Birkin bags are too hard to buy, shoppers allege in antitrust lawsuit

Birkin bags are too hard to buy, shoppers allege in antitrust lawsuit - Business and Finance - News

The Exclusive World of Birkin Handbags: A Lawsuit Alleges Monopolistic Practices by Hermès

Birkin handbags, known for their exquisite craftsmanship and high price tags, have long been a symbol of luxury and exclusivity. Hermès, the French brand behind these coveted accessories, produces only a limited number of Birkins each year, with prices reaching upwards of $450,000. However, owning one is not merely a matter of having the financial means; the lawsuit brought by two California residents alleges that Hermès engages in monopolistic practices, making it nearly impossible for consumers to purchase a Birkin handbag without first buying other Hermès products.

Antitrust Allegations: Coerced Purchases and Market Dominance

The two plaintiffs, in their lawsuit filed in the US District Court for the Central District of California, accuse Hermès of violating antitrust laws. They claim that, to be allowed to purchase a Birkin bag, they were required to first buy other Hermès items such as shoes, scarves, or belts. The complaint alleges that this is a form of “tying arrangement,” which is illegal under US law. Consumers are reportedly coerced into purchasing ancillary products to secure a Birkin bag sale, making it more challenging for competitors to enter the market.

Proving a Monopoly: Significant Hurdles

If proven true, Hermès’ practices could have significant consequences. US law forbids monopolies from engaging in forced buying or “tie-in sales” to gain an advantage in markets where they are not dominant. However, establishing a monopoly and proving illegal tying arrangements will be no small feat. Hermès, based in Paris, is likely to argue that its tactics are necessary for preserving brand loyalty in a competitive market.

A Symbol of Rarefied Wealth: The Allure and Challenges of Owning a Birkin Bag

Birkin bags are more than just fashion accessories; they represent a level of wealth and exclusivity. Getting your hands on one directly from Hermès is no simple task – it typically requires celebrity status, a significant spending history, or being deemed “worthy” by the brand’s representatives. The limited number of Birkins produced each year and their absence from contact sales add to the allure. In 2022, a report from Credit Suisse and Deloitte noted that Birkin sales surged by 38% in 2020, with record premiums reported by resellers. Christie’s sold a crocodile-skin Birkin for nearly $390,000 that November, the second-highest price ever paid for a handbag at auction.

A Damaging Revelation: The Plaintiffs’ Story

The lawsuit, even if unsuccessful, has already brought the alleged practice to public attention. “At least according to the complaint,” says John Mark Newman, a University of Miami School of Law professor and former deputy director of the Federal Trade Commission’s Bureau of Competition, “Hermès representatives basically told these people that they aren’t good enough to buy a Birkin bag.” Whether the plaintiffs’ primary motivation is financial compensation or simply wanting to share their story, they have already accomplished their goal of shedding light on this controversial business practice.