Luxury brands can ban online sellers

Luxury product manufactures can block retailers from selling their merchandise on online marketplaces like Amazon.

"According to the court, the prohibition, imposed by a supplier of luxury goods on its authorised distributors, of the use, in a discernible manner, of third-party platforms for internet sales of those goods is appropriate to preserve the luxury image of those goods". A clause as used by Coty, that prohibits authorised distributors from selling through third-party online platforms, is similarly allowed when it has the objective of preserving the luxury image of the goods in question, is laid down uniformly and not applied in a discriminatory manner; and is proportionate in the light of the pursued objective.

This sales issue is crucial to companies in Europe, which are estimated to account for 70 per cent of global luxury goods sales, and the ruling is the latest stage in a long-running battle between online retailers and the luxury...

Coty, whose brands include Marc Jacobs, Calvin Klein and Chloe, welcomed the ruling, which carries legal weight across the 28-nation EU.

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Brand owners have previously argued that they should have the right to choose their distributors to protect their image and exclusivity. It subsequently upheld Coty's contractual clause which seeks to stop distributors forwarding luxury goods to third parties for onward sale without prior brandowner permission.

The issue has split European Union countries, with Germany more eager to promote e-commerce.

"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", it says. "Germany will have to align with European case law and accept this kind of restrictions unless it contradicts some conditions in competition law", he said.

The CJEU was ruling in a case referred to it by a court in Frankfurt, Germany.

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