The Competition Effects of Lookalike Private Label Products

This paper considers the competition effects of lookalike products, which seek to mimic the packaging, design and appearance of leading brands. Such products, most notable in the fast-moving-consumer-goods (FMCG) sector, are particularly associated with items promoted by retail organizations as part of their private-label programmes. The market power and control over the supply chain which the major retailers now enjoy means that by developing lookalike products they may have the opportunity to exploit unfairly and anti-competitively the image and goodwill that brand manufacturers have developed through careful and continual product and marketing investment. This, in turn, could distort the way and the extent to which manufacturers compete, enhance retailer control over the supply chain. In the process, this could undermine manufacturer branded goods which smaller retailers traditionally rely on, thus weakening their competitive position and resulting in further concentration of retail markets and less choice of store types and product varieties for consumers. The continuing absence of a rapid and effective legal remedy to prevent the rewards from brand investment being misappropriated by imitators means that such action will likely continue, with the upshot that manufacturer and retailer competition may be distorted to the detriment of consumer welfare and the public interest.