Hermès Faces Class Action Suit Over Birkin Sales Practices

[carrie8]

The concern from an antitrust perspective is that if consumers are allegedly required to purchase additional items, like a pair of shoes, from Hermès in order to have the opportunity to buy a Birkin bag, this practice could unfairly impact other shoe sellers. Consumers who might have preferred or otherwise chosen to buy their shoes from a different brand could feel compelled to buy Hermès shoes instead, simply because it's tied to their ability to purchase a Birkin bag. This could potentially reduce sales for other shoe brands and distort the competitive dynamics in the shoe market, giving Hermès an unfair advantage not because their shoes are preferred on their own merits, but because buying them is allegedly a precondition for obtaining a highly sought-after product in a completely different category.

Also, from an antitrust perspective, the primary concern is often consumer harm. If consumers are forced to purchase products they do not want (the ancillary products) to obtain a product they do want (a Birkin bag), this can be seen as harmful to consumers. It could lead to inefficiencies in the market, such as consumers paying more than they would in a competitive market or receiving less value.

Is it like Google who got sued over monopoly of search engines in the EU?

 

[textilegirl]

I would LOVE to see any attorney argue in court, with a straight face, that anyone is FORCED to buy Hermes shoes because they NEED a 5 figure purse as an administrative assistant and the male plaintiff who lives in Vernon. Not that there is anything wrong with them having multiple Berkins, but come on. The lawsuit is just a stupid shakedown. What a waste of judicial resources.

I was gonna say children are starving around the world but your comment will do. And further, admin assistant or CEO, nobody needs a Birkin. This is the pseudo adult version of a temper tantrum.

 

[allanrvj]

the first point you make is an important antitrust policy, but I doubt the plaintiffs care about the effect on H’s competitors. What they care about is your second point.

yes but in order to win the case, since they are gunning for the tying arrangement, they need to prove that the other products bought is really affecting the competition.

which is funny because scarves, fine jewelry, and expensive furniture--the tied products, I assume--are not necessarily products in competitive markets

 

[Veritybelle]

I would LOVE to see any attorney argue in court, with a straight face, that anyone is FORCED to buy Hermes shoes because they NEED a 5 figure purse as an administrative assistant and the male plaintiff who lives in Vernon, which is southeast of South Cental LA. Not that there is anything wrong with them having multiple Berkins, but come on. The lawsuit is just a stupid shakedown. What a waste of judicial resources.

i think the misspellings of Birkin are delicious! I’m imagining a new line of Berken dupes being rushed into production as we speak…

 

[allanrvj]

Is it like Google who got sued over monopoly of search engines in the EU?

that one is different. the case against Google was for market dominance. this case against H is about tying (buy this so you get that).

 

[umamanikam]

Would love to know the age of these people who are suing .

 

[textilegirl]

yes but in order to win the case, since they are gunning for the tying arrangement, they need to prove that the other products bought is really affecting the competition.

which is funny because scarves, fine jewelry, and expensive furniture--the tied products, I assume--are not necessarily products in competitive markets

Exactly.

 

[textilegirl]

Would love to know the age of these people who are suing .

56 going on 5

 

[jenayb]

Would love to know the age of these people who are suing .

They aren't difficult to find via Google.

 

[Veritybelle]

yes but in order to win the case, since they are gunning for the tying arrangement, they need to prove that the other products bought is really affecting the competition.

which is funny because scarves, fine jewelry, and expensive furniture--the tied products, I assume--are not necessarily products in competitive markets

Most cases involve both horizontal and vertical conduct and effects. The analysis will obviously depend on the applicable statutes, but can anyone seriously think H’s strategy is to actually damage or eliminate competition in those ancillary markets? Their strategy is to control sales of Bs and sell more of their own products in those other markets, which will be so widely defined that there is no chance there’s any relevant detrimental effect on competition. The plaintiffs would be mad to try to run an argument based on the anticompetitive effect in the market for say luxury shoes.

 

[umamanikam]

They aren't difficult to find via Google.

Running to check

 

[allanrvj]

Most cases involve both horizontal and vertical conduct. The analysis will obviously depend on the applicable statutes, but can anyone seriously think H’s strategy is to actually damage or eliminate competition in those ancillary markets? Their strategy is to control sales of Bs and sell more of their own products in those other markets, which will be so widely defined that there is no chance there’s any relevant detrimental effect on competition. The plaintiffs would be mad to try to run an argument based on the anticompetitive effect in the market for say luxury shoes.

which should have been the thought process of the legal team in the first place. lol

 

[stephbb9]

I rememeber a customer sued a famous watch brand (maybe Patek?) last year for not selling him the watch he wanted and had him spend $200K on other items first. Then he never got the watch and sued. Seems like a similar situation…

 

[880]

@stephbb9 , was that case thrown out?

Hermes ‘s insurance provider might demand that they settle, IDK

I always assumed that the reason why Hermes restricts product and has moved away from waiting lists must be at least in part, (perceived as ) better: for their bottom line; for the perceived value of their products; and for their shareholders. I’m not sure that being fair to walk ins, who want a popular bag and who will never be seen again, plays into Hermes corporate awareness at all.

At the end of the day, the clients Hermes wants will probably stick around: aspirational clients; some lifestyle clients; some loyal OG clients; and some high net worth.

This lawsuit might shore up the resale prices of some bags,* but there are a lot of mini K’s out there that no one is buying for 3X plus retail price. If someone bought birkin bait and gambled on making money reselling a bag, that’s on them.

*ETA: @acrowcounted , I had the vague notion that a lawsuit reinforcing the belief that these bags are difficult to purchase at retail might increase demand for reseller bags. (I don’t really see this lawsuit going anywhere, but I’m no expert). The softening demand for anncillary goods even at below retail, secondary market prices, might discourage those who don’t care for the items on their own merit.

 

[acrowcounted]

@stephbb9 , was that case thrown out?

Hermes ‘s insurance provider might demand that they settle, IDK

I always assumed that the reason why Hermes restricts product and has moved away from waiting lists must be at least in part, better: for their bottom line; for the perceived value of their products; and for their shareholders. I’m not sure that being fair to walk ins who want a bag plays into this at all.

At the end of the day, the clients Hermes wants will probably stick around: aspirational clients; some lifestyle clients; some loyal OG clients; and some high net worth.

This lawsuit might shore up the resale prices of some bags, but there are a lot of mini K’s out there that no one is buying for 3X plus retail price. If someone bought birkin bait and gambled on making money reselling a bag, that’s on them.

Curious on how you think this could potentially help resale values? This lawsuit seems to seek to make the bags more accessible, which would drastically hurt resale values. Unless, I guess, there is always the possibility that H decides the US market isn't worth it and pulls bags completely from the country, or in a super extreme case, shuts down its entire US business. (No, I don't believe either of these things would happen, but H does have "F you" money and a "devil may care" attitude so if any huge company would do it, I could see it being Hermes.)