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Pandora jewellery in hot water over Alex and Ani

In what can only be described as an unusual move, Pandora has taken steps to prevent its retailers from simultaneously carrying jewellery from US newcomer Alex and Ani.

Brien Winther, president of Pandora Australia and New Zealand, has advised the brand’s retail stockists that, “Pandora would not consider allowing you to distribute Alex and Ani products from your store whilst you are an authorised Pandora retailer.”

In an email, headed ‘Competing products’, sent on Monday night, Winther reminded stockists about the terms and conditions of the Pandora Authorised Retailer Agreement.

Winther’s email first explained that it was directed to holders of a current Pandora agreement and went on to read, “As you may have heard, Alex and Ani is entering the Australian jewelry [sic] market. Under the terms of your Pandora Authorised Retailer Agreement you must not sell any products that could reasonably be regarded as Competing Products of Pandora Jewelry unless of course Pandora has previously given you written approval to do so.

Brien Winther, Pandora Australia president
Brien Winther, Pandora Australia president

“Please note that as Alex and Ani is a Competing Product Pandora would not consider allowing you to distribute Alex and Ani products from your store whilst you are an authorised Pandora retailer.”

The email came as a shock to many in the industry with reports of stores calling Pandora to complain, especially given it was only announced last week that the popular US-based Alex and Ani would launch in Australia and New Zealand.

Jeweller reported last Tuesday that former Pandora Australia president Karin Adcock would return to the jewellery industry having secured the exclusive distribution rights to Alex and Ani.

Adcock became aware of Pandora’s position on her new range immediately after Winther’s email was sent at 5.20 pm.

“I was very surprised and disappointed by the Pandora letter because there are other very similar brands like Thomas Sabo and Endless Jewelry already sitting alongside Pandora [in-store] and Pandora has no problems with these brands being sold next to Pandora,” she stated.

Karin Adcock, House of Brands CEO
Karin Adcock, House of Brands CEO

Adcock said she was even more confused by Pandora’s action because the Alex and Ani range was nothing like Pandora. “Alex and Ani is an eco-friendly jewellery concept made from recycled brass and could not be considered a competitive product because Pandora is sterling silver,” she explained, highlighting the other products that are similar to Pandora.

Background reading: Jeweller's Hits & Misses

When asked about this point and why Pandora had not acted on products similar to Pandora such as Endless, Thomas Sabo, Nikki Lissoni and Chrysalis, Winther said, “every situation is different”.

Adcock believes that the Pandora and Alex and Ani products are quite dissimilar, adding that the only ‘competition’ she could see was for the consumer dollar.

Winther told Jeweller that Australia was taking a lead from the US where Alex and Ani was seen as a direct competitor to Pandora.

“We [Pandora] are not saying that our retailers can’t stock Alex and Ani, we are simply saying that under our authorised retailer agreement, you cannot sell any competing products so if you want to stock Alex and Ani, you can’t have Pandora.”

Legalities

Jeweller understands that at least one retailer has already referred the matter to the Australian Competition and Consumer Commission (ACCC) for a breach of the Consumer and Competition Act 2010.

Section 47 of the Act deals with exclusive dealing, which is broadly described on the ACCC’s website as: “Exclusive dealing occurs when one person trading with another imposes some restrictions on the other’s freedom to choose with whom, in what, or where they deal. Most types of exclusive dealing are against the law only when they substantially lessen competition, although some types are prohibited outright.”

The ACCC website mentions one type of exclusive dealing, ‘full line forcing’, whereby a supplier refuses to supply goods or a service unless the intending purchaser agrees not to buy goods of a particular kind or description from a competitor.

A solicitor experienced in this area told Jeweller, “Whether the refusal to supply will result in a ‘substantial lessening of competition in the relevant market’ is not a simple test and involves many things.” He added that the ACCC also indicates, “As a general guide, the more exclusive the product and the more powerful the supplier, the more likely it is that the competition will be affected.”

The solicitor also pointed to Section 46 – Misuse of market power – which is described as, “A business with a substantial degree of power in a market is not allowed to use this power for the purpose of eliminating or substantially damaging a competitor or to prevent a business from entering into a market.”

It should be noted that having market power is not itself unlawful; however, to determine whether there has been a misuse of market power, the courts will consider three questions:
• Does the company have substantial market power?
• Is it taking advantage of that power?
• Is it using the power for an illegal purpose?

Winther said he was unaware that the matter had been referred to the ACCC and could not offer comment. Meanwhile Adcock said the matter had already been referred to her legal advisors.

More reading 
Pandora private and confidential email
Adcock launches Alex and Ani in Australia










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Thursday, 12 December, 2019 09:20am
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