Birkin Bags are Exclusive - So Exclusive They Break the Law?
You don’t need to be at the forefront of fashion to be familiar with the exclusive Birkin bag. The Birkin bag was first introduced in 1984 by luxury fashion house Hermès.
Birkin bags are handmade from leather and are widely considered a symbol of wealth and exclusivity. Many celebrities including Kim Kardashian, Victoria Beckham, and Jennifer Lopez have been photographed carrying the bags. A Birkin bag sells anywhere between $11,000 USD and $380,000.
The exclusivity of these bags is the subject of a recent lawsuit filed by two Hermès customers in California.
The Lawsuit
The lawsuit involves two California shoppers who attempted to purchase a Birkin bag, but were allegedly told by the company that they needed to purchase other items before they would be eligible for the purchase. Purchasing other items allegedly proves a strong and consistent buying history that is required to be eligible to purchase the bag.
The two customers have filed a class action lawsuit against Hermès, claiming that the company’s sales practices violate antitrust laws. The lawsuit hinges on the Sherman Act, which prohibits tying or bundling goods to other purchases and the California Cartwright Act, which bars certain restrictions on commerce and unfair competition.
The lawsuit also claims that the company’s sale structure facilitates and promotes the illegal activity. Hermès sales associates get a 3% commission for products that count toward a strong buying history, but no commission on the sale of Birkin bags.
The plaintiffs are seeking unspecified monetary damages and a court order barring Hermes' allegedly anticompetitive practices.
Alleged Antitrust Violations - What is Tying?
The plaintiffs in this case allege that Hermès’ Birkin bag restrictions constitute illegal tying. Tying refers to the practice where a seller conditions the sale of one product (the "tying product") on the purchase of another product (the "tied product"). Perhaps the most famous case involving tying is United States v. Microsoft. In that case, Microsoft allegedly tied the sale of Internet Explorer to the purchase of Windows.
Tying is illegal because it can potentially harm competition by leveraging market power in the tying product to gain an advantage in the tied product market.
Impact on the Industry
If the lawsuit against Hermès is successful, fashion brands may need to reconsider their loyalty and status programs to ensure they are not violating antitrust laws.
PN Lawyers will continue to follow the case. For more legal news, subscribe to our newsletter!