Short Reads

EU Court of Justice: Suppliers of luxury goods may prohibit their authorised distributors from selling on third party internet platforms

EU Court of Justice: Suppliers of luxury goods may prohibit their authorised distributors from selling on third party internet platforms

06.12.2017 EU law

Today the ECJ rendered its much anticipated judgment in a dispute between a supplier of luxury cosmetics (Coty) and one of its authorised resellers. The central question was whether Coty is allowed under the competition rules to forbid its resellers to sell Coty products over third party internet platforms with visible logos (like eBay or Amazon).

The ECJ ruled that such an “online platform ban” is not incompatible with EU competition law. The Court ruled that online platforms bans can be appropriate in the context of a selective distribution system provided such bans do not go beyond what is necessary to preserve the luxury image of products.

Judgment

This ruling will be welcomed by luxury brand owners. The ECJ confirms that suppliers have considerable freedom under EU competition rules to design their (selective) distribution networks as they see fit. The ECJ’s judgment largely follows previous case law indicating that selective distribution systems which are mainly intended to preserve the ‘luxury image’ of products are not necessarily caught by the cartel prohibition. This is the case where such selective distribution systems meet two criteria: (1) the resellers are chosen on the basis of objective criteria of a qualitative nature which are determined and applied uniformly and (2) the criteria established do not go beyond what is necessary for the preservation of the special character of the products supplied within the selective distribution system (e.g. their luxury image).

In its judgment of today, the ECJ ruled that online platform bans in such selective distribution networks can be an appropriate and necessary means to preserve the luxury image of products sold. Such bans allow brand owners to ensure that the goods are sold in an online environment that corresponds to the brand owner’s qualitative standards. Consequently, an online platform ban within a selective distribution network, in principle, does not restrict competition. By contrast, the ECJ reiterates that an absolute online sales ban imposed on retailers (which for example also prohibits retailers from selling via their own online shops) will not be legal unless objectively justified (see the ECJ judgment in Pierre Fabre).

Implications

The Coty-judgment ends a period of uncertainty over the legality of online platform bans under EU law, which has been the subject of divergent interpretations by the national competition authorities and courts. In Germany, the national competition authority had ruled that online platform bans tend to restrict competition (see our February 2016 Newsletter). Conversely, a Dutch court had recently ruled that a brand owner was allowed to impose an online platform ban on its authorised distributors (see our November 2017 Newsletter). Following the ECJ’s ruling, a remaining point of uncertainty arguably lies in what may qualify as a ‘luxurious’ good.

In any event, today’s ruling in Coty should make it easier for luxury brand owners to create pan-European selective distribution systems, with without worrying too much about divergent interpretations of the competition rules by national courts and authorities in different EU Member States. Online platforms like eBay or Amazon, however, will not be pleased with the outcome of this case. They may see more brand-owners prohibiting their authorised retailers to sell via third party online platforms.

If you have any questions on the above, please contact Rein Wesseling, Christof Swaak or Floris ten Have

Team

Related news

02.01.2018 EU law
Court of The Hague confirms that the ACM can copy mobile phones during an inspection

Short Reads - On 22 November 2017, the District Court of The Hague dismissed a legal challenge that was brought against the Authority for Consumers and Markets (ACM) in preliminary relief proceedings. In the course of an inspection, the ACM had made a copy of (virtually) all data on the business mobile phones of six employees who worked for the company subject to the inspection. The Court ruled that the ACM was permitted to do so.

Read more

02.01.2018 EU law
Court of Justice: Suppliers of luxury goods may prohibit their authorised distributors from selling on third party internet platforms

Short Reads - On 6 December 2017, the Court of Justice rendered its much anticipated judgment in a dispute between a supplier of luxury cosmetics (Coty) and one of its authorised resellers. The central question was whether Coty is allowed under the competition rules to forbid its resellers to sell Coty products over third party internet platforms with visible logos (like eBay or Amazon).

Read more

19.12.2017 EU law
L’arrêté wallon portant conditions sectorielles des parcs d'éoliennes a été annulé par le Conseil d’Etat!

Articles - Trois ans et demi après avoir fait l’objet d’un recours en annulation et après un détour préjudiciel à la Cour de Justice de l’Union européenne, le Conseil d’Etat a finalement annulé l’arrêté wallon fixant les conditions sectorielles s’appliquant aux parcs éoliens. Cette décision ne créera cependant pas le séisme annoncé. Le Conseil d’Etat a, en effet, décidé de maintenir définitivement les effets de l'arrêté tant pour le passé que pendant les trois prochaines années.

Read more

02.01.2018 EU law
Court of Justice dismisses appeal by Telefónica on non-compete clause in telecoms transaction

Short Reads - On 13 December 2017, the Court of Justice dismissed the appeal brought by Telefónica against a judgment of the General Court (GC) regarding a non-compete agreement [see our July 2016 Newsletter]. The judgment confirms the finding of the GC that the non-compete clause agreed upon between Telefónica and Portugal Telecom (PT) amounted to a market sharing agreement with the object of restricting competition.

Read more

07.12.2017 BE law
Décision Inédite de la Cour de justice de l’Union européenne en matière de protection de l’environnement : menace de sanctions financières pour la Pologne.

Articles - Dans son ordonnance du 20 novembre 2017, la Cour de Justice de l’Union européenne a ordonné, sous astreinte, à la Pologne de cesser immédiatement les opérations de gestion forestière active dans la forêt de Białowieża. Cette ordonnance sort de l’ordinaire parce qu’elle contient des mesures provisoires mais également parce qu’elle est assortie de sanctions financières. Ces deux aspects sont pourtant des gages de l’efficacité du contrôle de la Cour devant laquelle la procédure au fond. L’impact de cette ordonnance va donc bien au-delà du seul cas de la forêt de Białowieża en Pologne.  

Read more

Our website uses cookies: third party analytics cookies to best adapt our website to your needs & cookies to enable social media functionalities. For more information on the use of cookies, please check our Privacy and Cookie Policy. Please note that you can change your cookie opt-ins at any time via your browser settings.

Privacy and Cookie Policy