Grey Market
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A grey market or dark market (sometimes confused with the similar term " parallel market") is the trade of a commodity through distribution channels that are not authorized by the original manufacturer or
trade mark A trademark (also written trade mark or trade-mark) is a type of intellectual property consisting of a recognizable sign, design, or expression that identifies products or services from a particular source and distinguishes them from others. ...
proprietor. Grey market products (grey goods) are products traded outside the authorized manufacturer's channel.


Etymology

Manufacturers of computers, telecom, and
technology Technology is the application of knowledge to reach practical goals in a specifiable and reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in medicine, science, ...
equipment often sell these products through distributors. Most distribution agreements require the distributor to resell the products strictly to end users. However, some distributors choose to resell products to other resellers. In the late 1980s, manufacturers labelled the resold products as the "grey market". The legality of selling "grey market" products depends on a number of factors. Courts in the United States and in the EU make a number of assessments, including an examination of the physical and non-physical differences between the "grey market" and authorized products to determine whether there are material differences. The legality of the products oftentimes turns on this examination. In November 2016, the
Court of Appeal of England and Wales The Court of Appeal (formally "His Majesty's Court of Appeal in England", commonly cited as "CA", "EWCA" or "CoA") is the highest court within the Courts of England and Wales#Senior Courts of England and Wales, Senior Courts of England and Wal ...
confirmed a ruling in the case of ''R v C and Others'' that the sale of grey goods can be met by criminal sanctions under section 92 of the UK
Trade Marks Act 1994 The Trade Marks Act 1994 is the law governing trade marks within the United Kingdom and the Isle of Man. It implements EU Directive No. 89/104/EEC (The Trade Marks Directive) which forms the framework for the trade mark laws of all EU member state ...
, with a potential penalty of up to 10 years in prison. It is worth mentioning that the goods sold in this case were, in fact, counterfeit and infringed on trademarks; as such, people would consider these to be black market goods, rather than grey. The simple fact is that selling or reselling any products one has bought is not generally considered a crime, and most traders rely on their right to resale and thus trade.


Description

Grey market goods are goods sold outside the authorized distribution channels by entities which may have no relationship with the producer of the goods. This form of
parallel import A parallel import is a non- counterfeit product imported from another country without the permission of the intellectual property owner. Parallel imports are often referred to as grey product and are implicated in issues of international trade, ...
frequently occurs when the price of an item is significantly higher in one country than another. This commonly takes place with electronic equipment such as
camera A camera is an Optics, optical instrument that can capture an image. Most cameras can capture 2D images, with some more advanced models being able to capture 3D images. At a basic level, most cameras consist of sealed boxes (the camera body), ...
s.
Entrepreneurs Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values th ...
buy the product where it is available cheaply, often at retail but sometimes at wholesale, and import it to the target market. They then sell it at a price high enough to provide a profit but below the normal market price. International efforts to promote
free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econo ...
, including reduced
tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...
s and harmonised national standards, facilitate this form of
arbitrage In economics and finance, arbitrage (, ) is the practice of taking advantage of a difference in prices in two or more markets; striking a combination of matching deals to capitalise on the difference, the profit being the difference between the ...
whenever manufacturers attempt to preserve highly disparate pricing. Because of the nature of grey markets, it is difficult or impossible to track the precise numbers of grey market sales. Grey market goods are often new, but some grey market goods are
used goods Used goods mean any item of personal property offered for sale not as new, including metals in any form except coins that are legal tender, but excluding books, magazines, and postage stamps. Risks Furniture, in particular bedding or upholstere ...
. A market in used goods is sometimes nicknamed a
green market Green market products are previously owned products that have been previously used and put back into productive use. These products are often repaired, refurbished and recycled by brokers, resellers or the original manufacturer. They are suitable ...
. The two main types of grey markets are those of imported manufactured goods that would normally be unavailable or more expensive in a certain country and unissued securities that are not yet traded in official markets. Sometimes the term dark market is used to describe secretive, unregulated trading in
commodity futures In finance, a futures contract (sometimes called a futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset ...
, notably crude oil in 2008. This can be considered a third type of "grey market" not intended or explicitly authorised by oil producers. The import of legally restricted or prohibited items such as prescription drugs or firearms, on the other hand, is considered
black market A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by noncompliance with an institutional set of rules. If the rule defines the se ...
, as is the smuggling of goods into a target country to avoid import duties. A related concept is
bootleg Bootleg or bootlegging most often refers to: * Bootleg recording, an audio or video recording released unofficially * Rum-running, the illegal business of transporting and trading in alcoholic beverages, hence: ** Moonshine, or illicitly made ...
ging; the smuggling or transport of highly regulated goods, especially
alcoholic beverage An alcoholic beverage (also called an alcoholic drink, adult beverage, or a drink) is a drink that contains ethanol, a type of alcohol that acts as a drug and is produced by fermentation of grains, fruits, or other sources of sugar. The c ...
s. The term "bootlegging" is also often applied to the production or distribution of
counterfeit To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value tha ...
or otherwise infringing goods (also black market). Grey markets sometimes develop for
video game Video games, also known as computer games, are electronic games that involves interaction with a user interface or input device such as a joystick, controller, keyboard, or motion sensing device to generate visual feedback. This fee ...
consoles and titles whose demand temporarily exceeds their supply causing authorised local suppliers to run out of stock. This happens especially during the
holiday season The Christmas season or the festive season (also known in some countries as the holiday season or the holidays) is an annually recurring period recognized in many Western and other countries that is generally considered to run from late November ...
. Other popular items, such as
doll A doll is a physical model, model typically of a human or humanoid character, often used as a toy for children. Dolls have also been used in traditional religious rituals throughout the world. Traditional dolls made of materials such as clay and ...
s,
magnets A magnet is a material or object that produces a magnetic field. This magnetic field is invisible but is responsible for the most notable property of a magnet: a force that pulls on other ferromagnetic materials, such as iron, steel, nickel, ...
and
contraception Birth control, also known as contraception, anticonception, and fertility control, is the use of methods or devices to prevent unwanted pregnancy. Birth control has been used since ancient times, but effective and safe methods of birth contr ...
, can also be affected. In such situations, the grey market price may be considerably higher than the
manufacturer's suggested retail price The list price, also known as the manufacturer's suggested retail price (MSRP), or the recommended retail price (RRP), or the suggested retail price (SRP) of a product is the price at which its manufacturer notionally recommends that a retailer ...
, with unscrupulous sellers buying items in bulk for the express purpose of inflating the prices during resale, a practice called
scalping Scalping is the act of cutting or tearing a part of the human scalp, with hair attached, from the head, and generally occurred in warfare with the scalp being a trophy. Scalp-taking is considered part of the broader cultural practice of the tak ...
. Online auction sites such as
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became a ...
have contributed to the emergence of the video-game grey market.


Goods


Arcade games

Certain otherwise identical
arcade games An arcade game or coin-op game is a coin-operated entertainment machine typically installed in public businesses such as restaurants, bars and amusement arcades. Most arcade games are presented as primarily games of skill and include arcade v ...
are marketed under different titles, such as ''
Carrier Air Wing A carrier air wing (abbreviated CVW) is an operational naval aviation organization composed of several aircraft squadron (aviation), squadrons and detachments of various types of fixed-wing aircraft, fixed-wing and rotorcraft, rotary-wing aircr ...
''/''U.S. Navy'', ''
Mega Man ''Mega Man'', known as in Japan, is a Japanese science fiction video game franchise created by Capcom, starring a series of robot characters each known by the moniker "Mega Man (character), Mega Man". Mega Man (video game), The original game w ...
''/''Rockman'', and ''
Police 911 ''Police 911'', called in Japan and ''Police 24/7'' in Europe, is a series of light gun shooter arcade games. Konami released the first game in 2000. Unlike earlier light gun games, the game was unique for its motion sensing technology, sensi ...
''/'' Police 24/7''. When certain arcade games are first powered on, a warning message is shown such as “ is game is intended only for sale and use in (country/region)” and often, such a message is occasionally displayed while the machine is in an attract mode. One reason for these regional name variants is trademark issues. A company may not own the rights to a trademark in another country, where that trademark may be owned by an entirely different entity. Because of this, a different name must be used. These regional name variations may also be used to prevent the sale of bootleg arcade games, including those from Japanese versions.


Automobiles

Automobile manufacturers segment world markets by territory and price, thus creating a demand for
grey import vehicles Grey import vehicles are new or used motor vehicles and motorcycles legally imported from another country through channels other than the maker's official distribution system. The synonymous term parallel import is sometimes substituted. Car mak ...
. Although some grey imports are a bargain, some buyers have discovered that their vehicles do not meet local regulations, or that parts and services are difficult to obtain because these cars are different from the versions sold through the new car dealer network. Also, ensuring service history and mechanical condition for a vehicle purchased at a distance can be a problem. Many used cars come from
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
or
Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
, and are sold in other countries around the world, including
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
,
Russia Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...
and
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island count ...
. Japan and Singapore both have strict laws against older cars. The Japanese ''Shaken'' road-worthiness testing regime, requires progressively more expensive maintenance, involving the replacement of entire vehicle systems, that are unnecessary for safety, year on year, to devalue older cars and promote new cars on their home market that were available for low prices. This makes these well running cars seem reasonably priced, even after transport expenses. There are very few cars in Japan more than five years old. New car arbitrage has become an issue in the US as well, especially when the US price is lower in the US than in countries like
China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
. Beyond cost issues, grey market cars provide
consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. T ...
access to models never officially released. Before 1987, the
Range Rover Range may refer to: Geography * Range (geographic), a chain of hills or mountains; a somewhat linear, complex mountainous or hilly area (cordillera, sierra) ** Mountain range, a group of mountains bordered by lowlands * Range, a term used to i ...
and
Lamborghini Countach The Lamborghini Countach () is a rear mid-engine, rear-wheel-drive sports car produced by the Italian automobile manufacturer Lamborghini from 1974 until 1990. It is one of the many exotic designs developed by Italian design house Bertone, w ...
, both revolutionary designs, were
grey import vehicles Grey import vehicles are new or used motor vehicles and motorcycles legally imported from another country through channels other than the maker's official distribution system. The synonymous term parallel import is sometimes substituted. Car mak ...
in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
. The grey market provided a clear signal to these manufacturers that the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
had significant demand for these cars, and their present-day US model descendants remain popular. Years later, Nissan similarly decided to sell the GT-R in North America after seeing how many people were importing older Skylines. Although
Mercedes-Benz Mercedes-Benz (), commonly referred to as Mercedes and sometimes as Benz, is a German luxury and commercial vehicle automotive brand established in 1926. Mercedes-Benz AG (a Mercedes-Benz Group subsidiary established in 2019) is headquartere ...
was also a beneficiary of the signals to US consumer demand that the grey market provided, their lobbying in Washington succeeded in virtually ending the US grey market in 1988. In the UK, some
Japanese domestic market Japanese domestic market (JDM) refers to Japan's home market for vehicles and vehicle parts. There is a common misconception that any Japanese branded car is JDM; however, this is not true. Only a vehicle made in Japan specifically to be sold i ...
models fetch a high price because of their performance, novelty or status, assisted by the fact that the Japanese drive on the left, in common with the UK, so vehicles are right hand drive. Popular types include - off-road vehicles, people carriers, affordable sports cars like the Mazda MX-5 / Roadster, very high performance sports cars like the rally homologation based cars like the
Subaru Impreza The is a compact car that has been manufactured by the Japanese automaker Subaru since 1992. It was introduced as a replacement for the Leone, with the predecessor's EA series engines replaced by the new EJ series. It is now in its sixth gen ...
and
Mitsubishi Lancer Evolution The Mitsubishi Lancer Evolution, popularly referred to as the 'Evo', is a sports sedan and rally car based on the Lancer that was manufactured by Japanese manufacturer Mitsubishi Motors from 1992 until 2016. There have been ten official versio ...
, ultra compact
kei car Kei car (or , kanji: , "light automobile", ), known variously outside Japan as Japanese city car or Japanese microcar, is the Japanese vehicle category for the smallest highway-legal passenger cars with restricted dimensions and engine capacit ...
s, and limited edition Japanese market designer cars like the
Nissan Figaro The Nissan Figaro is a front-engine, front-wheel drive, two-door, 2+2, fixed-profile convertible manufactured by Nissan for model year 1991, and marketed in Japan at Nissan Cherry Stores. A total of 20,073 Figaros were produced by Nissan in ...
. In Japan, due to strict and differing car classifications and emission regulations, or lack of main consumer demand, some international models or certain regional models aren't sold in Japanese Domestic Market. Grey importers are trying to import some of these models into Japan but it is permitted due to lack of restrictions imposed on them, unlike in other countries. Among the grey-imported vehicles in Japan are pickup trucks like Toyota Tundra,
Nissan Navara The Nissan Navara is a nameplate used for Nissan pickup trucks with D21, D22, D40 and D23 model codes. The nameplate has been used in Australia, New Zealand, Central America, South America, Asia, Europe, and South Africa. In North, Central a ...
and
Subaru BRAT The Subaru BRAT (acronym for “Bi-drive Recreational All-terrain Transporter”) was a light-duty, four-wheel drive coupé utility, version of the Subaru Leone originally introduced in 1977. The BRAT was developed directly from the company's fou ...
, which aren't officially sold in Japan.


Broadcasting

In television and radio broadcasting, grey markets primarily exist in relation to
satellite radio Satellite radio is defined by the International Telecommunication Union (ITU)'s ITU Radio Regulations (RR) as a ''broadcasting-satellite service''. The satellite's signals are broadcast nationwide, across a much wider geographical area than ter ...
and
satellite television Satellite television is a service that delivers television programming to viewers by relaying it from a communications satellite orbiting the Earth directly to the viewer's location. The signals are received via an outdoor parabolic antenna comm ...
delivery. The most common form is companies reselling the equipment and services of a provider not licensed to operate in the market. For instance, a
Canadian Canadians (french: Canadiens) are people identified with the country of Canada. This connection may be residential, legal, historical or cultural. For most Canadians, many (or all) of these connections exist and are collectively the source of ...
consumer who wants access to
American American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the "United States" or "America" ** Americans, citizens and nationals of the United States of America ** American ancestry, pe ...
television and radio services that are not available in Canada may approach a grey market reseller of
Dish Network DISH Network Corporation (DISH, an acronym for DIgital Sky Highway) is an American television provider and the owner of the direct-broadcast satellite provider Dish, commonly known as Dish Network, and the over-the-top IPTV service, Sling TV. A ...
or
DirecTV DirecTV (trademarked as DIRECTV) is an American multichannel video programming distributor based in El Segundo, California. Originally launched on June 17, 1994, its primary service is a digital satellite service serving the United States. It ...
. There is also a grey market in the United States (especially from Canadian citizens with winter homes in the U.S.) for Canadian satellite services such as
Bell Satellite TV Bell Satellite TV (french: Bell Télé; formerly known as Bell ExpressVu, Dish Network Canada and ExpressVu Dish Network and not to be confused with Bell's IPTV Bell Fibe TV, Fibe TV service) is the division of BCE Inc. that provides satellite ...
or
Shaw Direct Shaw Direct is a direct broadcast satellite television distributor in Canada and a subsidiary of the telecommunications company Shaw Communications. As of 2010, Shaw Direct had over 900,000 subscribers. It broadcasts on Ku band from two commu ...
.
VPN services A virtual private network (VPN) service provides a proxy server to help users bypass Internet censorship such as geoblocking and users who want to protect their communications against data profiling or MitM attacks on hostile networks. A wide va ...
also market access to programming restricted by broadcasting deals through spoofing an
IP address An Internet Protocol address (IP address) is a numerical label such as that is connected to a computer network that uses the Internet Protocol for communication.. Updated by . An IP address serves two main functions: network interface ident ...
within a different territory. This is commonly used by Americans to access
Olympic Games The modern Olympic Games or Olympics (french: link=no, Jeux olympiques) are the leading international sporting events featuring summer and winter sports competitions in which thousands of athletes from around the world participate in a var ...
coverage that is unaffected by production, broadcast delays and
reality Reality is the sum or aggregate of all that is real or existent within a system, as opposed to that which is only imaginary. The term is also used to refer to the ontological status of things, indicating their existence. In physical terms, r ...
-like storytelling decisions made by
NBC The National Broadcasting Company (NBC) is an American English-language commercial broadcast television and radio network. The flagship property of the NBC Entertainment division of NBCUniversal, a division of Comcast, its headquarters are l ...
, the American broadcaster for the Games, or to access a television series otherwise stuck on an unpopular streaming service and instead access it easier through a service such as
Netflix Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fil ...
, which may have it in their library within another territory. In
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
some satellite TV services are encrypted since they have only been authorised by content suppliers to broadcast films, sporting events and US entertainment programming in a certain country or countries, hence only residents of the UK and
Ireland Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, North Atlantic Ocean, in Northwestern Europe, north-western Europe. It is separated from Great Britain to its east by the North Channel (Grea ...
may subscribe to Sky Digital. In other European countries with large British
expatriate An expatriate (often shortened to expat) is a person who resides outside their native country. In common usage, the term often refers to educated professionals, skilled workers, or artists taking positions outside their home country, either ...
populations, such as
Spain , image_flag = Bandera de España.svg , image_coat = Escudo de España (mazonado).svg , national_motto = ''Plus ultra'' (Latin)(English: "Further Beyond") , national_anthem = (English: "Royal March") , i ...
, Sky is widely available through the grey market. Although Sky discourages the use of its viewing cards outside the UK or Ireland, and has the technology to render them invalid, many people continue to use them. Parallel importing of "
free-to-view Free-to-view (FTV) is a term used for audiovisual transmissions that are provided free without any form of continual subscription . It differs from free-to-air (FTA) in that the program is encrypted. Free-to-view vs. free-to-air The free-to-vi ...
" Sky cards from the UK to Ireland is often done so that Irish Sky customers can receive Channel 5 and some of the other channels not generally available via Sky in the Republic because of trademark and other licensing issues. Conversely, Sky viewing cards from the Republic of Ireland, which allow viewing of Irish terrestrial channels, are imported into the UK.
Northern Ireland Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom, situated in the north-east of the island of Ireland, that is variously described as a country, province or region. Nort ...
residents subscribing to Sky can watch
RTÉ One RTÉ One ( ga, RTÉ a hAon) is an Irish free-to-air flagship television channel owned and operated by Raidió Teilifís Éireann (RTÉ). It is the most-popular and most-watched television channel in the country and was launched as ''Telefís ...
and
Two 2 (two) is a number, numeral and digit. It is the natural number following 1 and preceding 3. It is the smallest and only even prime number. Because it forms the basis of a duality, it has religious and spiritual significance in many cultur ...
and
TG4 TG4 ( ga, TG Ceathair, ) is an Irish free-to-air public service television network. The channel launched on 31 October 1996 and is available online and through its on demand service TG4 Player in Ireland and beyond. TG4 was formerly known ...
, although not TV3, which carries many of the same programs as
ITV ITV or iTV may refer to: ITV *Independent Television (ITV), a British television network, consisting of: ** ITV (TV network), a free-to-air national commercial television network covering the United Kingdom, the Isle of Man, and the Channel Islan ...
, a lot of the programs airing before ITV can show them. It is also becoming increasingly common in the UK for some
pub A pub (short for public house) is a kind of drinking establishment which is licensed to serve alcoholic drinks for consumption on the premises. The term ''public house'' first appeared in the United Kingdom in late 17th century, and was ...
s to use satellite decoder cards from
Greece Greece,, or , romanized: ', officially the Hellenic Republic, is a country in Southeast Europe. It is situated on the southern tip of the Balkans, and is located at the crossroads of Europe, Asia, and Africa. Greece shares land borders with ...
,
Norway Norway, officially the Kingdom of Norway, is a Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of Jan Mayen and t ...
,
Poland Poland, officially the Republic of Poland, is a country in Central Europe. It is divided into 16 administrative provinces called voivodeships, covering an area of . Poland has a population of over 38 million and is the fifth-most populous ...
or the
Arab world The Arab world ( ar, اَلْعَالَمُ الْعَرَبِيُّ '), formally the Arab homeland ( '), also known as the Arab nation ( '), the Arabsphere, or the Arab states, refers to a vast group of countries, mainly located in Western A ...
to receive satellite TV broadcasting live English football matches from those countries. Alternatively, they may use cards which allow
pirate decryption Pirate decryption is the decryption, or decoding, of pay TV or pay radio signals without permission from the original broadcaster. The term "pirate" is used in the sense of copyright infringement. The MPAA and other groups which lobby in favour ...
of scrambled signals. Such cards are typically much cheaper than the cards available in the UK from Sky (who charge extra fees for public showing licences). However, Sky has taken civil and criminal action against some who do this. Two recent cases involving grey cards have been referred to the
European Court of Justice The European Court of Justice (ECJ, french: Cour de Justice européenne), formally just the Court of Justice, is the supreme court of the European Union in matters of European Union law. As a part of the Court of Justice of the European Un ...
. The suppliers of grey cards and Karen Murphy have won their cases at the European Court of Justice. The judges have ruled that right holders cannot license their content on an exclusive territorial basis as it breaches EU Law on competition and free movement of goods and services. However, whilst this ruling allows domestic viewers to subscribe to foreign satellite services, pubs may still need permission from right holders such as the Premier League to broadcast content. This is because certain elements of the broadcast such as branding are copyrighted. The matter now rests on the High Court to incorporate the ruling into UK Law. There have been two High Court judgements on this matter now. Mr. Justice Kitchin has ruled that QC Leisure and other suppliers of foreign satellite systems can carry on with their businesses if they can prevent copyright elements such as branding of football matches from being shown in a public place. The Premier League can pursue prosecutions of licensees who show branding of matches via foreign satellite systems. Karen Murphy has won her case in the High Court following the ruling from the European Court of Justice. The ruling from Justice Stanley Burnton allows Ms Murphy to shop for the cheapest foreign satellite provider. However the ruling from Justice Kitchin prevents Ms Murphy from showing matches in her pub via foreign satellite systems because branding are copyrighted. It is no longer illegal though for a customer to purchase a foreign viewing card from an EU country and use it outside the territory.


Cell phones

The emergence of the
GSM The Global System for Mobile Communications (GSM) is a standard developed by the European Telecommunications Standards Institute (ETSI) to describe the protocols for second-generation ( 2G) digital cellular networks used by mobile devices such ...
international standard for cell phones in 1990 prompted the beginning of the grey market in the cell phone industry. As global demand for mobile phones grew, so did the size of the parallel market. Today, it is estimated that over 30% of all mobile phones traded will pass through the grey market and that statistic continues to grow. It is impossible to quantify an exact figure, but sources suggest that as many as 500,000 mobile phones are bought and sold outside official distribution channels through their trading platforms every day. Many smaller countries and markets (such as Croatia, for example) are still being prone to grey imports of mobile phones, apparently due to very limited number of mobile phone models ever to be sold in that particular country. The driving forces behind a heavily active mobile phone grey market include currency fluctuations, customers demands, manufacturers policies, market-specific features, and price variations. It is not uncommon for grey market traders to introduce a product into a market months in advance of the official launch. This was evident with the launch of the
iPhone 4 The iPhone 4 is a smartphone that was designed and marketed by Apple Inc. It is the fourth generation of the iPhone lineup, succeeding the iPhone 3GS and preceding the 4S. Following a number of notable leaks, the iPhone 4 was first unvei ...
, where international grey market traders bought large quantities at Apple's retail price then shipped to countries where the product was not available, adding a substantial margin to the resale price. The launch of the
iPhone 14 The iPhone 14 and iPhone 14 Plus (also stylized as iPhone 14+) are smartphones designed, developed, and marketed by Apple Inc. They are the sixteenth generation of iPhones, succeeding the iPhone 13 and iPhone 13 Mini, and was announced durin ...
, which lost the
SIM card file:SIM-Karte von Telefónica O2 Europe - Standard und Micro.jpg, A typical SIM card (mini-SIM with micro-SIM cutout) file:Sim card.png, A smart card taken from a Global System for Mobile Communications, GSM mobile phone file:Simkarte NFC SecureE ...
slot in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
and was replaced with eSIM technology, but remains elsewhere, including
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
, also created a grey market for a version with a traditional SIM card slot.


Computer games

Purchasing some games from online content distribution systems, such as
Valve A valve is a device or natural object that regulates, directs or controls the flow of a fluid (gases, liquids, fluidized solids, or slurries) by opening, closing, or partially obstructing various passageways. Valves are technically fittings ...
's
Steam Steam is a substance containing water in the gas phase, and sometimes also an aerosol of liquid water droplets, or air. This may occur due to evaporation or due to boiling, where heat is applied until water reaches the enthalpy of vaporization ...
, simply requires entering a valid CD key to associate with an account. In 2007, after the release of ''
The Orange Box ''The Orange Box'' is a video game compilation containing five games developed and published by Valve. Two of the games included, ''Half-Life 2'' and its first stand-alone expansion, '' Episode One'', had previously been released as separate ...
'', Valve deactivated accounts with CD keys that were purchased outside the consumer's territory in order to maintain the integrity of region-specific licensing. This generated complaints from North American customers who had circumvented their Steam end-user licence agreement by purchasing ''The Orange Box'' through cheaper, market retailers. Due to
regional lockout A regional lockout (or region coding) is a class of digital rights management preventing the use of a certain product or service, such as multimedia or a hardware device, outside a certain region or territory. A regional lockout may be enforced ...
, video game consoles and their games are often subjected to grey market trade and are chosen as the alternative to
modding ''Modding'' is a slang expression derived from the English verb " to modify". The term refers to modification of hardware, software, or anything else, to perform a function not originally intended by the designer, or to achieve bespoke specific ...
by some gamers. The reasons for this may range from the console being crippled in some markets to that of the desired game not being released for the market the potential consumer of the game is in. PC code stripping is a process by which boxed PC product is bought in large quantities at cheap rates. Manual labor is then used to open the box, retrieve the activation code from the box and enter the code into a database. The activation code is then sold online as a download key and the physical product is discarded or sold as backup media.


Electronics

There is a grey market in electronics in which retailers import merchandise from regions where the prices are cheaper or where regional design differences are more favourable to consumers, and subsequently sell merchandise in regions where the manufacturer's selling price is more expensive. Online retailers are often able to exploit pricing disparities in various countries by using grey-market imports from regions where the product is sold at lower costs and reselling them without regional buyer restrictions. Websites such as
Taobao Taobao () is a Chinese online shopping platform. It is headquartered in Hangzhou and is owned by Alibaba. According to Alexa rank, it is the eighth most-visited website globally in 2021. Taobao.com was registered on April 21, 2003 by Alibaba ...
and
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became a ...
enable customers to buy products designed for foreign regions with different features or at cheaper costs, using parallel importation. The grey market for photographic equipment and other such electronics is thriving in heavily taxed states like
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
with dealers importing directly from lower taxed states and selling at lower prices, creating competition against local
distributor A distributor is an enclosed rotating switch used in spark-ignition internal combustion engines that have mechanically timed ignition. The distributor's main function is to route high voltage current from the ignition coil to the spark plugs ...
s recognised by the products' manufacturers. "Grey sets", as colloquially called, are often comparable to products purchased from the manufacturer's preferred retailer.
Lenses A lens is a transmissive optical device which focuses or disperses a light beam by means of refraction. A simple lens consists of a single piece of transparent material, while a compound lens consists of several simple lenses (''elements''), ...
or
flash Flash, flashes, or FLASH may refer to: Arts, entertainment, and media Fictional aliases * Flash (DC Comics character), several DC Comics superheroes with super speed: ** Flash (Barry Allen) ** Flash (Jay Garrick) ** Wally West, the first Kid ...
units of parallel imports often only differ by the warranty provided, and since the grey sets were manufactured for another state, photographic equipment manufacturers often offer local
warranty In contract law, a warranty is a promise which is not a condition of the contract or an innominate term: (1) it is a term "not going to the root of the contract",Hogg M. (2011). ''Promises and Contract Law: Comparative Perspectives''p. 48 Cambrid ...
, instead of international warranty, which will render grey sets ineligible for warranty claims with the
manufacturer Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to a ran ...
. Because of the nature of local warranties, importers of grey sets usually offer their own warranty schemes to compensate for the manufacturers' refusal of service. Grey sets do not differ particularly from official imports. They look and function identically. In the early days of camera sales during the 60s and 70s, when lenses had amber coating, the bargain basements for Japanese equipment were Hong Kong and Singapore, through which goods were channeled to European shop windows bypassing the often substantial levy of the official importers. World-market pricing and the Internet have largely eliminated this.
Canon Canon or Canons may refer to: Arts and entertainment * Canon (fiction), the conceptual material accepted as official in a fictional universe by its fan base * Literary canon, an accepted body of works considered as high culture ** Western ca ...
gives their hard-selling DSLR cameras names like "Rebel" in the US and "EOS xx0/xx00" outside it, aimed at preventing the competitively priced US-merchandise reaching Europe where sales are slower but achieve a higher profit.


Frequent-flyer miles

Trade or bartering of
frequent-flyer miles A frequent-flyer program (American English) or frequent-flyer programme (British English) is a loyalty program offered by an airline. Many airlines have frequent-flyer programs designed to encourage airline customers enrolled in the program ...
is prohibited by nearly all major airlines, although an authorised medium exists for specific frequent flyer programs. Unauthorised exchanges of frequent flyer miles – of which several exist – are also major examples of grey markets.


Infant formula

Following the
2008 Chinese milk scandal The 2008 Chinese milk scandal was a significant Food safety incidents in China, food safety incident in China. The scandal involved Sanlu Group, Sanlu Group's milk and infant formula along with other food materials and components being adultera ...
, parents in China lost confidence in locally produced
infant formula Infant formula, baby formula, or simply formula (American English); or baby milk, infant milk or first milk (British English), is a manufactured food designed and marketed for feeding to babies and infants under 12 months of age, usually prepar ...
, creating a demand for European, Japanese and American produced formula. Import restrictions on formula from these sources has led to parents willing to pay a premium for foreign brands leading to the emergence of milk-powder runners, who buy formula at ticket price over the counter in Hong Kong, carry the tins over the border to
Shenzhen Shenzhen (; ; ; ), also historically known as Sham Chun, is a major sub-provincial city and one of the special economic zones of China. The city is located on the east bank of the Pearl River estuary on the central coast of southern province ...
before returning to Hong Kong to repeat the process. The effect of the runners led to a shortage of infant formula in Hong Kong forcing the government to impose an export restriction of two tins per person per trip. The Chinese then turned to Australia, subsequently also caused shortages there and for milk formula producers to ask retailers in the United Kingdom to restrict purchasers to two tins, as there was evidence that milk formula is being purchased for onward shipment to China.


Pharmaceuticals

Some prescription medications, most notably popular and branded drugs, can have very high prices in comparison to their cost of transport. In addition, pharmaceutical prices can vary significantly between countries, particularly as a result of government intervention in prices. As a consequence, the grey market for pharmaceuticals flourishes, particularly in Europe and along the US–Canada border where Canadians often pay significantly lower prices for US-made pharmaceuticals than Americans do.


Securities

Public company A public company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. A public (publicly traded) company can be listed on a stock exchange (l ...
securities that are not listed, traded or quoted on any U.S.
stock exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
or the OTC markets are sometimes purchased or sold over the counter (OTC) via the grey market. Grey market securities have no market makers quoting the stock. Since grey market securities are not traded or quoted on an exchange or interdealer quotation system, investors' bids and offers are not collected in a central spot so market transparency is diminished and effective execution of orders is difficult. In India, the unofficial grey market trades are very common for the initial public offering (IPOs). The people put their money in the unregulated and unofficial grey market before the listing of the IPOs. Company promoters along with the Market Operators buy and sell the shares before the listing. This is the easiest way to manipulate the share price before IPO listing.


Textbooks

College level
textbooks A textbook is a book containing a comprehensive compilation of content in a branch of study with the intention of explaining it. Textbooks are produced to meet the needs of educators, usually at educational institutions. Schoolbooks are textbook ...
have a grey market, with publishers offering them for lower prices in developing countries or sometimes the UK. These books typically contain a disclaimer stating that importation is not permitted. However, the
U.S. Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
decisions ''
Quality King v. L'anza ''Quality King Distributors Inc. v. L'anza Research International Inc.'', 523 U.S. 135 (1998), was a decision by the United States Supreme Court over whether a copyright holder could restrict redistribution of material containing copyrighted conte ...
'' (1998) and especially '' Kirtsaeng v. John Wiley & Sons, Inc.'' (2013, involving textbooks imported from Thailand by an
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became a ...
seller) protect the importation of copyrighted materials under the
first-sale doctrine The first-sale doctrine (also sometimes referred to as the "right of first sale" or the "first sale rule") is an American legal concept that limits the rights of an intellectual property owner to control resale of products embodying its intellec ...
.


Swiss watches

The ''
Financial Times The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...
'' has stated that the market is now over a billion dollars for grey market
Swiss Swiss may refer to: * the adjectival form of Switzerland * Swiss people Places * Swiss, Missouri * Swiss, North Carolina *Swiss, West Virginia * Swiss, Wisconsin Other uses *Swiss-system tournament, in various games and sports *Swiss Internation ...
watches A watch is a portable timepiece intended to be carried or worn by a person. It is designed to keep a consistent movement despite the motions caused by the person's activities. A wristwatch is designed to be worn around the wrist, attached by ...
such as
Rolex Rolex SA () is a British-founded Swiss watch designer and manufacturer based in Geneva, Switzerland. Founded in 1905 as ''Wilsdorf and Davis'' by Hans Wilsdorf and Alfred Davis in London, the company registered ''Rolex'' as the brand name of ...
, Breitling, IWC,
Cartier Cartier may refer to: People * Cartier (surname), a surname (including a list of people with the name) * Cartier Martin (born 1984), American basketball player Places * Cartier Island, an island north-west of Australia that is part of Australia' ...
,
Patek Philippe SA Patek Philippe SA is a Swiss luxury watch and clock manufacturer, located in the Canton of Geneva and the Vallée de Joux. Established in 1839, it is named after two of its founders, Antoni Patek and Adrien Philippe. Since 1932, the company has ...
,
Audemars Piguet Audemars Piguet Holding SA () is a Swiss manufacturer of luxury watches and clocks, headquartered in Le Brassus, Switzerland. The company was founded by Jules Louis Audemars and Edward Auguste Piguet in the Vallée de Joux in 1875, acquiring ...
, Breguet and
Bvlgari Bulgari (, ; stylized as BVLGARI) is an Italian luxury fashion house founded in 1884 and known for its jewellery, watches, fragrances, accessories, and leather goods. While the majority of design, production and marketing is overseen and exe ...
''
Barron's Barron's or Barrons may refer to: *Barron's Educational Series, a publisher of books, as well as college entrance exam preparation classes and materials, now an imprint of Kaplan Test Prep ** B.E.S. Publishing, the former owner of Barron's * ''Barr ...
'' has been quoted in saying you can get 40% off fine Swiss Watches in the grey market. ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' even going after the
Rolex Daytona The Rolex Cosmograph Daytona is a mechanical chronograph wristwatch designed to meet the needs of racing drivers by measuring elapsed time and calculating average speed. Its name refers to Daytona, Florida, where racing flourished in the early 2 ...
calling it the hottest watch money can not buy.


Sneakers

One of the biggest Grey Market marketplaces for sneakers is
StockX StockX is an online marketplace and clothing reseller, primarily of sneakers. Since November 2020, it has also opened up to electronic products such as game consoles, smartphones and computer hardware. The Detroit-based company was founded by Dan ...
. Since November 2020, it has also opened up to electronic products with a valuation of almost four billion. StockX has planned to go public since October 2019. As of January 2022, they have not yet done so.


Corporate action

The parties most opposed to the grey market are usually the authorised agents or importers, or the retailers of the item in the target market. Often this is the national subsidiary of the manufacturer, or a related company. In response to the resultant damage to their profits and reputation, manufacturers and their official distribution chain will often seek to restrict the grey market. Such responses can breach
competition law Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...
, particularly in the European Union. Manufacturers or their licensees often seek to enforce
trademark A trademark (also written trade mark or trade-mark) is a type of intellectual property consisting of a recognizable sign, design, or expression that identifies products or services from a particular source and distinguishes them from others ...
or other
intellectual-property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...
laws against the grey market. Such rights may be exercised against the import, sale and/or advertisement of grey imports. In 2002,
Levi Strauss Levi Strauss (; born Löb Strauß ; February 26, 1829 – September 26, 1902) was a German-born American businessman who founded the first company to manufacture blue jeans. His firm of Levi Strauss & Co. (Levi's) began in 1853 in San Francisco ...
, after a 4-year legal case, prevented the UK supermarket
Tesco Tesco plc () is a British multinational groceries and general merchandise retailer headquartered in Welwyn Garden City, England. In 2011 it was the third-largest retailer in the world measured by gross revenues and the ninth-largest in th ...
from selling grey market jeans. However, such rights can be limited. Examples of such limitations include the
first-sale doctrine The first-sale doctrine (also sometimes referred to as the "right of first sale" or the "first sale rule") is an American legal concept that limits the rights of an intellectual property owner to control resale of products embodying its intellec ...
in the United States and the doctrine of the
exhaustion of rights The exhaustion of intellectual property rights constitutes one of the limits of intellectual property (IP) rights. Once a given product has been sold under the authorization of the IP owner, the reselling, rental, lending and other third party comme ...
in the European Union. When grey-market products are advertised on
Google Google LLC () is an American multinational technology company focusing on search engine technology, online advertising, cloud computing, computer software, quantum computing, e-commerce, artificial intelligence, and consumer electronics. ...
, eBay or other legitimate web sites, it is possible to petition for removal of any advertisements that violate trademark or copyright laws. This can be done directly, without the involvement of legal professionals. For example, eBay will remove listings of such products even in countries where their purchase and use is not against the law. Manufacturers may refuse to supply distributors and retailers (and with commercial products, customers) that trade in grey market goods. They may also more broadly limit supplies in markets where prices are low. Manufacturers may refuse to honor the warranty of an item purchased from grey market sources, on the grounds that the higher price on the non-grey market reflects a higher level of service even though the manufacturer does of course control their own prices to distributors. Alternatively, they may provide the warranty service only from the manufacturer's subsidiary in the intended country of import, not the diverted third country where the grey-market goods are ultimately sold by the distributor or retailer. This response to the grey market is especially evident in electronics goods. Local laws (or customer demand) concerning distribution and packaging (for example, the language on labels, units of measurement, and nutritional disclosure on foodstuffs) can be brought into play, as can national standards certifications for certain goods. Manufacturers may give the same item different model numbers in different countries, even though the functions of the item are identical, so that they can identify grey imports. Manufacturers can also use supplier codes to enable similar tracing of grey imports. Parallel market importers often decode the product in order to avoid the identification of the supplier. In the United States, courts have ruled decoding is legal, however manufacturers and brand owners may have rights if they can prove that the decoding has materially altered the product where certain trademarks have been defaced or the decoding has removed the ability of the manufacturer from enforcing quality-control measures. For example, if the decoding defaces the logo of the product or brand or if the batch code is removed preventing the manufacturer from re-calling defective batches. The development of DVD region codes, and equivalent regional lockout, regional-lockout techniques in other media, are examples of technological features designed to limit the flow of goods between national markets, effectively fighting the grey market that would otherwise develop. This enables movie studios and other content creators to charge more for the same product in one market than in another, or alternatively withhold the product from some markets for a particular time.


Canon

The lawsuits started by Canon U.S.A. Inc. v. a number of retailers on 25 October 2015 in the New York Eastern District Court (Case No. 2:15-cv-6019 and No. 2:15-cv-6015) will not be tried until 2016 at the earliest, but are based on a Trademark violation. The Plaintiff alleges that the Defendant retailers applied counterfeit serial numbers to Canon digital SLR cameras and sold kits with inferior (non-Canon) warranties as well as counterfeit batteries and chargers that did not comply with U.S. certification regulations. Canon U.S.A. Inc. also reserves the right to claim damages for "further violations of CUSA's intellectual property and other rights [that] will come to light as this litigation progresses".


Alliance for Gray Market and Counterfeit Abatement

The Alliance for Gray Market and Counterfeit Abatement (AGMA) is a California-based non-profit organisation of information technology (IT) companies that works to educate and raise awareness on counterfeiting; digital IP protection; service and warranty abuse; and the grey market.


Support

Consumer advocacy groups argue that discrimination against consumers—the charging of higher prices on the same object simply because of where they happen to live—is unjust and monopolistic behaviour on the part of corporations towards the proletariat, public. Since it requires governments to legislate to prevent their citizens from purchasing goods at cheaper prices from other markets, and because this is clearly not in their citizens' interests, many governments in Democracy, democratic countries have chosen not to protect anti-competitive technologies such as DVD region-coding. Correspondingly, the grey market has found support from most ideological tendencies. Anarchism, Anarchist opponents of social hierarchy, class discrimination argue that private property in general leads to the oppression of much of society and are therefore against the very idea of intellectual property, which forms the basis of arguments against the grey market. Capitalism, Proponents of the corporation, corporate financial system, in agreement, assert that the enforcement of intellectual property can lead to a 'lessening of composing effort'. The grey market has been a constant source of litigation and appeals in the United States. The same fundamental question arises under patent law and copyright law, namely whether or not a good sold abroad lawfully is still protected by United States intellectual property law for the purposes of resale. When purchased domestically, a copyrighted good may be resold by the purchaser under the first sale doctrine contained a
17 U.S.C. §109(c)
Similarly, a patented good may be re-sold under the patent exhaustion doctrine. In 2013, the United States Supreme Court largely discussed the legality of the grey market when it decided '' Kirtsaeng v. John Wiley & Sons, Inc.'' where it held that a sale abroad of a copyrighted good triggers the first sale doctrine. The decision is largely understood to apply to patented goods as well.


See also

*Agorism *Pirate politics *Counter-economics *Cryptocurrency *Hawala *Regional lockout *''The Misfit Economy'' – a 2015 book *Black market *Organ trade, Red Market (organ trade) *White market *Silk Road (marketplace)


References


Further reading

* * * * * * {{Authority control Distribution (marketing) Economic liberalism Free market Informal economy International trade Libertarian theory Market (economics)