Levi wins designer shopping battle

Levi Strauss sells products only through selected outlets

LONDON, England -- Levi Strauss has won a judgment from the European Union's highest court that could stop designer goods being sold at discount prices in supermarkets.

The European Court of Justice has upheld Levi Strauss's right to limit imports of its jeans from outside the EU.

The decision is a victory for Levi Strauss over British supermarket group Tesco, which had imported Levis jeans from the United States and sold them at cut-rate prices.

Levi Strauss has a policy of selling its products only through selected outlets, arguing that these are chosen because they offer the best customer service and selection.

Opponents of the system say it allows the company to keep prices artificially high, especially in comparison with countries outside the EU such as the United States.

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Tesco believe they were right to sell jeans, including the 501 brand, at discounted prices and bought from the so-called "grey market" after Levi refused to supply them.

Other stores have begun selling designer goods using the same method -- importing genuine goods from outside Europe to avoid trade rules -- resulting in cut-price deals on a range of products from clothing to fragrances.

The case against Tesco began in 1998 and centres on when the manufacturer loses the right to decide how its trademarked goods are distributed.

The European Court of Justice was asked to rule on the issue of consent after it was referred by the High Court in England.

In a news release, the court said on Tuesday: "The consent of a trade mark proprietor to marketing within the European Economic Area of goods placed on the market outside the European Economic Area must be expressed unequivocally ... Such is not the case where the trade mark proprietor is merely silent.

"It follows that it is not for the trade mark proprietor to demonstrate absence of consent, but rather for the trader alleging consent to prove it," it added.

Levi Strauss pointed out before the ruling that whatever the decision the case would return to the High Court to finally be resolved.

Perfume maker Zino Davidoff joined the case on the side of Levi Strauss, and discount retailer Costco on the side of Tesco.

The decision was expected to have a broad effect on consumers, determining if businesses across Europe can legally buy everything from motorcycles and auto parts to toys and perfume outside the European Union and sell them in the EU at prices below those of manufacturers' authorised importers.