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Luxury brands can prohibit on-line sales through non-authorised third-parties

In a recent judgement [1], the Court of Justice of the European Union (CJEU) has confirmed that a supplier of luxury goods can prohibit its authorised distributors from selling those goods on a third-party internet platform such as Amazon.

The headquarters of Court of Justice of the European Union in Luxembourg - Photo: © Court of Justice of the European Union in Luxembourg

The headquarters of Court of Justice of the European Union in Luxembourg - Photo: © Court of Justice of the European Union in Luxembourg

In the specific case, Coty has brought proceedings before the German courts against one of its authorised distributors, Parfümerie Akzente, with a view to prohibiting it, in accordance with the selective distribution contractual clause, from distributing Coty goods via a non-authorised third-party platform, ‘amazon.de’ in the specific situation.

In its judgment, referring to its settled case-law, the Court reminds that a selective distribution system for luxury goods, designed primarily to preserve the luxury image of those goods, does not breach the prohibition of agreements, decisions and concerted practices laid down in EU law, provided that the following conditions are met:

  • resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion;
  • the criteria laid down must not go beyond what is necessary.

The Court notes in this context that 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 in that it thus enables consumers to distinguish them from other similar goods. Therefore, any impairment to that aura of luxury is likely to affect the actual quality of those goods.

Thus, the Court finds that a contractual clause which prohibits authorised distributors of a selective distribution network of luxury goods from using, in a discernible manner, third-party platforms for internet sales of the goods in question complies to the EU law provided that:

  • the clause has the objective of preserving the luxury image of the goods in question;
  • it is laid down uniformly and not applied in a discriminatory fashion;
  • and it is proportionate in the light of the objective pursued.

Footnotes

[1] Judgment of 6th December 2018 in Case C-230/16 Coty Germany GmbH v Parfümerie Akzente GmbH

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