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08 December 2017, 12:50 | Darnell Patrick
Luxury goods makers can block online sales, Europe's top court rules
Luxury beauty company Coty can stop retailers from selling its products online, Europe's top court has ruled.
In a case led by United States cosmetics brand Coty, which argued that German retailer Parfümerie Akzente sold its goods on sites against Coty's wishes, the European Court of Justice said online marketplaces detracted from the image of luxury brands.
The European Court of Justice concluded that companies offering luxury products could limit the distribution of their goods, including by blocking distributors from selling the items on third-party websites, as long as the limitations were properly tailored and uniformly applied.
Coty, owner of brands such as Marc Jacobs and Calvin Klein raise a case on this issue. The case concerns a dispute between U.S. beauty products manufacturer Coty and German business Parfümerie Akzente, which sells perfumes and other toiletries over the internet.
Opponents have warned that restricting sales will hurt smaller businesses. "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".
Parfumerie Akzente said it meets the terms for online sales set by luxury owners.
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Coty said in a statement: "Coty welcomes this decision which confirms that the character of luxury brands necessitates and justifies selective distribution, whatever the distribution channel".
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.
The issue has split European Union countries, with Germany more eager to promote e-commerce.
The German cartel office said it expected the court's ruling to have a limited effect on its policy, noting that its decisions had involved brand manufacturers from outside the luxury industries.
Germany will now have to fall in line though, said a competition lawyer, who declined to be named.
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