Parallel Universe: How ending parallel import restrictions cuts costs for British consumers

Parallel imports are genuine products imported into the United Kingdom without the consent of the intellectual property (IP) rights holder, often taking place when there is a price or availability difference between markets. Parallel import restrictions (PIRs) allow producers to control distribution across borders and price-discriminate between different national markets. The UK historically allowed parallel imports based on a principle of international exhaustion of rights. This changed following the harmonisation of EU trademark rules in the late 20th century, with the European Court of Justice (ECJ) requiring member states to block imports of genuine goods from outside the EU without rights holder permission. Brexit has provided an opportunity to diverge from the EU approach and abolish an effective trade barrier. The previous government consulted on the future parallel import regime in 2021 but did not make a final decision prior to the election. There is therefore an opportunity for the new government to take action. Since Brexit, the UK has continued allowing parallel imports from the EU/EEA while restricting imports from the rest of the world. This approach is arbitrary, inconsistent, and may violate World Trade Organization (WTO) obligations. Removing PIRs would intensify competition, lower consumer prices, expand consumer choice and improve supply chain flexibility. Academic evidence from Australia, New Zealand and within the EU suggests benefits to consumers from allowing parallel imports. The NHS, for example, is estimated to save hundreds of millions of pounds each year as a result of parallel imports from the EU. Arguments from rights holders against removing restrictions - such as harming domestic creative industries, reducing investment incentives, impacting product quality, distorting retail competition, and environmental/ethical concerns - are not well supported by evidence. There may be limited exceptional cases, such as low-cost pharmaceuticals for developing countries, warranting continued restriction. The UK should revert to its historical stance by allowing parallel imports from all countries with narrow exceptions as needed. This would be consistent with the approach taken by many other nations globally.