The owner of MAC Cosmetics, Estee Lauder, has accused Target of selling fake Bobbi Brown makeup alongside counterfeit MAC products in the latest twist in the ongoing court case between the cosmetics company and retail giant.
Estee Lauder commenced legal action in the Federal Court a month ago alleging that products sold under the MAC brand in Target stores and online are counterfeit. The matter was back before the court yesterday.
The cosmetics company has now sought to include Bobbi Brown in its action. Target has removed the MAC and Bobbi Brown products from sale in its stores and online and has cancelled all orders for them.
Target spokesperson Megan Lane told SmartCompany that Estee Lauder’s claims are just allegations at this stage and in response Target has been conducting extensive tests on the products.
Lane says Target will gather more information and complete analysis of the test results that can then be submitted to the court.
“Target acted in good faith when we acquired these products in order to provide our customers with genuine products at substantially lower prices,” she says.
“Bringing genuine premium products to our customers at a lower cost than other retailers demonstrates that we are a company that is prepared to put the interests of customers first when it comes to removing unnecessary costs to provide genuine value.”
Richard Hoad, partner at Clayton Utz, told SmartCompany that Target is claiming it believed the products were genuine.
“It is certainly a risk when parties seek to obtain supply from grey imports which are not the licensed distributor,” he says.
He says counterfeit products are “a growing issue” in Australia.
“I think particularly with retail competition and online sales growing there has been more pressure on price for retailers, so they are looking to obtain supplies at the cheapest possible price and that entails risk that you might end up with product that is not genuine,” Hoad says.
He says there are potential issues about whether the product is even made for the trademark owner or whether it is a genuine product but not approved for sale in Australia, as was the case with Greg Norman branded products sold by Paul’s Warehouse.
“The government a number of years ago looked to change the laws in Australia to allow more parallel importing and opened up this can of worms; even though the product might appear genuine you run the risk of it not being so,” says Hoad.
“It is a bit of a hot topic and is probably going to be increasingly so with the tough economic environment for retail.”
The case has been postponed to November 9 for a case management conference.
SmartCompany contacted Estee Lauder for comment but did not receive a response before publication.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
