Hermès Slapped with Lawsuit! Could Rolex's Waitlist Be Illegal Too? 

I am a California attorney with antitrust experience. As you suggested, the threshold substantive legal question is proof of the anticompetitive use of market power in the tying product. This analysis requires that the relevant market be defined and that the anti-competitive effect be demonstrated. This is easy to allege and hard to prove. As Abbott and Wright observe in Hylton, Keith N. Antitrust Law and Economics. Elgar, 2010: “bundling would not constitute unlawful tying if the purchaser simply desires to purchase less than the entire bundle of products offered for package sale at a reduced price. Rather, to prevail on an unlawful tying claim, the plaintiff would have to show an exclusionary effect on other sellers as a result of plaintiff’s thwarted desire to purchase substitutes for one or more items in the bundle from other sources that harms competition in the market for the tied product.” This means that the plaintiff needs to prove that sellers of the tied products (the stuff you don’t want so that you can get the stuff you do want) are harmed. The legal standard is not “I can’t buy what I want at MSRP.” It is also worth noting that class action suits are not easy. The class must be certified. The defendant will fight the certification of the class. If the class is certified, it will then move to the settlement phase. At this point the defendant will use the class to get rid of all the similarly situated plaintiffs by agreeing to the largest class possible and then proposing a settlement which includes minor changes to business practices, a lot of money for the plaintiff’s attorneys, a spiff for the representative plaintiff and useless coupons for class members. We all ignore these class action settlement post-cards in the mail because claiming the coupon is too much trouble and opting out, thereby preserving your rights, is merely an opportunity to hire an attorney. The recent settlement of the real estate brokerage industry is the rare exception where an anti-trust class action suit changes an industry and gets meaningful damages for the class. As a matter of economics, the core issue is that there are only two ways to allocate products -- by price or by by quantity. Looking at watches, Rolex could decide to let retailers sell Submariners at the market clearing price, which is what the goods trade for in the secondary market. This would eliminate the perceived shortage of Submariners. It would also eliminate flipping. You see this with car manufacturers that let dealers set their own retail prices - the dealer adds the "Additional Dealer Mark-Up" to the hot cars, thereby selling new cars at the market clearing price. And everyone complains that the dealer is gouging them, when, in fact, the dealer is merely allocating by price instead of favoritism. Instead of allowing "Additional Dealer Mark-Up", Rolex is enforcing MSRP under the Colgate Doctrine. Rolex has decided to set the MSRP below the market clearing price, thereby creating a shortage (at MSRP demand > supply). This shortage means that the retailer must allocate the products by some system other than price. And what do retailers do? They use a system of favoritism in which they reward what they perceive to be good customers. In essence, the hot watches become a rewards program for good customers. And the fact of the matter is that if what you really want is a Submariner, you are dollars ahead buying a Submariner for a premium in the secondary market instead of losing money on watches you don't want in order to get the one watch you want at MSPR. It is also worth noting that for luxury goods makers, some customers are worth more than money -- they are advertising assets. Allocating a scarce item to a famous person to display in public is better for the brand image than selling it to me at any price.

I am not a lawyer, but Rolex and its AD’s walk up to the line of illegality without crossing it. The reps are trained to never say buy this and we guarantee you a Rolex of your choice. I had the owner of an AD tell me because of Rolex supply & demand, it comes down to your purchase history with a specific AD to determine if you get the privilege to buy the Rolex you want. I wanted to buy a GMT and after a 30 minute conversation with the sales rep, I was offered a white gold Pepsi at $40,000+. I respectively walked out. It is cheaper to buy the Rolex you want on the grey market. As far as suing Rolex for illegal sales tactics, Rolex will show it can’t control its agents/AD’s sales practices. The prosecution would be more successful suing individual AD’s and trying to discover why they force a customer to buy stuff we don’t want. In the end, I no longer go into my local AD’s to avoid playing the Pandemic Games. One day the pendulum will favor the side of collectors who want to buy a Rolex. Until then the AD’s can sell Rolex anyway they want and get away with it!

Consumer protection used to be a thing. Now politicians are not concerned about the consumer, just “campaign contributions”.

Thanks for sharing your insights. My take is that unlike Hermes, Rolex mainly does not sell watches directly to consumers but through the AD network, except for Bucherer. To make real disruption to their Modus operandi, other avenues needs to be explored.

I was never pressured to buy something else. But things got a little easier when I did buy lesser brands at one AD. But when I went to another AD, they got me a Sub with only one purchase history. But that place was also involved in a retail lawsuit similar to this situation. Interesting indeed

“Forced” to buy an unnecessary luxury good? LMFAO

Wouldn’t the “gray market” be considered an option in the Rolex scenario?

It’s about time that these selling practices came under legal action . i am surprised that it took this long .

To be completely honest, I feel like Tudor kinda protects Rolex. To a degree, with Tudor there is no real need for one to buy a Rolex, because functionality and finishing on Tudor models is already terrific. I kinda feel like Rolex have always been aware of this and have Tudor as a result. It could trickle down all the way to why Tudor commissioned Kenissi. I have a Black Bay 58 Navy. Is it as well built as a 124060? No. Does it have a ceramic bezel? No. Does it look as attractive as the 124060 (subjective)? Probably not. Does it have a 70h power reserve? Yes. Does it have a free-sprung balance and an anti-magnetic hairspring? Yes. Is it regulated better than COSC? Yes. The 124060 is a better watch and I’m not going to lie and say that I wouldn’t take one over my Black Bay. However, rationally, the Black Bay 58 is no worse of a watch than the 124060. Rolex models just have that cherry on top.

This has nothing to do with Rolex S.A. It’s all about the authorised dealer.

I think the only way this type of lawsuit can proceed to win is to prove that the brand name is intentionally withholding stocks to create a false sense of scarcity.

Unlike Hermes, the vast majority of Rolex AD’s aren’t owned by the brand. It is the individual AD’s that are doing the tying, not the brand itself. Rolex may provide high level allocation directives to AD’s (“sell more to young buyers” etc), but it literally has no control over how individual watches are allocated to consumers so I’m not sure how applicable the Hermes suit is to Rolex. But Rolex owns Bucherer, and they may be doing the anti-competitive tying. Well, Bucherer is in the retail business so there are plenty of other consumer choices to shop at other AD’s. I’m no fan of Rolex; I wish they get sued to the ground. But this anti-trust suit is not it. I think the French government’s ruling against the brand has more potential to alter the watch market than this anti-trust suit filed by entitled California handbag shoppers.

I see these lawsuits going nowhere. The problem is there is no victim that any law agency will care about. I cannot walk into the Ferrari dealer and buy an SF90. Boohoo for me that I cannot go buy a $1mm car or $500k purse? Waste of time for any law agency to help billionaires get a purse. The scarcity of Rolex products is, sadly, why we want them. They are not the best watch for the price, but the scarcity is a big part of the allure. If we can all just walk in and buy any Rolex we want, the brand cache will fall dramatically and so will our desire for them. It's a circular reference.

Nothing will happen, ADs are not legally obligated to release their waitlist. And Hermes owns their stores, Rolex do not own the ADs.

This is a failed lawsuit, it’s annoying but it’s not wrong what they’re doing.

Wow ok, CBS News has now done a report on this: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-4_tam43HZUY.html