"If you destroy a free market, you create a black market. If you make ten thousand regulations you destroy all respect for the law"
- Winston Churchill
It is known to all South Africans that the trade of tobacco and alcoholic goods was banned by our government during the national state of disaster in April 2020 due to COVID-19. Thus, these products are not allowed to be sold to the public during the lockdown.
This raises two main arguments. One, the people who despise smoking and drinking due to the harmful health effects, who are happy with the news. On the other hand, the unhappy lot who prefer to have their daily dose of nicotine and alcohol.
What the participants of these two arguments are mostly unaware of is the millions in revenue lost by the fiscus due to the ban, which gives the counterfeiter or illicit trader a platform to thrive.
The ban on these products will not, in any way or form, deter the consumption of alcohol or tobacco products by the public. There will be no epiphanies reached - especially in a time of crisis which will lead consumers to the illicit or counterfeit trade - as they most likely have.
Despite these issues, this causes damage to a brand in the sense that the revenue from those products are not flowing to the brand holder, but to the counterfeiter or illicit trader instead. The other fact to consider, is how does the legitimate brand holder or manufacturer gain back the lost ground when the ban has been lifted?
Despite the powers in place to simply lift the ban, the government rather chose to extend the ban.
The tobacco and cigarette trades are not the only ones suffering. Any 'non-essential' goods are also not allowed to be traded during these times, without a clear indication of when sales of these items will be allowed to resume. The same effect will happen here. Consumers will turn to the counterfeiter as opposed to the legitimate trader.
The option available to a brand holder is to establish an aggressive Anti-Counterfeiting strategy with their IP attorney during this time in order to hit the ground running with investigations and the seizure of counterfeit goods, and to take back the lost ground as swiftly as possible.
Your IP attorney can also assist in lodging the required complaint with the South African Police Service against an illicit trader in order to have the goods removed from the market.
Article originally published on 7 May 2020
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