SHOPPERS face higher prices for "designer" items, including Calvin Klein clothes and Levis, perfume, sportswear and champagne, after a thriving trade in cut-price goods was outlawed by the European Court of Justice yesterday. Supermarket chains, consumer groups and the Government condemned the ruling as "anti-competitive" and said that it amounted to support for price fixing.
The decision, which has enormous implications for British and other EU retailers, concerned an Austrian company, Silhouette, which produces fashionable sunglasses.
Silhouette had complained that an Austrian retailer, which it had refused to supply, was selling its glasses at a discount after buying 21,000 "outmoded" Silhouette frames from a distributor in Bulgaria, which is not a member of the EU.
The European Court judges interpreted a 1988 European directive to mean that a trademark owner could prevent products bearing its mark from being brought into EU countries without its approval.
"This is the only interpretation which is fully capable of ensuring that the purpose of the directive is achieved, namely to safeguard the functioning of the internal market," the Luxembourg-based court said.
Different rules in different member states "would inevitably give rise to barriers to the free movement of goods and the freedom to provide services".
The judgment threatens a £100 million British market which has allowed prized brands to be bought at lower prices in popular chains than in fashionable department stores chosen by the producers.
Tesco said: "Our customers tell us time and time again that they want to buy fashionable and popular designer items, but resent having to pay ridiculous prices for them.
"They don't want to pay £50 for a pair of Levis, they want to pay £30. Why should they pay between 20 and 50 per cent more for jeans in Britain than they would in the United States?"
Tesco, Safeway, Sainsbury's and other chains began importing fashion names in clothing and perfume from outside the EU early last year after being rejected as official retail outlets by companies which prefer more exclusive stores.
The retailers say that "selective distribution" forced them to explore what has become known as the "grey market" outside the European Union.
This source of cheap, high quality goods was boosted by the collapsing economies in the Far East, which created a glut of designer goods on offer at low prices.
Asda said it would try to continue selling as many low-cost designer goods as possible. But Mark Williamson, its spokesman, said that the supply would inevitably be curtailed.
"If we want to find the Calvin Klein or the Armani brands, we must now do so from within the EU.
"We don't believe - and our customers don't believe - that price fixing should be allowed."
The Co-op, which reduced the price of a bottle of Moet and Chandon champagne from £20 to £14.99, condemned the ruling as a "retrograde step".
It said that its policy had resulted in a general cut in the price of Moet and Chandon.
Nigel Griffiths, the consumer affairs minister, said that the court ruling contradicted the EU's policy of fighting for lower prices.
"Quite clearly this is bad news for consumers. It allows foreign manufacturers to dictate the prices British consumers have to pay."
The European Commission said that the ruling was in line with its reading of EU law. It was good for consumers, as it "guaranteed the continuing quality of goods moving in the single market".
