Published: Thu, December 07, 2017
Finance | By Loren Pratt

Luxury brands can ban online sellers

Luxury brands can ban online sellers

Those brands received cheering news on Wednesday: the Court of Justice of the European Union (CJEU) ruled that luxury brands are perfectly entitled to forbid their distributors from selling through third-party online platforms such as Amazon and eBay.

European competition law can not stop a luxury retailer that does not want its wares being trafficked via the online retail giant Amazon, the EU's highest court ruled Wednesday.

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

It said: "A supplier of luxury goods can prohibit its authorised distributors from selling those goods on a third-party internet platform such as Amazon".

"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", the court found.

Luxury retailers such as Harrods and Selfridges could benefit from the ban as online marketplace customers would need to revert to these as authorised product distributors, but online platforms argue that the decision could hurt small businesses.

Parfumerie Akzente said it meets the terms for online sales set by luxury owners. The ECJ clarifies that it did not intend to set out a general statement of principle on selective distribution systems in that earlier judgment. A judge has now ruled that when a brand collaborate with a small group of retailers, it can say where its products can and cannot be sold, in order to protect the brand's image, according to the FD. "Germany will have to align with European case law and accept this kind of restrictions unless it contradicts some conditions in competition law", he said.

The decision out of Luxembourg comes in response to contractual proceedings that the luxury retailer Coty Prestige initiated in Germany against one of its authorized retailers.

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