Luxury brands win European Union court ruling on online distribution

Luxury goods makers can block online sales, Europe's top court rules

Luxury goods makers can block online sales, Europe's top court rules

Legal experts have said online marketplaces will now have to have direct contractual relationships with luxury brands in order to be able to continue to offer them on their platforms. "In particular, it allows the brand owners to prevent the sale of the products by their authorised distributors on online market places such as Amazon and eBay. Therefore, any impairment to that aura of luxury is likely to affect the actual quality of those goods". However, e-tailers such as Amazon and eBay have countered that the ruling to curb online sales will be harmful to small businesses while being anti-competitive. The case concerns a dispute between USA beauty products manufacturer Coty and German business Parfümerie Akzente, which sells perfumes and other toiletries over the internet. Coty initially sought to prohibit Parfümerie Akzente's onward distribution of its products via the platform "amazon.de".

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". But luxury fashion brands are seem to be unhappy with its distributors selling the brand items online without the permission.

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The European Court of Justice said in principle a ban was "appropriate to preserve the luxury image" of products. Even brands have all the right to stop distributors from selling on online platforms.

European Union competition law generally prevents companies from using agreements which have as their object or effect the restriction of competition.

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Speaking during the ruling, the ECJ said, "A supplier of luxury goods can prohibit its authorized distributors from selling those goods on a third-party internet platform such as Amazon". 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".

Though the German court where a Coty Inc. unit sued an.

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