A Wren Says

It’s often referred to as the Hermes game. If you watch enough luxury influencer content, invariably you’ll end up the corners in the internet where super wealthy purse obsessed vloggers bemoan all the hurdles hey have to jump through to buy the coveted Birkin Bag. You have to go to this store. Make sure you buy the right items. What are the right items? Go to this store not that one. Do all the right things to just maybe one day get the chance of buying your prized possession. Many on the internet called that foolish. But perhaps the court of law might call it illegal.

The question will be put to the test soon enough. A complaint was filed in San Francisco against Hermes for its practices. While there are two named plaintiffs, the team wants to make this a class action suit, opening this up to those who consider themselves harmed across the U.S. They claim Hermes is in violation of antitrust laws by unfairly restricting competition and using unjust consumer practices.

Think about it this way (which is surely how the plaintiffs lawyers would want you to), when you make clients play the Hermes game, you tell them they have to buy other items to be considered to buy a Birkin Bag. That means you drive up your sales on items that they would have never bought otherwise. Not only does that mean the consumer has to buy things they don’t want, but it means they have to buy them from you and not your competitors. When you force purchase of one item to get a separate item, it is referred to as an illegal tying agreement.

You might think that this would be a cut and dry case. I mean, evidence of the practice being widespread is all over social media. People know that Hermes does this all the time. But I honestly think it won’t be that simple. For starters, there doesn’t seem to be consistent, cut and dry method of looking at cases like this. And usually, there is a clear list of items that are required. You buy my nail gun, well now you can only buy my nails. Will the courts say that building a purchase history of the items of your choice is the same as a tying agreement?

The other issue is that sometimes the courts decide there is a legitimate reason to bundle items, and other times they say it stifles competition. Will Hermes base their defense on the need to protect their most loyal customers from predatory resellers? Or perhaps because of the how limited in quantity the product is, and will stay given how they produce it, does the game make good sense because it helps them better control demand for a limited supply? Or will this just expand how courts view tying agreements and bundling? Perhaps, access to exclusive products for loyalty members would also be questioned.

With just a cursory reading of the complaint that was filed, it seems the plaintiffs are focusing their argument on restriction of competition instead pulling in more of the consumer protection side. I imagine then, that Hermes could somehow demonstrate that they don’t have sufficient market power, because they are not the most lucrative luxury house in the game. (Which will probably feel weird, to argue that your competitors are better than you.)

I don’t believe there has ever had a case like this, with such a clear luxury good. This line would drive a knife in the heart of purse collectors:

Hermès is well known for its famous Birkin and Kelly handbags (collectively “Birkin handbag”), which are exclusive Hermès design.

Gasp! How dare you lump together the Birkin and Kelly as if they are the exact same? But to the court, they probably are. Will the jury, and everyone else in the court, be distracted by how ridiculous this might feel, sitting there for days listening to arguments about why rich people should be able to buy whatever super expensive thing they want? The previous cases have items more important for everyday life. Of course, it’s wrong to make important healthcare items conditional on buying your other products. But how will the courts consider this bundling of unnecessary luxury goods?

If you can’t tell, I don’t know how this case will go, if it actually goes through to trial. If Hermes loses this case, what will be their next move? Will they make Birkins unavailable in U.S. stores as a response? But if Hermes wins, how will that change luxury approaches. Will more brands be emboldened to start “games” of their own. Time will tell, but you better believe I will be looking forward to the outcome of this.