Published: Thu, December 07, 2017
Worldwide | By Gretchen Simon

Too chic for Amazon: Luxury firms in European Union can pick sales sites

Too chic for Amazon: Luxury firms in European Union can pick sales sites

A German court, believing Coty was acting anti-competitively, sought a ruling from European Union courts.

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. A clause as used by Coty, that prohibits authorised distributors from selling through third-party online platforms, is similarly allowed when it has the objective of preserving the luxury image of the goods in question, is laid down uniformly and not applied in a discriminatory manner; and is proportionate in the light of the pursued objective.

The court said Coty's effort to limit distributors "is appropriate to preserve the luxury image of those goods", adding that it "does not appear to go beyond what is necessary".

The Court of Justice of the EU (ECJ) ruling came in a case involving US 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.

However, opponents have warned that this decision would hurt small dealers and their business.

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Coty said in a statement: "Coty welcomes this decision which confirms that the character of luxury brands necessitates and justifies selective distribution, whatever the distribution channel".

Parfumerie Akzente said it meets the terms for online sales set by luxury owners.

Europe's top court has passed a law restricting distributors from selling brands online without permissions. 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.

"The court notes in this context that the quality of luxury goods is not simply the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury", it says.

The case is C-230/15 Coty Germany.

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