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BRUSSELS – The European Court of Justice (ECJ) has ruled that luxury brands can prevent third party retailers selling their products on platforms such as Amazon and eBay. The Court justified the ruling by saying luxury brands have the right to preserve their luxury image and that such a prohibition is, “appropriate and does not, in principle, go beyond what is necessary to preserve the luxury image of the goods.”

The ECJ made its ruling in a case involving Coty, which makes fragrances and make-up for some of the world’s best known brands including Calvin Klein, Rimmel London, Playboy and Max Factor.

The ECJ was called on to settle a dispute between Coty and one of its licensed distributors, German perfume retailer Parfumerie Akzente, which hitherto has sold Coty’s goods on sites such as Amazon against the company’s wishes.

“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 in a ruling which will carry legal weight across the 28-nation EU and is sure to impact the luxury fashion segment.

For many years now, luxury brands have faced a balancing act of maintaining the exclusivity of their branding by keeping a tight control of how and where their products are sold while, at the same time, seeking to drive sales volumes.

In 2010 the EU courts passed a ruling allowing brand owners with less than a 30 per cent of market share to block solely online retailers from distributing their products. However, many claim such rulings are anti-competitive and do not benefit consumers, an argument which carries considerable weight given that so many of us now look immediately to sites such as ebay and Amazon when making a purchase.

Coty has welcomed the latest decision by the ECJ. Said the company’s CEO Kai Renchen: “After years of uncertainty, this means luxury brands can determine how they are placed on digital platforms and 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.”

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