April 2011, Volume 7, Issue 4
Published by AEGIS Communications
Gray Market vs Black Market
Black market products—such as those that are counterfeit—are illegal by the laws of most countries. "Gray market is typically not illegal, but it certainly violates both written and unwritten agreements and is a very unsavory way of doing business," says Brian Melonakos.
"Black market typically involves transactions outside of the official economy (either not paying taxes or dealing with illegal goods or services), whereas gray market is more about diversion or counterfeiting," notes Krisa Drost. "But in practical terms, both often involve a violation of the law and present the buyer with the risks of purchasing products from an unknown supply chain."
Counterfeit goods are fake products designed to look like genuine goods. They also move through uncontrolled supply chains, so the lines between gray market goods and counterfeit goods often are blurry, Drost elaborates. However, the risks don’t stop with repackaging, relabeling, and packaging alterations. The channels used for gray market products typically are the same channels used to sell counterfeit products. Counterfeit drugs and devices used in dentistry pose serious risks to the health of patients, and put the reputation of treating doctors and manufacturers of the genuine products at risk.
"With black market, counterfeit products, we are now entering exponentially more serious and dangerous ground for patients, doctors, dealers, and manufacturers," stresses Leo Pranitis. "There is significant overlap between gray market and black market, and entities selling gray market goods also sell black market goods, knowingly or unknowingly. Thus, customers and dental distributors who turn to gray market goods risk exposing patients to black market products."
The counterfeit market adds another level of complexity to the gray market problem, observes Paul Jackson. It’s lucrative for unreputable entities to make product, and so much product is available from all around the world. "When you end up with counterfeiting, that adds a new risk for everybody," he explains. "For dealers who have a credit policy, if a dentist bought some products from them and then sent back counterfeit, it could get into the dealer’s inventory and, ultimately, hurt another dentist."