Coty 'Amazon win' sets precedent for luxury online

Chloe is among the luxury brands Coty sought to protect

The European Commission then claimed that manufacturers should be able to decide, in order to protect their brand's image. "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 is C-230/15 Coty Germany.

After intense lobbying by LVMH, Richemont and other luxury goods companies, European Union antitrust regulators laid down rules in 2010 allowing brand owners with less than a 30 percent market share to block online retailers without a bricks-and-mortar shop from distributing their products.

"Such a prohibition is appropriate and does not, in principle, go beyond what is necessary to preserve the luxury image of the goods". A clause as used by Coty, that prohibits authorised distributors from selling through third-party online platforms, is similarly allowed when it has the objective of preserving the luxury image of the goods in question, is laid down uniformly and not applied in a discriminatory manner; and is proportionate in the light of the pursued objective.

This criteria is imposed on all its authorised distributors, under the terms of their selective distribution agreements.

The CJEU noted, however, that Coty allows its authorised distributors under certain conditions to advertise the sale of its luxury goods via the internet on third-party platforms and to use online search engines.

Though the German court where a Coty Inc. unit sued an.

Europe's top court has passed a law restricting distributors from selling brands online without permissions.

The ruling said luxury brands have no contractual relationship with online marketplaces, which in turn are not required to comply with brands' quality criteria.

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.

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