The BBC's Denise Mahoney: "The strongest criticsm yet of trademark owners"

MPs have backed campaigns by supermarket chains including Asda and Tesco to end restrictions on the 'grey market' where genuine trademarked goods are imported from abroad to be sold within the UK at reduced prices.

Ending controls on the grey market would allow large retailers to buy designer brand products at lower prices than they are currently available in the UK and pass benefits on to shoppers.

But manufactures claim that supermarkets fail to offer the right setting for their products and argue staff may not be able to give customers relevant advice on their goods.

At the moment designer label goods made outside the European Union can not be sold legally in the UK without the permission of the manufacturer.

A Labour member of the Trade and Industry Select Committee, Martin O'Neill, said: "We are talking about people being overcharged and we are talking also about supermarkets who have identified sources of goods that they think they can bring to the market and to their customers at low prices."

He added that companies attempting to stop the sale of their goods at lower prices should be "named and shamed".

But a spokesman for the British Brands Group insisted: "Prices are not artificially high. The UK is a very competitive market."

'Cheaper goods'

In a report published on Thursday, the committee said: "We recommend that the government and the European Commission work towards the adoptions of a broad principle of international exhaustion of trade mark rights, allowing grey imports of goods but afford exceptional protections to those sectors where such a principle could be shown to have severe detrimental effects."

They said such an approach would "lead to cheaper goods for consumers".

The committee also called for the UK Government and the EU to look into labelling of grey goods where products marketed under the same brand are substantially different depending on the country of manufacture.

MPs were particularly concerned over the labelling of cars and motor bikes imported on the grey market to alert consumers to the potential consequences of buying such vehicles.

At present a European Union directive states that while retailers can buy grey goods from unauthorised suppliers within European Union they cannot import from outside the EU.

Brand court case pending

A case regarding the illegal importation of grey market goods is currently pending in the European Court of Justice.

Supermarkets claim trademark owners such as Levi jeans, Calvin Klein and Prada should not have the right to determine exactly where their goods are sold.

Tesco's commercial director John Gildersleeve said: "This report shows that it is the law keeping some prices up here and Tesco is right to fight for change and a better deal for shoppers.