§ 3.5 p.m.
§ Baroness Hamwee asked Her Majesty's Government:
§ What steps they propose to take to protect the interests of consumers and to deal with any necessary changes to trademark and competition law in the light of current and recent cases in the European Court of Justice regarding parallel importing of trademarked goods (importing in the so-called "grey market").
§ The Minister of State, Department of Trade and Industry (Lord Simon of Highbury)
My Lords, the European Court of Justice issued a judgment in the Silhouette case (C-355/96) Silhouette International v. Hartlauer Handelgesellschaft) on 16th July 1998. This judgment confirmed our understanding of the Trade Marks Directive, which dealt with the harmonisation of national trade mark law. As a result the market for trade marked goods in the European Union and, by extension to the European Economic Area, has been liberalised so that brand owners have no power to prevent the import of their goods already placed on the market anywhere in the European Union or the European Economic Area. They have rights to prevent the import to the EU or the economic area of their goods already put on the market with their consent outside the Union or the European Economic Area.
The Government have recognised the significance to consumers of the rights provided to brand owners by the Trade Marks Directive. We therefore fully support 435 a current European Commission study of the economic consequences of trade mark owners' rights to control parallel imports into the Community.
§ Baroness Hamwee
My Lords, I thank the Minister for that reply. I declare an interest. The solicitors' practice in which I am a partner represents certain of these traders. Since I put down the Question the Parallel Traders Association has been launched and my firm acts for that, too. However, I was anxious to put the Question from the consumers' point of view.
Does the Minister acknowledge that notwithstanding the liberalisation within the European Economic Area to which he referred the provisions do not serve consumers well? Trademarked goods bought perfectly legally outside Europe were being sold at a far lower price than trademarked designer goods. I give as examples the sale of designer sunglasses for £50 in a supermarket but for £90 to £150 for the same sunglasses in Harrods. Football shirts were about twice the price in the stores as against a supermarket.
Will the Minister consider seriously making oral representations in the forthcoming Sebago case? It represents an opportunity for the Government to protect the rights of consumers and to make the point that trademark law is designed to deal with counterfeits, not to restrict distribution.
§ Lord Simon of Highbury
My Lords, I recognise two parts to the question. First, it is possible for imports to be brought in from outside the economic area, and differential pricing ensues. Any retailer has the right to fight his case if he is stopped from doing that by an importer. However, I must make it clear that normally we use the legislation on trademarks within trading areas to protect the consumer by the quality and after-service of the design. That is the point of the trademark. Therefore, there is protection for the consumer in this case. The noble Baroness referred to the Sebago case. It is unlikely that the Government will make a submission. We do not believe that any new matter will be dealt with which is not already in the Silhouette case to which I referred.
§ Lord Peston
My Lords, concentrating on the position in the European Union, my noble friend summarised very clearly the view of the European Court of Justice. The problem is striking the balance between the rights of intellectual property owners and the need for competition. Within the European Union, the European Court of Justice has made the issue clear and to the advantage of the consumer. However, is there not a problem in respect of which the Government and the Commission have a role to play; namely, that manufacturers might misuse their trademarks by threatening their distributors who will distribute to people who wish to parallel import in all kinds of areas? Is the Minister satisfied that such abuse needs to be controlled and that the Government need to take a considerable interest in these matters?
§ Lord Simon of Highbury
My Lords, the Minister will be satisfied when this House in its wisdom passes 436 the new Competition Bill. One of the advantages of the new Bill is that we will be able to look to cases in which abuse is occurring, bring the right investigation and, if the case is proved, the correct retribution. The current system is not efficient in doing that, which is why the Competition Bill is so important to us.
§ Baroness Oppenheim-Barnes
My Lords, does the Minister agree that the bottom line is that it should be clear to consumers that they are buying the prestige goods they believe they are buying or that they are buying them at a lower price? The muddle that has arisen as a result of trying to create a level playing field is making the position much more difficult. Whatever the outcome, it must be easily assimilable by those at the buying end.
§ Lord Simon of Highbury
My Lords, I recognise that consumers' rights are of paramount importance. That is clear and the Government will always try to protect them. But there are two sets of rights; the value and quality of the goods and the service that is received. We must look to that balance.
We do not have a muddle in Europe. We now have the largest block of consumers in the world potentially able to have the same prices in any area of the marketplace. That is also true of the United States. The issue is whether we should negotiate bilaterally to make that so between the two markets. As noble Lords will understand, that is a more complex negotiation.
§ The Lord Privy Seal (Baroness Jay of Paddington)
My Lords, I think that after 25 minutes we must move on.