Coty can impose online sales ban on luxury products
The European Court of Justice said a supplier could prohibit the selling of its goods on third-party platforms to protect its luxury image.
Luxury beauty company Coty can stop retailers from selling its products online, Europe’s top court has ruled.
The European Court of Justice (ECJ) said a supplier could prohibit the selling of its goods on platforms such as Amazon to protect its luxury image.
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.
“Such a prohibition is appropriate and does not, in principle, go beyond what is necessary to preserve the luxury image of the goods.”
The case involved Coty’s German subsidiary and German retailer Parfumerie Akzente, which sells Coty’s goods on sites including Amazon against the company’s wishes.
Coty told the court that its main concern was to safeguard the cachet of its luxury brands such as Marc Jacobs, Calvin Klein and Chloe.
Brand owners have previously argued that they should have the right to choose their distributors to protect their image and exclusivity.
Online platforms say such curbs are anti-competitive and hurt small businesses.
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 years of uncertainty, this means luxury brands can determine how they are placed on digital platforms and it is a clear ruling for the protection of luxury brands’ image, the defence of our teams’ work and the protection of consumers’ rights and information.
“As a consumer led company, we want to make our brands and products accessible for our consumers. It means that these can be accessed through our authorised retailers who will offer and promote our brands within the right environment and in the appropriate way.”
“We now look forward that this ruling be honoured throughout the European Union.”
The issue is significant in Europe, whose companies account for 70% of global luxury good sales.
Coty brought the original case in a Frankfurt court, which subsequently sought guidance from the ECJ.