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Thursday, July 16, 1998 Published at 12:34 GMT 13:34 UK

Business: The Economy

Designer imports ruled illegal

It's cheap and it's the real thing

In a landmark decision, the European Court of Justice in Luxembourg has outlawed sales of discounted designer goods imported into the European Union without approval from brand owners.

The BBC's Consumer Affairs Correspondent Nicola Carslaw reports
The European Court's judges said that such imports violated EU trademark rules.

The court ruled that companies could only buy goods from sources other than the producer if they were within the European community.

[ image: Does your dog want designer food at discount prices?]
Does your dog want designer food at discount prices?
The court ruled on an Austrian case, where a company sold cut-price sunglasses of the Austrian manufacturer Silhouette, which it had bought in Bulgaria and re-imported into the EU.

The decision is a setback for supermarket chains and discount retailers across Europe.

In the UK alone, supermarkets do an estimated £100m of business in low price designer goods from brand leaders such as Calvin Klein and Nike.

Asda's Mark Williamson says "we'll work hard to maker sure our customers get what they want."
Most manufacturers of designer products like perfume, jeans and sports clothing refuse to supply discount retailers with their goods.

They claim that their brands would be sullied were their goods sold next to milk, beer and dog food.

Their critics, however, say that the only reason is their desire to keep prices high.

For many years the manufacturers have fought attempts by discount retailers to break into the market and cut prices by buying branded goods in countries where they are cheaper.

It is a "grey market": the products are genuine designer goods, but they are bought from wholesalers who act against the wishes of the manufacturers and sell to retailers like supermarkets and discount stores.

Some companies like the Tesco and Asda supermarket chains in the UK, had repeatedly tried to get into the game. They cheaply bought products like Levi jeans, Calvin Klein underwear and Nike trainers and sold them far below the usual High Street prices.

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