Lands' End Takes Guarantee Dispute to EU
The case was brought several years ago by a German consumer protection group that charged the guarantee violated a 1932 law limiting discounts and premiums retailers were allowed to offer customers.
The plaintiff charged the guarantee was a separate product provided on top of the apparel purchased and therefore in violation of the 1932 law.
Lands' End won in lower court, but lost on appeal with Germany's highest court finally refusing last year to hear the case and thus letting the appellate court ruling stand that allows Lands' End to offer the guarantee but not to advertise it.
The company went to Brussels because it launched a German Web site last October that can be accessed from other countries, including Austria, Switzerland, Belgium, Luxembourg and the Netherlands where German is spoken.
Moreover, the company's overall Internet operation is run out of the United Kingdom and established under British law, which does not oppose an unconditional guarantee.
The European Union's recent e-commerce directive specifically makes country of origin law applicable in all Web-based transactions so that under EU rules British law would apply.
Under German rules, Landsend.de, the German Web site, would have to set up a second site aimed at German speakers outside Germany to advertise its guarantee.
Lands' End's complaint argues that German law now violates European law and that in any dispute European law is to prevail. "The EC will now decide whether to accept our complaint," marketing director Frank Kriegl said.
"That will take six months. Then, if the EC accepts our complaint, it will make an official inquiry asking the German government to state its position.
"If that reaction is negative or reaction to the request is declined, odds are very good that the EC will take the case to the European court of justice. That will take another two years."
But Kriegl believes pressure from retailers is rising to have the law rescinded, allowing German merchants to compete more effectively with foreign competition.
The ministries of economics and of justice have "let it be known," Kriegl said, that "they are anxious to rescind the law and may do something about it as early as next year.