Luxembourg
31 July 2017
Reporter: Barney Dixon

Third-party online sales ban doesn’t harm competition


Banning third-party sales of branded goods does not infringe competition rules, according to a Court of Justice of the EU (CJEU) advocate general.

In his 26 July opinion on a request for a preliminary ruling in Coty Germany v Parfümerie Akzente, advocate general Nils Wahl said that brand restrictions on the use of third-party platforms for online sales does not breach EU competition rules.

Wahl said this interpretation of EU competition law is subject to certain conditions. Any restriction must be justified by the nature of the products concerned and applied in a non-discriminatory manner.

He said: “By expanding on the considerations hitherto applied in relation to selective distribution, that prohibition is likely to improve the luxury image of the products concerned in various respects.

“Not only does it ensure that those products are sold in an environment that meets the qualitative requirements imposed by the head of the distribution network, but it also makes it possible to guard against the phenomena of parasitism, by ensuring that the investments and efforts made by the supplier and by other authorised distributors to improve the quality and image of the products concerned do not benefit other undertakings.”

The case centred on Coty, a luxury cosmetics supplier in Germany that selectively distributes its products to protect the luxury image of its brands.

Coty sellers must meet certain requirements to become authorised by the brand, including a certain environment, decor and furnishing.

Parfümerie Akzente began selling its products through Amazon, which Coty challenged, seeking an injunction. The Higher Regional Court in Frankfurt referred the case to the CJEU to ascertain whether a ban on sales would be anti-competitive.

Wahl’s opinion is not binding on the CJEU, whose preliminary ruling has not yet been issued.

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