Luxury companies can ban Amazon sales

Cheryl Sanders
December 7, 2017

And today the European Union court ruled: "A supplier of luxury goods can prohibit its authorised distributors from selling those goods on a third-party internet platform such as Amazon".

In a move that could have far-reaching consequences, the Court of Justice backed the case brought by U.S. cosmetics giant Coty - which makes Rimmel and CoverGirl brands, among others.

The court statement on its findings explains that it considers the retail platform of luxury goods as having an impact on the public perception of brands.

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.

In a case led by United States cosmetics brand Coty, which argued that German retailer Parfümerie Akzente sold its goods on sites against Coty's wishes, the European Court of Justice said online marketplaces detracted from the image of luxury brands.

The issue is significant in Europe, whose companies account for 70 percent of global luxury goods sales. Therefore, luxury goods manufacturers will be able to prevent their products from being sold on third party websites by distributors.

Brand owners have previously argued that they should have the right to choose their distributors to protect their image and exclusivity. Only recently have some companies buckled and accepted online sales, but these companies usually still only sell on their own online platform.

"Our preliminary view is that such manufacturers have not received carte blanche to impose blanket bans on selling via platforms", he said.

Germany will now have to fall in line though, said a competition lawyer, who declined to be named.

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