It’s Not a Bag, It’s a Birkin: Class Action Targets Hermès with Antitrust, Unfair Trade Claims | Holland & Knight LLP
The “Birkin” name is well known around the world – it is synonymous with exclusivity and high-end luxury. From storylines in “Sex and the City” and “Gilmore Girls” to mentions in lyrics from the likes of Jay-Z and Beyoncé, the message is clear: the Birkin is a major luxury and status symbol. But, according to the lawsuit, not everyone gets the chance to purchase a Birkin – even if they can afford the hefty price tag. Birkin bags, which are made by hand in limited quantity and not sold online, range from $12,000 to $450,000 at private sales.
California Class Action
A new putative class action lawsuit filed on March 19, 2024, claims that Hermès International, a French corporation, and Hermès of Paris, its wholly owned subsidiary, a New York corporation that is the sole authorized distributor of Birkin bags in the United States, violated antitrust and unfair business practices laws. The lawsuit alleges that the requirement for consumers to purchase other Hermès products before being given the opportunity to purchase a Birkin bag is unlawful “tying” that allows the luxury brand to increase prices on the bags. Further, the lawsuit alleges that Hermès encourages its sales associates to implement the tying arrangement by offering commissions to associates for sales of other products, but not the Birkin. According to the plaintiffs, Hermès “use[s] Birkin handbags as a way to coerce consumers to purchase ancillary products … “
The named plaintiffs include two individuals – one of whom was allegedly not permitted to purchase a Birkin bag because he had not purchased other products, and another who had spent tens of thousands of dollars on Hermès products, including Birkin bags, but was allegedly told that only “clients who have been consistent in supporting our business” were eligible to make the purchase. Plaintiffs seek to represent a class of all U.S. and subclass of California residents who “purchased or were asked to purchase” other Hermès products “in order to purchase a Birkin Handbag” (“Birkin” is also defined to include Hermès “Kelly” handbags).
The Tied-Product Market
Section 2 of the Sherman Act prohibits monopolization, or attempts or conspiracies to monopolize, and the Cartwright Act specifically prohibits certain tying arrangements. Under both Section 2 of the Sherman Act and Section 16727 of the Cartwright Act, plaintiffs in this lawsuit will have to prove that Hermès had sufficient economic power in the market for the tying product to enable it to harm (i.e., lessen or foreclose) competition in the market of the other, tied product. Here, the tied-product market is the market for the other or “ancillary” Hermès products one allegedly must purchase before gaining eligibility to purchase a Birkin.
How plaintiffs hope to prove that Hermès harmed the ancillary product market for products like scarves, belts, leather goods, jewelry, or home goods is unclear. Similarly, it is unclear how plaintiffs will be able to show that the tying helps Hermès maintain a “monopoly.” It is hard to imagine how the selling of so-called “ancillary products” helps Hermès maintain any kind of monopoly, even over a narrowly defined market for Birkin bags.
California’s Unfair Competition Law is broader in nature, prohibiting “unlawful, unfair, or fraudulent” conduct. It seems unlikely, however, that plaintiffs would prevail arguing that Hermès’ actions constitute “unfair” conduct if they similarly fail to prove any lessened competition. Although this legal case poses intricate challenges for the plaintiffs and the likelihood of the plaintiffs substantiating their claims remains highly uncertain at this juncture, the case stands to impact other luxury brands’ sales and marketing strategies, particularly given the prevailing legal landscape, which appears to prioritize antitrust scrutiny.
