The supermarket chain Tesco takes on the jeans manufacturer Levi Strauss in court over its policy of selling unauthorised imports of the designer clothing.

Tesco wants the right to import designer goods from around the world and sell them at discount prices to UK customers.

Lawyers for the supermarket will tell the European Court of Justice in Luxembourg that the existing regulations keep prices high and stop competition.

But Levi says it has the right to choose which retailers sell its products.

Tesco argues that Levi is trying to prevent it from giving consumers a better deal, by buying products in cheaper markets such as the US and Eastern Europe and bringing them in to sell in the UK.

Tesco argues that once a product has been bought the new owner has every right to decide what to do with it. But that is not the law at the moment.

Baked beans

But Levi insists the customer already has the choice of 18,000 authorised Levi dealers throughout Europe which guarantees good service, quality and range.

It also believes it does not suit the brand image to sell the designer jeans alongside tins of baked beans.

The dispute started more three years ago when Tesco sold Levi 501s for �30 in selected stores - �15 lower than the average shop price.

But the European Court of Justice banned the sale of branded goods bought through unauthorised channels outside the European Union - on the so-called 'grey market'.

A court decision is expected by the early summer.

As the case got under way, the European Commission said a change in EU law to allow any retailer to sell any branded goods would not bring down prices "in the short-term".

A Commission spokesman said an exhaustive study had showed there would be no "significant" fall in consumer prices if the current law on trade marks was changed.

"The 1989 trade mark directive makes it clear that everyone has the right to trade freely within the EU," the spokesman said.

"But it also gives manufacturers the right to block imports of their trade-marked goods from countries outside the EU.

"We have looked at this issue. We have undertaken a thorough study and we have concluded that a change in the current trade mark rules would not lead to a significant fall in consumer prices in the short term."