EU court decision hits brand owners

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A ruling from the European Court of Justice today could loosen the grip that brand owners have on their product distribution in Europe.

After a protracted court battle between Levi's and UK retailer Tesco, the European Court of Justice said that traders such as Tesco should have their interests considered, paving the way for discount operators in the UK and elsewhere to sell cut-price designer brands in their stores. Tesco had been purchasing genuine Levi's outside the EU and selling them in its UK stores. Levi's had argued that the re-sale of its products in a discount environment without its permission was against the law.

Following the ruling, Tesco announced it would be seeking to expand in other markets to offer low-priced branded goods.

A final decision from the court comes in June, but is expected to confirm this ruling. The case has big implications for brand owners, especially in the luxury and lifestyle sectors. At its heart is the issue of parallel imports and the rights of brand owners to decide on distribution.