Yahoo Finance Luxury goods suppliers can ban distributors selling on Amazon says ECJ
Suppliers of luxury goods are not breaking European Union law if they ban their distributors from selling posh products on websites such as Amazon.
The European Court of Justice (ECJ) today said that such a ban did not go beyond what is necessary “to preserve the luxury image of the goods” and did not break EU competition rules by restricting customer choice.
The Luxembourg court’s decision will set a precedent meaning that makers of high end goods across the EU, including Britain, will be able to prevent them being sold on third party websites by their authorised distributors.
“The quality of luxury goods is not simply the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury. That aura is an essential aspect of those goods” the ECJ said.
“Any impairment to that aura of luxury is likely to affect the actual quality of those goods.”
The issue is significant in Europe, whose companies account for 70% of global luxury good sales.
The case was referred to EU judges by a German court in Frankfurt, which will now make a final judgment on the battle between luxury cosmetic company Coty Germany and Parfümerie Akzente, one of its distributors.
The legal battle is over whether Parfümerie Akzente could sell Coty products on Amazon’s German website, against Coty’s wishes.
Coty markets some of its high-end brands exclusively through a network of selected, authorised distributors.
Those distributors must make sure their shops adhere to standards of location, decor and furnishing laid down by the cosmetics firm.
While they can sell goods online, they must only do so on their own branded website, their “electronic shop window”.
Coty expressly forbids its distributors from using sites such as Amazon, which EU judges said was “appropriate to preserve the luxury image” of its goods.
The cosmetics firm brought the case against its distributor for breaching its contract to a German court, which referred the case to the ECJ to see if the ban broke EU competition law.
Whether the decision will still hold sway in the UK after Brexit will depend on the ongoing negotiations but any change to the law will likely take many years.
