not have the right to determine exactly where their goods are sold.

The supermarkets claim customers are being ripped off by the brand owners who repeatedly try to stop sales of designer goods at discount prices.

A European Union directive states that while retailers can buy so-called grey market goods from unauthorised suppliers within the 15 European Union member states, they cannot import from outside.

However, yesterday's report says it is time that trade mark rights were abandoned internationally to bring cheaper prices.

But the committee warned that in other sectors, particularly the pharmaceutical and music industries, the consumer benefits may be outweighed by the problems that could arise.

The report recommends that the Government work with the European Commission towards adopting a broad principle of allowing worldwide grey imports, incorporating special protection for certain sectors.

The committee also recommends that once worldwide grey trading is allowed, products imported in this way could be labelled as such to differentiate from those authorised by the manufacturer.

A case regarding the importation of grey market goods is pending in the European Court of Justice and retail brands lawyer Ms Katrin Turner, of law firm Davies Arnold Cooper, said that this may prove the turning point.

"There are two ways for the market to be opened up. One is through a political solution which would see the trade mark laws changed and the other is through a legal decision where a previous decision in favour of the existing laws was overturned," she said.

Mr John Gildersleeve, Tesco's commercial director, said that although trade mark law is vital to international trade, it should not be used to control supply and keep prices high in individual markets.

Brand manufacturers warned that jobs were at risk from recommendations made in the committee's report, and said international exhaustion of trade mark rights across the board would force some major UK manufacturers to flee to lower-cost countries.
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Publication:The Birmingham Post (England)
Date:Jul 9, 1999
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