Hermès’ Birkin policy: Exclusive, but not illegal, says a US District Court
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Sep 30, 2025, 9:17:02 AMSep 30
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Home / antitrust law / Birkin bag / fashion law / Hermès / Söğüt Atilla / tying arrangement / unfair competition / Hermès’ Birkin policy: Exclusive, but not illegal, says a US District Court
Hermès’ Birkin policy: Exclusive, but not illegal, says a US District Court
On 17 September last, the US District Court for the Northern District of California decided that the tying arrangement operated by Hermès International and Hermès of Paris (Hermès) in order to purchase Birkin bags does not violate US antitrust laws.
If you are one of those who feel uncomfortable with Hermès’ exclusive or rather exclusionist practice, the good news is that you are not alone. Several claimants filed a lawsuit in California, US, claiming that this practice was in breach of sections 1 and 2 of the Sherman Act, 15 USC sections 1 and 2, as well as certain California state laws. Bad news, however, is that the court did not find Hermès’ tying arrangement to qualify as an injury to competition. Instead, it reiterated that businesses can freely decide the “manner in which they do business absent [such] injury”, and accordingly rejected the claimants’ submissions.
The first such requirement is the presence of two or more products tied together at the point of sale. Although this is clearly the case with the sale of Birkins, it is not, in itself, sufficient to establish that such attachment is harmful to competition.
The second requirement is the possession of market power in the market of the tying product by Hermès, which should be capable of forcing customers to buy the tied product too. The claimants identified the relevant market for the tying product as “elitist luxury handbags in the United States” and attempted to demonstrate Hermès’ power in that market by reference to some articles and papers dated early 2010s. In addition to being out-of-date, these documents were primarily on the consumption of luxury goods in general, and thus, not decisive for establishing Hermès’ market power in elitist luxury handbags in the US. Moreover, claimants accused Hermès of possessing 60-75% of the elitist luxury handbag market and thus, enjoying a dominant position on the said market. However, cautioning the claimants, the court emphasised that having a substantial or even a dominant position in a specific market is not per se forbidden or evidence of an anti-competitive behaviour.
This was a crucial point, though not a surprising or an inapparent one. Without any behaviour suggesting that a company is abusing its dominant market share, it cannot be held liable for merely having secured a large proportion of a specific market. In other words, it cannot and should not be a crime to successfully address the majority of the customers in any given market, as long as that dominant participant does not engage in unfair competition practices, which harm or negatively affect the commercial activities of other participants or prevent the new entrants from joining that market. Competition law, in essence, is aimed at preserving and promoting competition in the market. And this competition can only be kept alive by allowing room for rivalry and some form of contests between brands offering similar goods or services. One company with a large share in a market, might trigger the production of higher quality products by the smaller ones, increasing the overall appeal and quality of goods available in that market, which would, in turn, not only benefit a particular company, but the whole market, including consumers.
The third and final requirement is that the tying arrangement affects a substantial volume of commerce in the market for the tied product. Claimants submitted that the said market consists of “everything from ‘scarves and shawls, ready to wear clothing, footwear, watches, jewellery, fragrancies, accessories (including hats, gloves, ties, and sunglasses)’ to ‘home goods such as table wear, furniture, blankets, and decorative objects like vases and trays’”. Besides criticising “lumping such a hugely diverse array of … products into a single market” (emphasis added), the court could not identify any supporting evidence that Hermès’ tying arrangement had harmed the competition for the goods listed above.
Defining the market broadly seems to have resulted to the detriment of the claimants. In an attempt to cover each product Hermès offers for sale (as any one of them can be the tied product), they sought to create an unduly expansive market. Yet, they overlooked the fact that the larger the market got, the more companies inevitably counted as participants. This, in turn, likely made Hermès’ share in that market appear smaller, and reduced the likelihood that its tying arrangement would affect a substantial volume of commerce in that market. Although this error may be attributed to the claimants, it might also be the case that Hermès – well aware of the pitfalls of antitrust law – tailored its tying arrangement by linking the purchase of Birkins not to any particular product, but to any other product in its inventory, thereby preventing the claimants from identifying a narrower relevant market.
As the claimants failed to support that Hermès’ market power in luxury handbags is used to force consumers to purchase other fashion items from it, or that its tying arrangement results in impacting a substantial volume of commerce in the market for the tied products, the court dismissed the case with prejudice.
According to Mr Dumas, Hermès wishes to create a connection with its customers before entrusting them with precious Birkins. This way, it ensures that those who buy Birkins will use those bags themselves, rather than reselling them on the secondary market – which grows each year due to the high demand for Birkin bags. He also explained that Birkins are handmade to meet the brand’s high-quality standards, rather than being mass-produced by machines, which allegedly yield lower quality bags. Moreover, he emphasised that, as the raw material of Birkins, they only use high-quality leather that would otherwise be discarded. Although this latter point was made to avoid some challenging questions regarding sustainability and animal rights, all these constraints together limit the number of Birkins that can be produced each year. According to Dumas, this scarcity inevitably requires Hermès to select which customers can purchase a Birkin. And instead of following a first-come, first-served basis, the company applies this tying arrangement to choose the most deserving and eligible customers.
Whether one finds these justifications convincing or not, it seems clear that – at least in the US – Hermès is not violating competition rules by allowing only a limited number of customers to buy its Birkin bags. There are certain behaviours that are deemed anti-competitive, abusive, or harmful to competition by the law, and as long as companies refrain from committing them, they can set their own policies and play the game with their own rules. Even if it means that this Kat still has a long way to go before getting her first Birkin…
Image credit: Gemini
Background
As many fashionista readers would know, it takes some time, effort, and a considerable amount of investment in Hermès to get a Birkin bag. The brand, as a policy, requires all potential buyers of Birkins to first buy its other products, such as scarves, shoes, clothes. Only after demonstrating some degree of loyalty to the brand, one can qualify for the status of purchasing a Birkin, which is produced in limited numbers each year, meaning that a further wait would most likely be on the horizon.
If you are one of those who feel uncomfortable with Hermès’ exclusive or rather exclusionist practice, the good news is that you are not alone. Several claimants filed a lawsuit in California, US, claiming that this practice was in breach of sections 1 and 2 of the Sherman Act, 15 USC sections 1 and 2, as well as certain California state laws. Bad news, however, is that the court did not find Hermès’ tying arrangement to qualify as an injury to competition. Instead, it reiterated that businesses can freely decide the “manner in which they do business absent [such] injury”, and accordingly rejected the claimants’ submissions.
Court decision
After explaining that a tying arrangement is a practice of conditioning the sale of one product (called the tying product, which is the Birkin in the case at hand) on the buyer’s purchase of another product (called the tied product, which can be any other Hermès product), the court elaborated on the necessary requirements of an illegal tying arrangement.The first such requirement is the presence of two or more products tied together at the point of sale. Although this is clearly the case with the sale of Birkins, it is not, in itself, sufficient to establish that such attachment is harmful to competition.
The second requirement is the possession of market power in the market of the tying product by Hermès, which should be capable of forcing customers to buy the tied product too. The claimants identified the relevant market for the tying product as “elitist luxury handbags in the United States” and attempted to demonstrate Hermès’ power in that market by reference to some articles and papers dated early 2010s. In addition to being out-of-date, these documents were primarily on the consumption of luxury goods in general, and thus, not decisive for establishing Hermès’ market power in elitist luxury handbags in the US. Moreover, claimants accused Hermès of possessing 60-75% of the elitist luxury handbag market and thus, enjoying a dominant position on the said market. However, cautioning the claimants, the court emphasised that having a substantial or even a dominant position in a specific market is not per se forbidden or evidence of an anti-competitive behaviour.
This was a crucial point, though not a surprising or an inapparent one. Without any behaviour suggesting that a company is abusing its dominant market share, it cannot be held liable for merely having secured a large proportion of a specific market. In other words, it cannot and should not be a crime to successfully address the majority of the customers in any given market, as long as that dominant participant does not engage in unfair competition practices, which harm or negatively affect the commercial activities of other participants or prevent the new entrants from joining that market. Competition law, in essence, is aimed at preserving and promoting competition in the market. And this competition can only be kept alive by allowing room for rivalry and some form of contests between brands offering similar goods or services. One company with a large share in a market, might trigger the production of higher quality products by the smaller ones, increasing the overall appeal and quality of goods available in that market, which would, in turn, not only benefit a particular company, but the whole market, including consumers.
The third and final requirement is that the tying arrangement affects a substantial volume of commerce in the market for the tied product. Claimants submitted that the said market consists of “everything from ‘scarves and shawls, ready to wear clothing, footwear, watches, jewellery, fragrancies, accessories (including hats, gloves, ties, and sunglasses)’ to ‘home goods such as table wear, furniture, blankets, and decorative objects like vases and trays’”. Besides criticising “lumping such a hugely diverse array of … products into a single market” (emphasis added), the court could not identify any supporting evidence that Hermès’ tying arrangement had harmed the competition for the goods listed above.
Defining the market broadly seems to have resulted to the detriment of the claimants. In an attempt to cover each product Hermès offers for sale (as any one of them can be the tied product), they sought to create an unduly expansive market. Yet, they overlooked the fact that the larger the market got, the more companies inevitably counted as participants. This, in turn, likely made Hermès’ share in that market appear smaller, and reduced the likelihood that its tying arrangement would affect a substantial volume of commerce in that market. Although this error may be attributed to the claimants, it might also be the case that Hermès – well aware of the pitfalls of antitrust law – tailored its tying arrangement by linking the purchase of Birkins not to any particular product, but to any other product in its inventory, thereby preventing the claimants from identifying a narrower relevant market.
As the claimants failed to support that Hermès’ market power in luxury handbags is used to force consumers to purchase other fashion items from it, or that its tying arrangement results in impacting a substantial volume of commerce in the market for the tied products, the court dismissed the case with prejudice.
Comment
One might feel that there must be something wrong or illegal with selling Birkin bags solely to the highest-paying, most loyal customers and excluding everyone else from experiencing the joy – or perhaps the reputation – of owning a Birkin. Despite having heard what Axel Dumas (the CEO of Hermès) has to say in defence of their tying arrangement, at an event held by The Oxford Union on 11 March 2025, this Kat remains slightly annoyed by the practice.According to Mr Dumas, Hermès wishes to create a connection with its customers before entrusting them with precious Birkins. This way, it ensures that those who buy Birkins will use those bags themselves, rather than reselling them on the secondary market – which grows each year due to the high demand for Birkin bags. He also explained that Birkins are handmade to meet the brand’s high-quality standards, rather than being mass-produced by machines, which allegedly yield lower quality bags. Moreover, he emphasised that, as the raw material of Birkins, they only use high-quality leather that would otherwise be discarded. Although this latter point was made to avoid some challenging questions regarding sustainability and animal rights, all these constraints together limit the number of Birkins that can be produced each year. According to Dumas, this scarcity inevitably requires Hermès to select which customers can purchase a Birkin. And instead of following a first-come, first-served basis, the company applies this tying arrangement to choose the most deserving and eligible customers.
Whether one finds these justifications convincing or not, it seems clear that – at least in the US – Hermès is not violating competition rules by allowing only a limited number of customers to buy its Birkin bags. There are certain behaviours that are deemed anti-competitive, abusive, or harmful to competition by the law, and as long as companies refrain from committing them, they can set their own policies and play the game with their own rules. Even if it means that this Kat still has a long way to go before getting her first Birkin…
Image credit: Gemini
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