Luxury beauty giant Coty wins ECJ ruling against online sellers

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 ECJ has delivered this important ruling in a case brought by Coty Germany GmbH versus Parfümerie Akzente GmbH, after the beauty company sought to have the unauthorised online distribution of its products banned.

Brand owners have previously argued that they should have the right to choose their distributors to protect their image and exclusivity.

But the European court said that for luxury goods firms, such rules can be critical to protecting the value of the products.

However, e-tailers such as Amazon and eBay have countered that the ruling to curb online sales will be harmful to small businesses while being anti-competitive.

Though the contracts allow authorized dealers to sell Coty goods over the internet through their own web-shop channels, they expressly forbid the utilization of third-party online retailers like Amazon.

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The issue is significant in Europe, whose companies account for 70% of global luxury good sales.

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.

"Our preliminary view is that such manufacturers have not received carte blanche to impose blanket bans on selling via platforms", he said.

"This judgment sets the principles for the European Union as a whole".

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.

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