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etvfutures.com December 17, 2017


Luxury brands win European Union court ruling on online distribution

07 December 2017, 05:14 | Opal Carroll

Reuters

Reuters

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.

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.

The court said Coty's effort to limit distributors "is appropriate to preserve the luxury image of those goods", adding that it "does not appear to go beyond what is necessary".

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

This new ruling should help to preserve the product value chain offer now that unauthorised distribution of luxury beauty products has been legally defined by the European Court of Justice.

"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", Coty said.

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

But the European court said that for luxury goods firms, such rules can be critical to protecting the value of the products.

The ruling said luxury brands have no contractual relationship with online marketplaces, which in turn are not required to comply with brands' quality criteria.

"Our preliminary view is that such manufacturers have not received carte blanche to impose blanket bans on selling via platforms", the office's president, Andreas Mundt, said in a statement. A judge has now ruled that when a brand collaborate with a small group of retailers, it can say where its products can and cannot be sold, in order to protect the brand's image, according to the FD. In yesterday's judgment, the Court repeats it earlier case law that selective distribution systems are compatible with the European Union cartel prohibition if resellers are chosen on the basis of objective criteria of a qualitative nature that are laid down uniformly and not applied in a discriminatory fashion and that do not go beyond what is necessary.

The case is C-230/15 Coty Germany.



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