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Analysis: Handbags at dawn
The ruling by the French Tribunal de Commerce in June, which ordered eBay to pay damages of €39 million (about £31 million) to Luis Vuitton (LVMH) for allowing counterfeit copies of its goods to be sold on its auction sites, attracted few headlines, perhaps because on the surface it seems to be eminently sensible and reasonable. We all know, after all, that eBay is awash with fake designer goods and that both customers and the companies whose products are faked lose out. Why shouldn't eBay be made to pay for exposing us all to the risk of buying counterfeit tat? Well, several reasons actually.
Despite LVMH's contention in court that 90% of Luis Vuitton products and those of its subsidiary, Christian Dior Couture, sold on eBay are fake, the auction site has been making a considerable effort to combat the problem. In a statement following the verdict, eBay pointed out that it spends $20 million (about £10 million) annually combating this kind of fraud, partners with 18,000 brand owners worldwide to attempt to eliminate fakes, and employs 2,000 people to work specifically on this problem. In 2007, it blocked 50,000 sellers, and prevented 40,000 previously blocked sellers from returning.
Those figures look impressive, although, of course, they are not enough. Auctions and Buy it Now listings for fake goods still appear and disappear on a frequent basis on eBay. And it's not just designer handbags. All sorts of products are faked and sold as originals: electric guitars seem to be a particular favourite of con merchants in Far Eastern countries. The company is at least working hard on the problem. It's acutely aware that the most important currency
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There's more to it than simply preventing the sale of counterfeit goods, however. In its statement, eBay contended that 'today's ruling is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that eBay empowers everyday'. And it added 'the attempt to use the ruling to confuse the separate issues of counterfeit and restrictive sales suggests that counterfeit suits are being used by certain brand owners as a stalking-horse issue to reinforce their control over the market'. That could be interpreted as sour grapes, if it weren't for the fact that evidence exists to support that claim.
The Times reported earlier this month that Maclaren and Bugaboo, which together account for a third of sales of pushchairs in the UK, have banned the sale of new pushchairs on eBay. And Mamas and Papas, which accounts for another third of the market is set to make it much more difficult for its resellers to use the auction site as a sales channel, having already introduced a no-returns policy for retailers who sell through third-party websites.
Maclaren insists that safety concerns are behind its decision because it had found that many of the Maclaren pushchairs for sale on eBay were fakes and didn't meet the company's safety standards. No one, including eBay, wants dangerous pushchairs to be sold to unsuspecting parents, but wouldn't a simpler and fairer solution have been to set up a registration scheme, which enabled authorised resellers to sign-up and have their eBay store listed on the Maclaren website as an official outlet?
