US jeans giant Levi Strauss & Co was celebrating on Wednesday after leading UK supermarket chain Tesco admitted defeat in its long-running battle to source cut-price denim products from outside the European Union.

Tesco hoisted the white flag after a High Court judge upheld a decision by the European Court of Justice last year that stores must have the permission of the trademark owner to buy goods on the grey market.

The grocery chain currently sells Levi 501s for around £33 compared to a recommended retail price of £50, but it claimed if it could source from the grey market it could have cut the price even further to around £25 and increased supply.

Tesco and fellow retailer Costco’s legal teams had claimed the ban was an infringement of human rights and described the ruling as "disappointing", although it said it still stocks designer goods at lower prices than authorised dealers by sourcing them from inside the EU.

Tesco director, John Gildersleeve, said "Today’s ruling is disappointing but changes nothing. Cut price clothes will stay on sale at Tesco.

"We’ll look at the judgment closely but after a long battle to promote free trade, and clear the way to allow imports of cheaper clothes from outside Europe, it seems we’ve run out of legal road."

"Our customers think this is a daft law, so it’s time for the law makers, the Government and the European Union, to get it changed to give consumers the lower prices they want."

Delighted Levi Strauss commented: "The High Court in London decided that Tesco had been selling Levi jeans illegally. The Levi brand is the most valuable asset we have. It is a definitive win for brand owners, who are ensured the right to decide how to distribute their products in Europe."