Document Type

Article

Publication Title

New York Law School Journal of International and Comparative Law

Publication Date

1983

Abstract

Although it has the appearance of benefiting the consumer, the phenomenon of gray market goods is, for the most part, a species of unfair competition. Where an exclusive distribution contract between foreign and domestic entities enhances interbrand competition and satisfies a rule of reason analysis, it should be considered a protectable property interest. There is little justification for permitting gray market imports to interfere with that interest by taking advantage of the good will associated with the distribution, marketing, warranties and servicing provided by the United States distributor. The antitrust goal of promoting long-run consumer interests is not advanced by conduct which misleads consumers as to warranties and servicing, by false advertising and by disrupting distribution systems geared towards increasing interbrand competition. This type of conduct exceeds the desirable bounds of competitive behavior. The competitive process suffers unless there is a commercial environment amenable to efficiency and progress. To the extent that gray market goods impede the incentive for vigorous interbrand competition,they imperil this process.

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