L'Oreal challenges eBay over counterfeit goods

"L'Oreal has been facing an increasing volume of illicit trade in fake fragrances and fake cosmetics products on some online auction sites" the company said in a statement.

In consequence the company has decided to take legal action to both protect its trademarks and its consumers, according to a string of news reports.

A spokesperson for eBay subsidiary eBay France said that the two companies have been involved in talks since May over the problem of selling counterfeit L'Oreal products on their site, according to the Associated Press.

The news agency add that a L'Oreal spokeswoman has confirmed that legal proceedings have now been launched in Belgium, Britain, France, Germany, and Spain.

Liberation, the French newspaper, said that L'Oreal has estimated the damage done to its business via counterfeit goods sold via eBay at 'several million euros'.

The proceedings follow action taken last year against the internet auction site by LVMH, when both Louis Vuitton and Christian Dior demanded damages totalling €37 million.

Through the French industrial lobby group, Unifab, the luxury goods company took the company to court last summer demanding significant monetary compensation.

At the time, Unifab told Reuters that they believed the online company had the means to police their sites, although they chose to act only after the event, rather than pre-emptively.

eBay claims it does have anti counterfeit schemes, monitoring auctions for goods that clearly infringe on manufacturers right.

In addition, US jewellers, Tiffanys, made similar complaints against the company in 2004, stating that when their investigators made test purchases of brand name items they found that the majority were counterfeit.

The International Chamber of Commerce's Counterfeiting Intelligence Bureau has recently estimated that the trade in counterfeit goods accounts for approximately 7 per cent of world trade, costing multinational manufacturers on average 10 per cent of their sales.

A large majority of counterfeit goods appear to come from emerging markets such as China and Eastern Europe, illustrated by the recent counterfeit Colgate toothpaste that contained the toxic ingredient diethylene glycol, traced back to China.

The Chinese government has promised to attempt to improve the situation - the country's President Hu Jintao said last week that his government is going to make a concerted effort to up product safety standards with the help of the international community - however it may be a while before any positive effects of this crackdown are seen within the industry.