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Luxury beauty giant Coty wins ECJ ruling against online sellers

Luxury beauty giant Coty wins ECJ ruling against online sellers”

After intense lobbying by LVMH and Richemont and other luxury owners, European Union antitrust regulators laid down rules in 2010 to allow brand owners with less than a 30 percent market share to block online retailers without a bricks-and-mortar shop from distributing their products. Therefore, any impairment to that aura of luxury is likely to affect the actual quality of those goods. That said, the ruling does make clear that third-party platform bans do not amount to a hardcore restriction of competition, and thus it will be open to brand owners to seek to justify their use on a case-by-case basis. "It is less good news for the online platforms and also for small businesses that rely on those platforms for their route to market", he said. The case is C-230/15 Coty Germany.

Coty Germany brought proceedings before the German courts against one of its authorised distributors, Parfümerie Akzente, with a view to prohibiting it from distributing Coty goods via amazon.de.

The court ruled that the "selective distribution systems" used by luxury brands to limit where their products are available can be seen as an aspect of competition.

Placing restrictions on the sale of luxury goods via online platforms where "goods of all kinds" are sold can contribute to preserving the luxury image of those products, and further address potential harm that could arise to that brand image, the CJEU said.

Coty will now be able to write a ban on sales through third party online platforms into its distributors' contracts. The issue is significant in Europe, whose companies account for 70 percent of global luxury good sales.

The sales locations of those authorised distributors must comply with a number of requirements relating to their environment, décor and furnishing.

The CJEU noted, however, that Coty allows its authorised distributors under certain conditions to advertise the sale of its luxury goods via the internet on third-party platforms and to use online search engines.



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