Luxury brands can ban online sellers

Coty can impose online sales ban on luxury products

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Coty argued that online platforms selling its high-end products damaged the image of its 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.

Coty allows its products to be sold by authorized dealers but puts a number of restrictions on how such sales are carried out, finding such terms necessary to preserve its branding image.

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

The European Court of Justice has ruled on the matter after cosmetics manufacturer Coty filed a complaint.

The ECJ has delivered this important ruling in a case brought by Coty Germany GmbH versus Parfümerie Akzente GmbH, after the beauty company sought to have the unauthorised online distribution of its products banned. Therefore, luxury goods manufacturers will be able to prevent their products from being sold on third party websites by distributors.

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"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".

Germany will now have to fall in line though, said a competition lawyer, who declined to be named. In yesterday's judgment, the Court repeats it earlier case law that selective distribution systems are compatible with the European Union cartel prohibition if resellers are chosen on the basis of objective criteria of a qualitative nature that are laid down uniformly and not applied in a discriminatory fashion and that do not go beyond what is necessary.

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