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Luxury Retailer Disdainful of Amazon Wins Appeal

06 December 2017

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. Online platforms such as Amazon and eBay, in turn, say online sales curbs are anti-competitive and hurt small businesses.

Coty's German subsidiary and retailer, Parfumerie Akzente, had been selling Coty cosmetics on Amazon and other online sites, despite its parent asking it to stop.

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European competition law can not stop a luxury retailer that does not want its wares being trafficked via the online retail giant Amazon, the EU's highest court ruled Wednesday.

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".

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The European Court of Justice said a supplier could prohibit the selling of its goods on platforms such as Amazon to protect its luxury image.

It said it is therefore up to national courts to determine whether luxury goods manufacturers rely on contract clauses that restrict who their authorised distributors can sell to or whether those distributors are barred from making "passive sales" over the internet to consumers, the court said.

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The decision out of Luxembourg comes in response to contractual proceedings that the luxury retailer Coty Prestige initiated in Germany against one of its authorized retailers. "This judgment may require the German authorities and courts to reassess their approach so as to allow genuinely prestigious luxury brands to restrict online sales via third party platforms by their authorised distributors". "A supplier of luxury goods can prohibit its authorized distributors from selling those goods on a third-party internet platform such as Amazon", the ECJ decided.

Luxury Retailer Disdainful of Amazon Wins Appeal