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Lawsuit against Birkin bag maker Hermès is ‘a nonstarter’ in antitrust law, Northeastern expert says

A person holding an orange retail Hermes bag.
Hermès should beat an antitrust lawsuit concerning Birkin handbags, Northeastern expert says. Photo by Anthony Behar/Sipa via AP Images

The price tag isn’t the only barrier shoppers have to overcome to buy the famed Birkin handbag, according to a lawsuit filed in San Francisco. 

Rather, plaintiffs allege that luxury retailer Hermès is violating antitrust law by making customers buy other goods at the retailer’s stores to qualify for buying a Birkin. 

Northeastern University law expert John Kwoka says that the case is “probably a nonstarter on antitrust grounds.”

“I just don’t think this is going to go anywhere,” says Kwoka, the Neal F. Finnegan distinguished professor of economics.

Headshot of John Kwoka.
12/03/21 – BOSTON, MA. – John Kwoka, Neal F. Finnegan Distinguished Professor of Economics, doesn’t see much of a case against luxury retailer Hermès. Photo by Matthew Modoono/Northeastern University

Birkin handbags, which are handcrafted from leather by artisans in France, are named after the late actress Jane Birkin and can cost well over $100,000. New bags are only sold at Hermès’ retail stores. 

But the lawsuit, filed in March, alleges shoppers must have “a sufficient purchase history of Hermès’ ancillary products … before they will be given an opportunity to purchase a Birkin bag.” As such, Hermès “unlawfully tied” the sale of Birkin handbags to the sale of other products, in violation of antitrust laws, the lawsuit alleges. 

Kwoka doesn’t see much of a case. 

“You do have to purchase something else,” Kwoka says. “But in order for that to be anticompetitive in the meaning of both economics and — roughly speaking — the law, you have to prove two other things, and the plaintiffs here seem altogether unlikely that they’re going to be able to do that.”

First, plaintiffs have to prove that the Birkin bag has market, or monopoly, power. 

That’s tough, Kwoka says. 

“Hermès sells 10 other expensive bags, so it’s not the only high-price bag that it sells,” Kwoka says. “Plus you can buy Gucci and Ralph Lauren and Ferragamo and some other bags, which are also on the top 10 list of exclusive bags.”

And no, the distinctness of a Birkin bag does not mean it has market power.

“There’s only one Big Mac, too,” Kwoka says. “But that does not mean it has monopoly power.  A product has to be more distinctive than that.”

Plus, he continues, there are also Burger Kings, Wendy’s and other fast food alternatives. 

“For Birkin bags, there are alternatives,” Kwoka says. Just walk down Boston’s Newbury Street, he adds. 

Secondly, plaintiffs have to prove that there’s harm to competition in the tied market — in other words, the belts, shoes, scarves, etc. that a customer buys in order to qualify for a Birkin handbag would have to cause harm to competitors in those marketplaces as well. 

“Let’s be real,” Kwoka says. “There’s no plausible harm that in order to buy a Birkin bag, you have to buy a Hermès pair of shoes. There’s no allegation here that there’s harm to competitors and shoemakers by virtue of the customers being forced — that seems like way too strong a term — to buy shoes as a qualifying purchase in order to get access to the Birkin bag.”

Kwoka said the Birkin case was similar to accessing benefits through membership in a club — maybe a Taylor Swift fan club that gives you access to exclusive tickets, or a country club where you can play golf. 

“It’s a nuisance and people don’t like it — they have to spend more money than the $100,000 in order to get the Birkin bag,” Kwoka continues. “But that’s a question about Hermès’ business strategy rather than the antitrust issues.”