ANTI-TRUST LAWS AND THE FASHION INDUSTRY : HOWHERMÈS DODGED CLASS ACTION OVER ACCESS TO THE ICONIC BIRKIN BAGS

Authored By: Abhinanda Nandi

The West Bengal National University of Juridical Sciences

ABSTRACT

Anti-trust laws or competition laws are regulations which promote free fair and open competition in the market by preventing formation of monopolies, fixing prices, or engaging in unfair practises. Presence of these laws help set a level playing field so that both large enterprises and emerging start-ups get to engage in fair business and drive innovation by constantly improving and engaging in better technology to stay ahead of rivals. This article explores anti-trust laws in various countries, their implications and compares real-world application. Further, this article analyses the case study of Cavalleri et al. v. Hermès International, a high-profile anti-trust class action lawsuit filed in California, and concludes with what Hermès’ win means for the consumers and the future of Antitrust laws in the Fashion Industry.

Keywords: Antitrust Laws, Fashion Law, Brand Identity, Legal Analysis, Luxury Brand Protection

INTRODUCTION

Not everyone can spend $13,500 on a handbag, but as they say, “It’s not a bag. It’s a Birkin!” The same Birkin made headlines in 2024 when a lawsuit was filed against Hermès International alleging that the luxury brand violated US federal antitrust law by illegally “tying” the purchase of Birkin bags to purchase of other ancillary products.

Antitrust law exists in virtually every major economy, but each jurisdiction has developed its own distinct framework shaped by different historical moments, economic philosophies and enforcement priorities. In the US, the Sherman Act of 1890 pioneered modern antitrust legislation. This was followed by the Clayton Act and Federal Trade Commission Act of 1914, establishing DOJ-FTC dual enforcement system that continues today. The European Union developed its own competition regime much later through the Treaty of Rome in 1957, motivated by post-World War II economic integration influenced by Germany and France’s earlier anti-cartel laws. In India, the anti-trust landscape evolved first with the MRTP Act of 1969 during its socialist era, and then it was replaced with the Competition Act of 2002 to align with economic liberalisation and global best practises.

This paper will examine each of these mentioned Acts and analyse anti-trust in detail, along with studying the entire Hermés anti-trust lawsuit situation.

BACKGROUND: ANTITRUST LAWS IN DIFFERENT COUNTRIES AND ITS ROLE IN FASHION

Anti-trust is a regulation to prevent concentration of economic power in the hands of dominant market players. These laws exist to curb anti-competitive practises and prevent the formation of monopolies and cartels. Arguments in favour of anti-trust laws explain how such laws are necessary in the economy so that the competition among sellers can give consumers lower prices but higher quality products and services, a greater selection of choices and encourage innovation.

UNITED STATES

In the United States of America, The Sherman Act, The Federal Trade Commission Act, and the Clayton Act are the major laws that lay the foundation of antitrust. The Sherman Act of 1890, named after Senator John Sherman, its principal author, prohibits 1) anti-competitive agreements and 2) unilateral conduct that monopolise or attempts to monopolise the market.

The Clayton Act of 1914 builds on the Sherman Act. It is a civil statute enforced by the Department of Justice and Federal Trade Commission. It bans price discrimination, prohibits mergers or acquisitions where the effect maybe to substantially lessen competition or to create a monopoly, bans “tying” agreements and “exclusive dealing” that prevent customers from doing business with competitors and it prohibits individuals from serving on the corporate boards of competing companies.

The Federal Trade Commission act of 1914 established the FTC or the Federal Trade Commission as an independent agency and a broad, regulatory enforcement body to police the market. By the Act, the FTC was empowered to stop practices that violate the spirit of anti-trust laws and protect consumers by actively prohibiting false advertising, fraud and misleading acts. The FTC was given the authority to issue cease-and-desist orders, pursue civil penalties to seek redress for consumers harmed by illegal business operators.

EUROPEAN UNION (EU)

The European Union anti-trust law is built on the Treaty of Rome 1957. It was originally designed to forge a single unified market. It is governed primarily by Article 101 which prohibits formation of cartels and anti-competitive agreements and Article 102 which prohibits the abuse of dominant market position. Since then, anti-trust laws in the EU have evolved through regulations and in the 2010s and 2020s, the focus shifted to digital economy, heavily penalising US technology giants like Google, Apple, Meta for anti-competitive conduct in market and in the ex-ante Digital Markets Act (DMA).

The ex-ante DMA is a progressive approach because traditionally, anti-trust regulators used an ex-post approach. An ex-post approach means that the authorities would investigate a dominant market power only after complaints of monopolistic behaviour are filed. The ex-ante DMA however is preventative because the regulator establishes a strict rule book that top tier companies must follow by default. The DMA, however, does not apply to all tech companies. It is specifically for the dominant digital platforms who are designated as “gatekeepers”, with strong economic position, operating a core platform service that serves as an important gateway for business users to reach end users.

INDIA

Anti-trust law in India is governed by the Competition Act, 2002¹. Section 3 of the Act prohibits arrangements that restrict competition, classifying them into two main categories of 1) horizontal agreements and 2) vertical agreements. Horizontal agreements are agreements between competitors who come together to fix prices, restrict supply, or allocate markets to themselves. Vertical agreements are agreements between enterprises at different levels of supply chain. Practises like tie-in arrangements, exclusive supply agreements, and resale price maintenance are characteristic of vertical agreements in anti-competitive agreements. These are strictly prohibited and presumed to adversely affect competition.

Section 4 of the act is about abuse of dominant position in the market with practises like predatory pricing, denying market access to competitors, or imposing unfair and discriminatory conditions in purchase or sale prices.

The Competition Commission of India (CCI) has the authority to regulate mergers, acquisitions and amalgamations that exceed specific asset or turnover threshold under Section 5 and 6 of the act. It is also entrusted with the duty of conducting investigations, ordering companies to cease-and-desist anti-competitive practices, and impose financial penalties which could amount up to 10% of the enterprises average turnover or income for the preceding three financial year if they engage in anti-competitive practices.

After understanding the specifics of anti-trust laws in different countries, it is evident that such laws would affect the fashion industry since there exists many dominant brands that operate in the world of fashion.

LEGAL ANALYSIS

The central question that anti-trust law must answer in the luxury fashion context is simple: Does exclusivity constitute an anti-competitive behaviour or is it the very engine of a luxury brand’s legitimacy in the market? The answer to this question, as the frameworks reveal, is far from settled.

Anti-trust doctrines, across all three jurisdictions mentioned, was architected primarily with commodity markets in mind. The Sherman Act prohibition on monopolisation presupposes that market dominance is harmful because it restricts consumer choices and inflated prices. However, in the case of luxury and fashion, the consumer is not harmed by the high prices. Quite paradoxically, they are attracted by them. The entire mysticism around the Birkin bag is its inaccessibility. This creates a structural tension, solving which, existing anti-trust law fall short of. If scarcity is the product, does manufacturing that scarcity result in anti-competitive conduct?

The EU framework, governed by Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), provide a more robust framework. Article 102 explicitly prohibits the abuse of dominant market position which could encompass conditional selling practises. The European Court of Justice’s ruling in Copad S.A. v. Christian Dior Couture (2009) was in favour of the luxury brand Dior. Dior licensed Société Industrille Lingerie (SIL) to produce luxury items, strictly prohibiting sales to discount stores to protect the brand’s reputation and prestige. Despite these restrictions, SIL sold licensed products to discount retailer Copad SA. Dior sued for infringement. In the judgement, it was made clear that selective distribution systems in luxury market can be lawful where they serve to preserve the brand prestige, effectively carving out space for exclusivity as a legitimate commercial objective of luxury brands. This sits uncomfortably within competition law because it is implicitly establishes that some consumers’ exclusion from the product is legally protected feature, not a harm to be remedied.

India’s Competition Act, 2002, provides yet another dimension. However, the CCI Has not substantively adjudicated a case involving a luxury brands access restrictions, leaving uncertainty for high-end fashion houses operating in India’s rapidly growing luxury consumer market.

What unites all of these frameworks is a conceptual limitation. These laws assess anti-competitive harm through the lens of price and output effects which are ill suited for market where prestige and not utility derives consumer demand. Consumers of high-end luxury products are not harmed by high prices. A consumer wanting to purchase a Birkin Bag could easily purchase a functionally equivalent bag elsewhere. However, the harm alleged is access to a specific social signal, that modern day anti-trust laws don’t neatly accommodate.

Whether existing laws can be stretched out to accommodate the needs of the fashion and luxury industry is a matter of debate. Behavioural economics closely study how demand for luxury goods is undeniably different from demand for normal consumer goods and therefore, it must be approached in a way it suits it. A forward-looking, open-minded approach can be expected in interpretation when it comes to anti-trust laws and the fashion industry because ideas of prestige, social status, hard-to-get luxury products enter into play.

RELEVANT CASE LAW

Cavalleri v. Hermès International (2024-25) 3:24-b/c-01707

Lead Plaintiff: Tina Cavalleri, Co-plaintiff: Mark Glinoga, represented by Lanier Law Firm against Hermès International

Shoppers in California sued Hermès ⁽¹⁾, claiming that it illegally “tied” access to the Birkin bag with the purchase of other Hermès products. The plaintiffs’ complaint is that Hermès violates federal anti-trust laws ⁽²⁾. In simple terms, Hermès forces people to purchase thousands of dollars worth of products to even qualify for a Birkin bag.

The lawsuit was dismissed in September 2025 by Judge James Donato. The court dismissed the case because plaintiffs could not prove that the brand had sufficient market power in a legally recognised product market which is the required element for any anti-trust tying claim, as per Section 1 of the Sherman Act.

On February 17, 2026, the plaintiffs filed an opening brief with the US Court of Appeals for the Ninth Circuit to reopen the case. A definitive judgement is awaited from the court. The lawsuit, for now, is considered dead until the plaintiffs decide to take it to a higher authority.

There were several reasons as to why the lawsuit got dismissed. The plaintiffs’ definition of the market for the Birkin as an “ultra-luxury handbag” was legally insufficient under an antitrust market definition. Applying the “rule of reason” theory here requires proof of any actual anti-competitive harm, which was not established.

FINDINGS

Analysis of the Cavalleri v. Hermès International case establishes how despite having extensive anti-trust laws, gaps remain in enforcement when it comes to an industry such as fashion and luxury.

Firstly, the relevant market definition problem remains unsolved. The dismissal of the Hermès class action did not vindicate Hermès on the merits, it exposed a fundamental procedural weakness in how anti-trust law approaches luxury goods. The court’s difficulty in accepting the plaintiffs’ market definition reflects a deeper doctrinal gap. Anti-trust law has no settled methodology of defining markets where desire, not function or utility, determines the value. Until courts or legislators address this, luxury brands will continue to exploit the ambiguity as a shield.

Secondly, the “luxury exception” risks becoming a loophole. Both United States and European Union jurisprudence have, in different ways, accommodated brand prestige. It has been used as a legitimate justification for restrictive practices, and while this is not inherently unreasonable, it currently operates without any clear boundaries. At what point does protecting brand identity become weaponising it against the consumers. The law does not yet have a satisfying answer and that disproportionately favours powerful market players.

Finally, the legal victory of Hermès was a victory of procedure over principle. Online debates have been charged over the lawsuit. Many accept that there exists restrictive access to the Birkin bag by having a selection procedure based on customer purchase history. Others find it completely justified for a luxury brand to decide which customers get to access to their most coveted products.

Anti-trust law, as it stands, was not built around the fashion and luxury world. Whether it evolves to meet that world is the question legislators and courts must confront.

CONCLUSION

Anti-trust law has been and will remain to be the foundation on which ethical and fair market practises are built upon. However, flexibility and ability to adapt to a given situation is where a statute is really tested. The existing frameworks must evolve to confront the economic realities of exclusivity in the world of luxury. As Miranda Priestley in the Devil wears Prada understood better than any court, fashion is not just a business, it is identity. Hermès, in protecting that identity, is perhaps not entirely wrong. But neither were the consumers left outside the door. The law here is not picking the wrong side. It is not yet being sophisticated enough to strike a balance between the two.

REFERENCE(S):

Statutes and Legislation