European Union lets luxury brands block goods from Amazon

European Union lets luxury brands block goods from Amazon

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. Luxury owners have long waged a battle against what they see as free riders cashing in on their exclusivity and branding.

Opponents have warned that restricting sales will hurt smaller businesses.

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

This new ruling should help to preserve the product value chain offer now that unauthorised distribution of luxury beauty products has been legally defined by the European Court of Justice.

"A supplier of luxury goods can prohibit its authorised distributors from selling those goods on a third-party internet platform such as Amazon", the ECJ said.

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"It is a clear ruling for the protection of luxury brands' image, the defence of our teams' work and the protection of consumers' rights and information", Coty said.

Manufacturers of goods that aren't luxury brands "still have no carte blanche to sweepingly limit their distributors' use of sales platforms, according to our assessment", Mundt added.

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 ruling said luxury brands have no contractual relationship with online marketplaces, which in turn are not required to comply with brands' quality criteria. Coty sued it, and a regional court in Frankfurt threw the case up to the CJEU for advice, because it wasn't sure whether Coty's restriction on sales channels was legitimate under European Union competition law.

In this case, the court found in favour of Coty who originally brought proceedings under competition law before the German courts against one of its authorised distributors, Parfümerie Akzente.

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