World Media

Luxury goods makers can block online sales, Europe's top court rules

Luxury goods makers can block online sales, Europe's top court rules

In this case, the court found in favour of Coty who originally brought proceedings under competition law before the German courts against one of its authorised distributors, Parf├╝merie Akzente. "It prevents third party resellers from being able to free-ride on the huge investments that the manufacturers make in developing the brand image".

Opponents have warned that restricting sales will hurt smaller businesses.

The case is C-230/15 Coty Germany.

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In order to preserve the "luxury image" of its products, Coty markets certain of its brands via a selective distribution network, that is to say, through authorised distributors. Only recently have some companies buckled and accepted online sales, but these companies usually still only sell on their own online platform.

The European Court of Justice has now agreed that suppliers can prohibit the sale of their goods on online platforms to safeguard their image.

As long as luxury goods brands apply any ban on specific retail platforms uniformly in a contractual clause across its authorised distributors, the court finds such a clause is reasonable.

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Parfumerie Akzente refused to sign a revised contract with the Amazon ban, however, leading Coty to sue it in Germany. In yesterday's judgment, the Court repeats it earlier case law that selective distribution systems are compatible with the European Union cartel prohibition if resellers are chosen on the basis of objective criteria of a qualitative nature that are laid down uniformly and not applied in a discriminatory fashion and that do not go beyond what is necessary.

German judges had previously ruled, in a court case revolving around sports brands Asics and Adidas, that retailers could choose where the products are sold.

The president of the German Federal Cartel Office Mr. Mundt, as well as the industry lobby group CCIA which includes Amazon and eBay, have already issued statements claiming that the scope of the CJEU's judgment is strictly limited to the distribution of luxury products.

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