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HP gets tough with grey market dealers

Takes UK reseller to court

HP EMEA is turning detective in its attempts to stamp out the unauthorised sale of imports.

As of yesterday HP is running reseller spot checks and distie audits to stamp out the grey market in the region. And it won’t hesitate to use the law courts against resellers who “violate contractual terms”. The company says it is taking legal action against one unnamed UK reseller for breach of contract and warns it has other cases under review.

According to HP these tough new measures show its commitment to “making the channel economically viable in the long term by clamping down on the illegal use of HP’s name and sale of its products through unauthorised channels”.

Of course, importing cheaper kit from outside the EU may be exactly what it takes to improve the bottom line of the HP product reseller. Vendors don’t like grey imports in their territories, because they don’t register the sale and they can end up with angry customers when they reject their calls for support.

Trouble is, the likes of HP and other members of the Anti Gray Market Alliance muddy the waters by using “grey” as a catch-all term, encompassing counterfeit goods and the misrepresentation of goods sold (e.g. software priced for the academic market sold abroad to businesses) and straightforward criminality (e.g. resellers booking grey sales as legit to claw back co-op marketing funds). But there is a legitimate grey market too.

All too often, vendors employ restrictive distribution policies to charge different prices in different countries. It is entirely legitimate for companies to go to the grey market to exploit this arbitrage opportunity – so long as the transactions take place entirely within the EU.

Indeed it is illegal under EU law to use restrictive distribution to thwart a common market, as many industries have found to their great cost when the fines rain down on them. The grey market should be welcomed as a means for companies to liquidate excess inventory quickly, and for buyers to get product more cheaply. ®

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