11 December 2017

Luxury goods suppliers can stop distribution on third-party platforms

Luxury cosmetics supplier Coty has won its case in the highest court in Europe over selling its products on Amazon but, say lawyers, other questions remain.

In a landmark ruling the Court of Justice of the European Union (CJEU) has ruled that suppliers of luxury goods can prohibit their authorised distributors from selling goods on third-party platforms. The ruling has put a preliminary end to the discussions on antitrust issues concerning third-party platform bans for luxury goods - essentially saying that they are lawful provided certain conditions apply. Lawyers said that the case would throw up difficulties in the future as luxury can be difficult to define and could push more mass-market brands to prevent sales on online marketplaces. They also said they expected more disputes to come before national courts. 

Selective distribution

The Coty Germany case concerns the selective distribution system of Coty, the leading German supplier of luxury cosmetics, where its distribution contract expressly prohibited its distributors from selling relevant goods via third-party online platforms which operate in a discernable manner towards consumers. Legal proceedings were initiated when Coty's distributor Akzente sold through the platform ‘amazon.de’.

Limited to luxury

The president of the German Federal Cartel Office Mr Mundt, as well as the industry lobby group CCIA which includes Amazon and eBay, have already issued statements claiming that the scope of the CJEU's judgment is strictly limited to the distribution of luxury products.