Tamara Mellon, the businesswoman who built Jimmy Choo into a renowned fashion brand, is launching a legal battle against her former company for anti-competitive practices and breach of EU anti-trust laws.
The law firm Olswang, representing Tamara Mellon has written to Jimmy Choo with accusations that it has imposed restrictive terms on a series of leading Italian leather suppliers, obligating them to pledge not to work with Tamara Mellon Brand LLC, the luxury fashion house she launched in 2013.
As a result of this, the complaint states that Mellon has been ”unable to secure suitable production capacity for…luxury leather products and the business consequently has been impaired.”
Mellon whom founded the Jimmy Choo brand with Malaysian shoe designer Jimmy Choo in 1996, and built the brand into a global name before selling it to a private equity company in 2004, for a noteworthy figure of £101 million is accusing the company Jimmy Choo of impairing the growth of her new brand.
Both UK and EU Competition law applies to anti-competitive agreements or business practices between:
competitors (horizontal agreements) and/or customer/distributors such as retailers (vertical agreements)
Competition law prohibit agreements, arrangements and concerted business practices which appreciably prevent, restrict or distort competition (or where this is the intended result) and which affect or may affect trade within the UK or the EU respectively.
In the fashion industry it is common for their to be exclusive (supply, manufacture and distribution) agreements and for the nature of these agreements to be limited. But in a global market place the issue often hinges on whether these agreements contain restrictive clauses and, whether according to the law these restrictive clauses would be justified.
According to us at FL&B having not seen the terms of the disputed agreement(s), it is difficult to assess whether such agreements would be caught by EU anti-competition law. A spokesman from Jimmy Choo has said: "We have received a letter which is being evaluated. Our initial assessment is that the complaint has no merit and will be vigorously contested. We plan to make no further comment until the process is completed."
Even though anti-trust law is something that is not frequently discussed in the fashion law arena, it is important that every fashion house & business be aware of compliance with competition law. According to EU & UK law companies involved in anti-competitive behavior may find that agreements to be unenforceable and risk being fined up to 10% of group global turnover as well as exposing themselves to possible damages actions. As such, any business (whatever its legal status, size and sector) needs to be aware of competition law, firstly so that it can meet its obligations (and in doing so, avoid the penalties mentioned above), but also so it can assert its own rights and protect its position in the marketplace.