Too chic for Amazon: Luxury firms in European Union can pick sales sites


Coty wanted to ban an authorized distributor from selling its products on in a case pending at a Frankfurt court, which requested a ruling from European Union judges. "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 involved Coty's German subsidiary and German retailer Parfumerie Akzente, which sells Coty's goods on sites including Amazon against the company's wishes.

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 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.

Coty argued that online platforms selling its high-end products damaged the image of its luxury brands.

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Selective distribution may be justified for luxury goods to protect the 'allure and prestige'.

Coty allows its products to be sold by authorized dealers but puts a number of restrictions on how such sales are carried out, finding such terms necessary to preserve its branding image.

In order to preserve the Coty luxury image, it markets certain of its brands via a selective distribution network, that is to say, through authorised distributors.

"The prohibition at issue in the main proceedings enables the supplier of luxury goods to check that the goods will be sold online in an environment that corresponds to the qualitative conditions that it has agreed with its authorized distributors", the ruling states.

"We would expect the German authorities to apply this ruling narrowly and scrutinise closely which products qualify for this limited exception from the general principle that goods may be sold freely online whether on resellers' own websites or on third party platforms", he said.