Luxury brands lifted by European Union court backing for online sales ban


Luxury brands lifted by European Union court backing for online sales ban

Coty's German unit filed the case against one of its retailers, Parfumerie Akzente, which used Amazon to sell Coty products.

In a boost to some of the world's most famous luxury labels, the European Court of Justice ruled that manufacturers had the right to protect their image by restricting sales of their products through websites such as Amazon and Ebay.

Manufacturers of goods that aren't luxury brands "still have no carte blanche to sweepingly limit their distributors' use of sales platforms, according to our assessment", Mundt added.

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.

Coty allows its products to be sold by authorized dealers but puts a number of restrictions on how such sales are carried out, finding such terms necessary to preserve its branding image.

Coty, owner of brands such as Marc Jacobs and Calvin Klein raise a case on this issue.

It is no secret that some luxury brands are not too keen on online sales. 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.

A RULING by Europe's top court could see luxury goods pulled from online retail sites such as Amazon. 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.

Germany's antitrust agency said it was examining the European Union court ruling, but expected it to have only a limited effect on its own decisions.