Coty and other luxury brand owners scored an important victory on Wednesday in their bid to prevent retailers selling their products on online platforms such as Amazon and eBay after Europe’s top court said they have the right to do so to preserve their image.
The issue is significant in Europe, whose companies account for 70 percent of global luxury good sales. Luxury owners have long waged a battle against what they see as free riders cashing in on their exclusivity and branding.
Online platforms such as Amazon and eBay, in turn, say online sales curbs are anti-competitive and hurt small businesses.
The Court of Justice of the EU (ECJ) ruling came in a case involving U.S. cosmetics maker Coty’s German subsidiary and German retailer Parfumerie Akzente, which sells Coty’s goods on sites including Amazon against the company’s wishes.
A German court had sought guidance on whether banning online sales on third-party sites restricted competition.
“A supplier of luxury goods can prohibit its authorized distributors from selling those goods on a third-party internet platform such as Amazon,” the ECJ said.
“Such a prohibition is appropriate and does not, in principle, go beyond what is necessary to preserve the luxury image of the goods.”
After intense lobbying by LVMH and Richemont and other luxury owners, EU antitrust regulators laid down rules in 2010 to allow brand owners with less than a 30 percent market share to block online retailers without a bricks-and-mortar shop from distributing their products.
The issue has split EU countries, with Germany more eager to promote e-commerce. In two test cases in recent years, the German cartel office forced Adidas and Asics to drop such bans, saying online platforms are crucial for small- and medium-sized companies and consumers.
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