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emfizz.com December 16, 2017


Luxury brands win European Union court ruling on online distribution

08 December 2017, 12:50 | Terri Saunders

Pop star Rita Ora promotes the Rimmel London range of cosmetics More

Pop star Rita Ora promotes the Rimmel London range of cosmetics More

Coty's German unit filed the case against one of its retailers, Parfumerie Akzente, which used Amazon to sell Coty products. The European Commission then claimed that manufacturers should be able to decide, in order to protect their brand's image.

Online platforms such as Amazon and eBay in turn say online sales curbs are anti-competitive and hurt small businesses. It subsequently upheld Coty's contractual clause which seeks to stop distributors forwarding luxury goods to third parties for onward sale without prior brandowner permission.

Coty's distribution contract expressly prohibits its distributors from selling relevant goods via third-party online platforms which operate in a discernable manner towards consumers. Only recently have some companies buckled and accepted online sales, but these companies usually still only sell on their own online platform.

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"The prohibition at issue in the main proceedings enables the supplier of luxury goods to check that the goods will be sold online in an environment that corresponds to the qualitative conditions that it has agreed with its authorized distributors", the ruling states. However, exemptions from that position apply under the Vertical Agreements Block Exemption (the VABE), including in respect to selective distribution systems. It also said that, from papers submitted as part of the case, it "does not appear possible to circumscribe, within the group of online purchasers, third-party platform customers". 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.

The president of the German cartel office, Andrea Mundt, suggested the ruling's focus on luxury goods meant it would have a limited impact.



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