A European Union regulator is looking to crackdown on anti-competition within the fashion industry. In a statement on Tuesday, the European Commission announced that it has started “unannounced inspections at the premises of companies active in the fashion industry in several Member States,” and at the same time, “has sent out formal requests for information to several companies active in the fashion sector,” citing concerns that the unidentified fashion industry players may be engaging in anti-competitive behavior in violation of EU law, including by potentially joining together to fix prices, limit production or share markets or customers, instead of engaging in competition. 

“The Commission has concerns that the companies concerned may have violated Article 101 of the Treaty on the Functioning of the European Union (‘TFEU‘) and Article 53 of the European Economic Area Agreement, which prohibit cartels and other restrictive business practices,” the European Commission stated, noting that unannounced inspections are “a preliminary investigative step into suspected anticompetitive practices.” The regulator cautions, stating that fact that it is carrying out such inspections and sending out formal requests for information “does not mean that the companies are guilty of anti-competitive behavior, nor does it prejudge the outcome of the investigation itself.” 

The fashion industry-specific action comes as the focus of the Commission for the 27-member bloc appears to primarily lie with big tech. In March, for instance, the Commission revealed that it had initiated a formal antitrust investigation to assess whether an agreement between Google and Meta (formerly Facebook) for online display advertising services breached EU competition rules, namely, Article 101 of the TFEU and/or amounts to the abuse of a dominant position (Article 102 TFEU). Meanwhile, earlier this month, the European Commission informed Apple of its preliminary view that it abused its dominant position in markets for mobile wallets on iOS devices “by limiting access to a standard technology used for contactless payments with mobile devices in stores (‘Near-Field Communication (NFC)’ or ‘tap and go’),” and thereby, restricting competition in the mobile wallets market on iOS.

Not limited entirely to tech, the Commission has pin-pointed at least one fashion-centric entity this year (aside from the unnamed companies involved in the recently-announced probe) in connection with an anti-competition probe, announcing early this year that it had launched a formal antitrust investigation to assess whether Pierre Cardin and its licensee the Ahlers Group may have breached EU competition rules by restricting cross-border and online sales of Pierre Cardin-licensed products, as well as sales of such products to specific customer groups. According to a statement from the Commission in January that “Pierre Cardin and Ahlers may have breached EU competition rules by restricting the ability of Pierre Cardin’s licensees to sell Pierre Cardin-licensed products cross-border, including offline and online, as well as to specific customer groups.” 

The investigation, which is currently underway, is said to focus on whether Pierre Cardin and Ahlers, its largest licensee, “developed a strategy to prevent parallel imports and sales to specific customer groups of Pierre Cardin-branded products by enforcing certain restrictions in the licensing agreements,” per Reuters, as the Commission has reinforced rules against curbs on cross-border and online sales as part of a push to boost e-commerce.

Morphe Cosmetics is on the receiving end of a proposed class action lawsuit, accusing it of knowingly engaging in false advertising, unfair competition, negligence, and products liability in connection with its manufacture and sale of makeup that is “inherently dangerous.” According to the complaint that they filed in a California federal court last month, Crystal Damato, Amanda Montgomery, and Taylor Maxwell (the “plaintiffs”) claim that Morphe is offering up eye makeup products that “contain color additives and ingredients that are dangerous when used on the immediate eye area,” and at the same time, failing to alert consumers – including children – about the risks of such known dangers. 

In their 52-page complaint, Damato, Montgomery, and Maxwell allege that they used Morphe eye makeup – including its eyeshadow palettes, eyeliners, and Colorfix 24-hour Cream Color – as instructed and encouraged by the popular beauty brand and “suffered physical injuries as a result.” Specifically, they claim that these products contain an array of color additives, such as FD&C Red No. 4, D&C Red No. 6, and D&C Violet No. 2, among many others, which have been designated by the U.S. Food and Drug Administration as “unsuitable and unapproved for cosmetic use in the eye area.” (“Both the FDA and California Health & Safety Code tightly regulate color additives for use in cosmetic products,” the plaintiffs assert.)

The plaintiffs contend that the 14-year-old beauty brand is running afoul of the law by representing that its eye makeup products “are safe for use in the eye area,” and labeling and packaging the products in a way that is “false and/or misleading,” namely, by “omitting material facts about the safety of the products.” Primarily, they claim that Morphe – which gained widespread popularity thanks to its eyeshadow palettes and collaborations with YouTube mega-stars like Jeffree Star and James Charles – does not warn consumers that the products are “not safe for [their] intended use or that the products contain harmful ingredients.” It also does not alert consumers of “the known dangers and risks associated with the harmful ingredients,” per the complaint. 

Los Angeles-based Morphe’s “advertising, marketing, packaging, and all other forms of communication, including [its] website, each fail to provide any warning whatsoever regarding the known dangers associated with the intended use of the products,” according to the plaintiffs, who assert that Morphe’s website merely includes “vague language and inconsistent statements such as ‘*Caution: Pressed pigments not intended for use in eye area.’” As a matter of law, the plaintiffs argue that this language – which is buried in lengthy lists of ingredients, “is not a safety warning because it does not: (1) assist the consumer in understanding the danger; and (2) it is not conveyed in a manner that a reasonable person would see, receive, and understand.” 

Such disclaimers are “unlikely to reach consumers at all because they are located in the least prominent location of Morphe’s website rather than in a conspicuous location such as the individual Products’ landing pages and/or description pages,” and in fact, the plaintiffs argue that “consumers can navigate through the entire purchasing process online at Morphe.com without ever encountering [its] hidden disclaimer.” 

Similarly, the products’ packaging “fails to provide any warning regarding the known dangers associated with the intended use of the products,” as indications, such as “a tiny symbol of an eye with a line though it, fail in every aspect to warn consumers of the known hazards associated with using the products for their intended use.” 

Despite (allegedly) knowing that its eye makeup products are not safe for their intended use (i.e., cosmetic application to the eye area), Damato, Montgomery, and Maxwell assert in their lawsuit that Morphe not only encouraged the use of the products for the eye area but actively attempted to work around federal regulations by using “deceptive and misleading language, such as ‘artistry palette’ or ‘pressed pigments,’” as opposed to “eyeshadow.” The problem, according to the plaitniffs, however, is that “pressed pigments are indistinguishable from eyeshadow, [and] the only reasonable and foreseeable use for [Morphe’s] pressed pigments is as eyeshadow to be used for cosmetic application around the eye area.” 

Morphe’s “use of these euphemisms allow [it] to sell the products alongside its other eyeshadows even though the products contain harmful ingredients and are unlawful to sell for cosmetic use in the eye area,” they argue. And the brand “knows, or should have known, that [they] and [other] consumers are likely to be misled by the phrase ‘pressed pigment’ because the products are packaged, marketed, and sold as eye shadows; there is no generally understood meaning of the phrase pressed pigment; [its] website does not explain how pressed pigments differ from eyeshadow; and [its] promotional images, tutorials, and other advertising materials instruct and encourage ‘pressed pigments’ to be used for cosmetic application in the eye area.” 

Damato, Montgomery, and Maxwell contend that they are other consumers “were under the reasonable belief that Morphe Eye Makeup was safe for its intended use, cosmetic application to the eye area,” and thus, suffered damages as a result. 

With the foregoing in mind, the plaintiffs set out claims of breach of implied warranties, false advertising, unfair competition, negligence, strict products liability, and unjust enrichment, among others, and are seeking damages that exceed $5 million, injunctive relief, and certification of their class action to enable as many as “tens of thousands of [other] people” who have been damaged by Morphe to join pool of plaintiffs.  

A representative for Morphe was not immediately available to comment on the lawsuit.

The case is Crystal Damato, et al, v. Morphe LLC, et al, 3:22-cv-02110 (N.D.Cal.)

Harrods is reportedly following in the footsteps of Chanel and limiting sales of luxury goods to Russian consumers in an attempt to comply with sanctions levied by the government of the United Kingdom. The Telegraph reported over the weekend that “the Qatar-owned store has been combing its customer database, singling out those with a Russian phone number or who have said they live in the country,” and alerting them that if they “might currently or ordinarily be [a] resident [of] Russia,” it cannot supply them with “luxury goods” worth more than £300. This means that “items ranging from jewelry and designer clothing to furniture and gym equipment are now off limits.”

“Our priority is to comply with regulations, informing potentially impacted customers on how it may limit their ability to shop at Harrods, and ensuring wider customers are not unduly affected. We are happy that we have been able to take this action and support customers in making them aware of recent government regulations,” a spokesman for the London-based department store stated. And while the move to block individuals who are “either currently or ordinarily in Russia” from snapping up designer wares may enable Harrods to fall in line with escalating sanctions in the United Kingdom, it does, however, stand to land the company on the receiving end of consumer furor, including “accusations of discrimination from Russians affected.” 

Chanel faced pushback – and claims of “Russophobia” – last month when it revealed that it had “rolled out a process” in its stores outside of Russia “to ask clients for whom we do not know the main residency to confirm that the items they are purchasing will not be used in Russia.” This meant that some Russian consumers were blocked from purchasing coveted Chanel products in the wake of Russia’s invasion of Ukraine, in furtherance of an move by Chanel to abide by European Union sanctions that prohibit the export of luxury goods to Russia.

“The latest sanctions from the European Union and Switzerland prohibit ‘the sale, directly or indirectly, of luxury items to any natural, legal person or entity in the Russian Federation or for use in the Russian Federation,’” Chanel said in a statement in early April, noting at the time that it was “working to improve the procedure.” Chanel – which maintains the title of the second largest luxury brand in the world, following only behind Louis Vuitton – also apologized in the statement “for any related misunderstandings and inconveniences” that have stemmed from its efforts to implement the newest EU sanctions that prohibit companies in the 27-member bloc from exporting luxury goods worth more than 300 euros ($330) to Russia. 

The response from Russia consumers, including models and heavily-followed influencers, who went so far as to post videos of themselves destroying Chanel bags on social media in protest, demonstrates the risk of tarnishment that comes from brands taking stands over issues, including geopolitics. On the heels of Western brands making statements about human rights abuses in their supply chains in connection with alleged forced labor in the Xinjian region in northwest China, which is known for its cotton production, massive boycotts came by way of the Chinese market. In addition to consumers swearing off companies – ranging from Nike and H&M to Burberry and Calvin Klein – for expressing their “concern,” leading Chinese e-commerce platforms “kicked major international labels off their sites, and a slew of celebrities have denounced their former foreign employers,” the New York Times reported at the time. 

The Times’ Vanessa Friedman and Elizabeth Paton called the situation, which saw adidas’ Q2 2021 sales fall by more than 16 percent in China “because of geopolitical tensions,” CEO Kasper Rorsted revealed, “a perfect case study of what happens when market imperatives come up against global morality.” H&M similarly reported a drop in sales – 23 percent in Q2 2021 – in China as a result of consumer boycotts, with CEO Helena Helmersson calling the situation “complex.” Meanwhile, seeming looking to save face, Nike’s CEO John Donahoe asserted at the time that Nike, which also faced pushback over comments about the alleged use of Uyghur forced labor in cotton production, is “a brand that is of China and for China.” 

At the same time, while the likes of H&M, adidas, and co. experienced what the Washington Post has characterized as “nationalistic backlash that led Chinese consumers to call for boycotts and hit brand loyalty and market share to a degree that these companies may never come back from,” Japanese apparel giant Uniqlo opted for a neutral stance, and has been rewarded as a result. “I want to be neutral between the U.S. and China,” Tadashi Yanai, the owner of Uniqlo parent Fast Retailing, told Nikkei Asia in December 2021.   While its “more outspoken peers saw their revenues in the greater China region slump sharply,” Bloomberg has since reported that “Uniqlo’s went in the opposite direction, with takings rising 17 percent in the year ended August 2021.”

The publication notes that it is not merely its apparel offerings that set Uniqlo apart from its rivals in the “lucrative–but tricky–Chinese apparel market,” stating that “there is also the Japanese brand’s approach to contentious political issues. In particular, the predominantly Muslim Xinjiang region in China’s northwest.” 

Back in terms of the robust luxury-centric sanctions that have been levied upon Russia by the U.S., UK, and EU, among others, if other brands and retailers are following in the lead of Chanel and Harrods, it is being kept quiet, presumably for fear that bottom-line-impacting backlash is sure to follow. 

Tiffany & Co. is looking to get the amended complaint filed against it by Cartier tossed out of court, arguing that its rival jeweler’s case is a “doomed” attack, “calibrated for maximum publicity.” In a newly-filed motion to dismiss, Tiffany & Co. asserts that Cartier has failed to establish the trade secret misappropriation, unfair competition, and tortious interference claims that it sets out in the case that it first filed in New York state court in March, in which it accuses Tiffany of luring former Cartier employee – and named defendant – Megan Marino away from her role as its Assistant Manager for Jewelry Merchandising to join Tiffany, and getting her to share “very sensitive and valuable” internal Cartier documents in the process. 

In response to the amended complaint that Cartier lodged with the court in April, in which it claims that Tiffany engaged in a concerted effort “to solicit and receive … trade secrets and other confidential information that would facilitate the pursuit of [its] stated corporate goal of competing with Cartier’s High Jewelry business” from two former Cartier employees, Tiffany argues that Cartier has failed to make its case. Primarily, Tiffany asserts that Cartier does not allege that the information that Marino allegedly stole from Cartier – including an inventory spreadsheet and “general revenue data” – amounts to trade secret information. 

In accordance with New York law, Tiffany contends that trade secrets are limited to “the most sensitive corporate information designed for ‘continuous use in the operation of the business,’” which is distinct from information about “‘single or ephemeral events in the conduct of the business,’ such as general financial and operational data.” While Cartier argues that access to such information “would allow a competitor to ‘make adjustments’ to their product allocations to match [its own],” Tiffany asserts that the information is “ephemeral, operational data, long-since outdated or provisional only, that can never qualify for protection under New York law.”

Second, Tiffany asserts that even if the information at issue was to be construed as trade secrets, Cartier’s claim is still lacking, as that information was “never sufficiently kept secret.” The ability of “Marino, a low-level assistant manager who did not work with High Jewelry, [to] so easily to access supposedly highly-sensitive High Jewelry documents prove[s] only that the documents are not and were never treated as sensitive at all,” Tiffany contends. While Cartier’s shared drive – where the information at issue was stored – was password-protected and its employees were required to sign confidentiality agreements, Tiffany contends that “Cartier admits that the documents were not separately encrypted, password-protected, marked or segregated, or otherwise given protections beyond those provided to standard Cartier documents.” 

Finally, Tiffany pushes back against Cartier’s trade secret claim on the basis that it “did nothing wrongful” in connection with Marino’s alleged misappropriation. “Tiffany cannot have aided and abetted Marino in breaching any fiduciary duty where there are no allegations that Tiffany knew what Marino was doing or offered assistance,” the LVMH-owned brand argues. Instead, Tiffany asserts that “Cartier admits that Marino took the documents at issue without any prompting from Tiffany and then voluntarily created and used spreadsheets at Tiffany without Tiffany’s knowledge.” 

In addition to allegedly falling short in establishing its trade secret claim, Tiffany argues that Cartier’s claim that Tiffany tortiously interfered fails because “there are no alleged facts showing Tiffany knew of Marino’s agreements or was the but-for cause of any breach.” Beyond that, Cartier’s allegation that Tiffany aided and abetted Marino’s breach of her fiduciary duty to Cartier similarly fails because Cartier “did not and cannot plead at least two elements of this claim,” per Tiffany. Specifically, it argues that Cartier makes “no specific factual allegations supporting its naked assertion that Tiffany knew of Marino’s breach,” and “no particularized allegation that Tiffany ever gave ‘substantial assistance’ to Marino in the ‘achievement of the primary violation.’” And still yet, Cartier’s unfair competition claim “fails for the same reasons as its other claims,” per Tiffany. 

With the foregoing in mind, Tiffany argues that the court should dismiss all of Cartier’s claims against it with prejudice. 

Tiffany’s motion comes less than a month after Cartier filed an amended complaint, adding an additional defendant on the heels of allegedly “discover[ing] additional substantial evidence of trade secrets misappropriated from Cartier.” Since filing suit, Cartier claims that it “has confronted Tiffany about another employee, Jaron Green, who recently misappropriated dozens of confidential Cartier documents immediately prior to resigning” from his role as Cartier’s Assistant Boutique Manager in Honolulu, Hawaii to take on a “more senior role” at Tiffany. 

“Rather than disclose the extent of Green’s misconduct and state whether any of Cartier’s information was disseminated or used,” Cartier claims that Tiffany “continues to employ Green and to defend him,” thereby, requiring it to “bring this action to address Green’s breach of his Confidential Information and Non-Solicitation Agreement and misappropriation of Cartier’s trade secrets and to hold Tiffany responsible for its conduct” in connection with that alleged “breach,” as well as the previously alleged wrongdoing of Tiffany and Marino. 

The case is Cartier v. Tiffany & Co., et al., 650925/2022 (N.Y. Sup.).

Six months ago, negotiators at the United Nations’ Glasgow climate summit celebrated a series of new commitments to lower global greenhouse gas emissions and build resilience to the impacts of climate change. Analysts concluded that the new promises, including phasing out coal, would bend the global warming trajectory, though still fall short of the Paris climate agreement. Today, the world looks ever more complex. Russia is waging a war on European soil, with global implications for energy and food supplies. Some leaders who a few months ago were vowing to phase out fossil fuels are now encouraging fossil fuel companies to ramp up production. 

In the U.S., the Biden administration has struggled to get its promised actions through Congress. Last-ditch efforts have been underway to salvage some kind of climate and energy bill from the abandoned Build Back Better plan. Without it, U.S. commitments to reduce emissions by over 50 percent by 2030 look fanciful, and the rest of the world knows it – adding another blow to U.S. credibility overseas. Meanwhile, severe famines have hit Yemen and the Horn of Africa. Extreme heat has been threatening lives across India and Pakistan. Australia faced historic flooding, and the Southwestern U.S. cannot keep up with the wildfires.

At the halfway point of this year’s climate negotiations, with the next U.N. climate conference in November 2022, here are three areas to watch for progress and cooperation in a world full of danger and division.

Crisis Response with Long-Term Benefits

Russia’s invasion of Ukraine has added to a triple whammy of food price, fuel price and inflationary spikes in a global economy still struggling to emerge from the pandemic. But Russia’s aggression has also forced Europe and others to move away from dependence on Russian oil, gas and coal. The G7 – Canada, France, Germany, Italy, Japan, the U.K. and the U.S. – pledged on May 8, 2022, to phase out or ban Russian oil and accelerate their shifts to clean energy.

In the short term, Europe’s pivot means much more energy efficiency – the International Energy Agency estimates that the European Union can save 15%-20% of energy demand with efficiency measures. It also means importing oil and gas from elsewhere. In the medium term, the answer lies in ramping up renewable energy.

There are issues to solve. As Europe buys up gas from other places, it risks reducing gas supplies relied on by other countries, and forcing some of those countries to return to coal, a more carbon-intense fuel that destroys air quality. Some countries will need help expanding renewable energy and stabilizing energy prices to avoid a backlash to pro-climate policies. As the West races to renewables, it will also need to secure a supply chain for critical minerals and metals necessary for batteries and renewable energy technology, including replacing an overdependence on China with multiple supply sources.

Ensuring Integrity in Corporate Commitments

Finance leaders and other private sector coalitions made headline-grabbing commitments at the Glasgow climate conference in November 2021. They promised to accelerate their transitions to net-zero emissions by 2050, and some firms and financiers were specific about ending financing for coal plants that don’t capture and store their carboncutting methane emissions and supporting ending deforestation. Their promises faced cries of “greenwashing” from many climate advocacy groups. 

Some efforts are now underway to hold companies, as well as countries, to their commitments. A U.N. group chaired by former Canadian Environment Minister Catherine McKenna, for instance, is now working on a framework to hold companies, cities, states and banks to account when they claim to have “net-zero” emissions. This is designed to ensure that companies that pledged last year to meet net-zero now say how, and on what scientific basis. 

For many companies, especially those with large emissions footprints (like fashion), part of their commitment to get to net-zero includes buying carbon offsets – often investments in nature – to balance the ledger. This summer, two efforts to put guardrails around voluntary carbon markets are expected to issue their first sets of guidance for issuers of carbon credits and for firms that want to use voluntary carbon markets to fulfill their net-zero claims. The goal is to ensure carbon markets reduce emissions and provide a steady stream of revenue for parts of the world that need finance for their green growth.

Climate Change Influencing Elections

Climate change is now an increasingly important factor in elections. French President Emmanuel Macron, trying to woo supporters of a candidate to his left and energize young voters, made more dramatic climate pledges, vowing to be “the first major nation to abandon gas, oil and coal.” With Chile’s swing to the left, the country’s redrafted constitution will incorporate climate stewardship. In Australia, Scott Morrison’s government – which supported opening one of the world’s largest coal mines at the same time the Australian private sector is focusing on renewable energy – faces an election on May 21, 2022, with heatwaves and extreme flooding fresh in voters’ minds. Brazil’s Jair Bolsonaro faces opponents in October who are talking about protecting the climate.

Elections are fought and won on pocketbook issues, and energy prices are high and inflation is taking hold. But voters around the world are also experiencing the effects of climate change firsthand and are increasingly concerned.

The Next Climate Conference

Countries will be facing a different set of economic and security challenges when the next round of U.N. talks begins in November in Sharm el-Sheikh, Egypt, compared to the challenges they faced in Glasgow. They will be expected to show progress on their commitments while struggling for bandwidth, dealing with the climate emergency as an integral part of security, economic recovery, and global health.

There is no time to push climate action out into the future. Every decimal point of warming avoided is an opportunity for better health, more prosperity and better security.

Rachel Kyte is the Dean of the Fletcher School at Tufts University. (This article was initially published by The Conversation.)