02 de April de 2019
A group consisting of the acclaimed Dean of EAE Business School, Dr. Josep María Altarriba and two of the academic professionals, Vice-Dean Dr. Eduardo Dittmar and Dr. David López, took part in the event at Harvard Law School with a presentation entitled "New perspectives on intellectual and industrial property: private-label brands".
Selected from a long list of presentations from all over the world, the seminar given by the representatives of EAE focused on the problem of retailers' own-brand products. Over the course of the week, the executive group also took part in various work sessions with highly-respected academics from Harvard University.
"We must recognize the immeasurable power that retailers now have. In Fact, they have enough power to impose several conditions on the manufacturer. It can therefore be deduced that, nowadays, rather than in the manufacture of the product, the power is rooted in its retail", began the presentation.
Moreover, retail sets the price both of the own-brand and of the producer/manufacturer's product. "This fact may lead the retailer to increase the price of the manufacturer's products to attract customers to its own-brand products. Of all the possible options, the consumer will choose the product that is most similar to the one they want to buy at a lower price, the spectrum of which includes the retailer's private-label brands. Precisely this last factor, the lower price, is what sets a leading brand's product far apart from a retailer's, which is as low as half the price in some cases, without taking the quality into consideration. When the economy is going well, there is no problem. However, in times of recession, it is this aspect that families focus on most to reduce the cost of their weekly shopping, particularly if the private-label brands are given precedence on the shelf over the manufacturer's products, as is always the case".
In the opinion of the EAE academic directors, it is important not to penalize commercial success, "except in the case of practices that are incompatible with the functioning of the internal market, such as the existence of proof of abuse of the dominant market position or harm to the consumer, contravening Article 101 of the Treaty on the Functioning of the European Union".
In addition, the effectiveness of a competitive market in terms of protecting consumers and operational efficiency may give rise to additional benefits. "In a free and fair market, retailers compete based on service, product quality and value for money". Meanwhile, unfair practices not only harm competitors, but also consumers. "In the situation analysed in this study, the consumers are affected in two ways. Firstly, there are actions that harm them directly, such as being misled or confused. Secondly, they may be harmed indirectly by the distortion of the proper functioning of the competitive system represented by the misuse of another party's reputation".
All the cases mentioned that harm consumers may occur as a result of using private-label brands which, by restricting a leading brand, confuse them while taking advantage of another party's reputation: the brand awareness and prestige achieved by other manufacturers through years of investment in innovation and commercial communication. Although the use of this tool is perfectly legal, certain functions of the brand are affected.
The analysis also highlights the particular features that arise from the perspective of Competition Law on the one hand, and from the viewpoint of unfair competition, on the other. These aspects were examined from the perspective of Spanish Law, as well as EU Law when applicable.