€3.5bn loss each year in EU from fake accessories

Swiss watch detailThe manufacture of counterfeit jewellery, watches, handbags and luggage costs EU businesses around €3.5bn each year, according to new studies.

Two new reports from the Office for Harmonization in the Internal Market (OHIM) - the EU's largest intellectual property agency - reveal that 13.5 per cent of sales of jewellery and watches and 12.7 per cent of sales of handbags and luggage in the EU are lost due to counterfeiting.

Those lost sales translate into 27,000 jobs directly lost across the two sectors, as legitimate manufacturers employ fewer people than they would have done in the absence of counterfeiting.

Moreover, the total yearly loss of government revenue as a result of counterfeit products in these sectors across the EU in terms of household income taxes, social security contributions, corporate income taxes and VAT can be estimated at €1.1bn, says the OHIM.

The two reports are the latest in a series being produced by the OHIM to try to plug gaps in the knowledge about the scale of counterfeiting and its impact on the EU economy.

Among the highlights of the report is the impact on counterfeiting on the manufacture of handbags and luggage in Italy, which accounts for more than half of the EU's total output and was worth €6.5bn in 2012.

The sector in Italy loses €520m every year as a result of counterfeiting - one third of total lost sales in the EU, says the report. Similarly, France's €2.7bn handbag and luggage sector loses €99m a year to counterfeiting, while the equivalent figures for Germany are €1.7bn and €231m, respectively. The full dataset including figures from other countries can be viewed here.

Italy is also the largest producer of jewellery in the EU with production of €5bn each year, with counterfeiting costing the sector some €400m, with France's €1.5bn sector losing €336m and Germany - the biggest producer of watches in the EU - losing €247m out of a total market worth €1.7bn. Data from other countries can be found here.

Commenting on the findings, OHIM president António Campinos said: "The jewellery and watches sector and the handbags and luggage sector in the EU are overwhelmingly made up of micro-enterprises, which employ fewer than 10 people."

The average number of employees per enterprise in the jewellery and watches sector is just three people, he added, noting that "such businesses are particularly vulnerable to the economic effects of counterfeiting."

OHIM will shortly change its name to the European Union Intellectual Property Office (EUIPO).

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