Luxury beauty giant Coty wins ECJ ruling against online sellers

Frederick Owens
December 8, 2017

The CJEU said that the specific ban Coty has placed on sales of its goods via third party platforms "does not go beyond what is necessary in order to preserve the luxury image of those goods".

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".

The issue is significant in Europe, whose companies account for 70 percent of global luxury goods sales.

The case was bought by cosmetics group Coty, which owns brands such as Marc Jacobs and Calvin Klein, but it is expected to set a precedent that could allow other luxury brands to stop their distributors selling their goods on Amazon, eBay and other online marketplaces.

Luxury owners have long waged a battle against what they say are free riders cashing in on their exclusivity and branding.

Opponents have warned that restricting sales will hurt smaller businesses.

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

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".

After intense lobbying by LVMH, Richemont and other luxury goods companies, European Union antitrust regulators laid down rules in 2010 allowing brand owners with less than a 30 percent market share to block online retailers without a bricks-and-mortar shop from distributing their products.

German judges had previously ruled, in a court case revolving around sports brands Asics and Adidas, that retailers could choose where the products are sold.

Alan Davis of Pinsent Masons, the law firm behind, said, however, that the judgment by the Court of Justice of the EU (CJEU) does not favour online marketplaces and third party resellers.

The CJEU was ruling in a case referred to it by a court in Frankfurt, Germany.

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