Luxury goods-makers win fight to block retailers from selling on Amazon

Pauline Gross
December 8, 2017

The Court of Justice of the EU (ECJ) ruling came in a case involving USA cosmetics maker Coty's German subsidiary and German retailer Parfumerie Akzente, which sells Coty's goods on sites including Amazon against the company's wishes.

Opponents have warned that restricting sales will hurt smaller businesses.

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.

In order to preserve the "luxury image" of its products, Coty markets certain of its brands via a selective distribution network, that is to say, through authorised distributors.

In a case led by USA 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 European Court of Justice stated that the decision has been taken to protect and maintain the luxury image of the products.

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The European Court of Justice concluded that companies offering luxury products could limit the distribution of their goods, including by blocking distributors from selling the items on third-party websites, as long as the limitations were properly tailored and uniformly applied.

The CJEU noted, however, that Coty allows its authorised distributors under certain conditions to advertise the sale of its luxury goods via the internet on third-party platforms and to use online search engines.

Europe's top court has passed a law restricting distributors from selling brands online without permissions.

Parfumerie Akzente refused to sign a revised contract with the Amazon ban, however, leading Coty to sue it in Germany.

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.

The president of the German cartel office, Andrea Mundt, suggested the ruling's focus on luxury goods meant it would have a limited impact.

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