European Union: The Coty Case – The CJEU Rules In Favour Of Selective Distribution Networks Against Third-Party Online Platforms

Last Updated: 12 December 2017
Article by Emmanuelle van den Broucke and Adrian Magnus

In the long-awaited Coty1 ruling, the Court of Justice of the European Union has confirmed that luxury brands may restrict distributors in a selective distribution network from selling their goods through third-party online platforms such as Amazon and eBay, provided that this is necessary to preserve the luxury image of their goods.

1. Introduction

Online sales through third-party online platforms have been a thorn in the side of luxury brands trying to reconcile the qualitative distribution of their goods with competition laws. The structure and business models of third-party online platforms such as Amazon or eBay are generally seen as incompatible with brands' desired selective distribution models for the resale of their products.

Until now, luxury brands have relied on the European Commission (EC) Guidelines on Vertical Restraints to limit distributors' use of third-party online platforms, which provide that:

"where the distributor's website is hosted by a third party platform, the supplier may require that customers do not visit the distributor's website through a site carrying the name or logo of the third party platform" (paragraph 54).

Luxury brands claim the branding of third-party online platforms diminishes the luxury image of their products. However, national case law on this point varies, with the German Federal Cartel Office taking a particularly strong approach in the Adidas case, considering that a third-party online platform ban may constitute an illegal hardcore restriction. In a highly anticipated judgment, the Court of Justice of the European Union (CJEU) has now confirmed that under certain conditions, luxury brands can restrict distributors' discernible use of third-party online platforms in a selective distribution network.

2. Background

Coty owns leading brands of luxury cosmetic products. Coty products are distributed in Europe via a selective distribution network under uniform distribution terms. Coty requires authorised distributors to meet certain qualitative criteria, including the requirement to sell only through an "electronic shop window" of the authorised store. Coty's authorised distributors must not retail online using a different business name or through a third party website where the third party is not an authorised retailer of Coty Prestige products if recognizable. In practice, this prohibits the sale of Coty's selective products through online platforms such as Amazon or eBay.

Authorised Coty distributor, Parfümerie Akzente, refused to comply with this requirement and sold Coty products through Amazon. Coty launched a case in Germany to prevent Parfümerie Akzente from selling Coty products via Amazon. The Court of First Instance (Landgericht Frankfurt am Main) refused on the grounds that Coty's selective distribution network was unjustified and that the specific restrictions on online sales constituted a hardcore restriction which could not benefit from the EC's Vertical Agreements Block Exemption Regulation (330/2010) (VABE) or from an individual exemption. Coty Germany subsequently appealed to the Higher Regional Court (the Oberlandesgericht Frankfurt am Main) which referred the question to the CJEU.

3. The CJEU Judgment

In its ruling, the CJEU broadly agreed with Advocate-General Nils Wahl's Opinion that luxury brands may prohibit authorised distributors in a selective distribution system from using in a discernable manner third-party online platforms to sell the brand's goods.

The CJEU confirms that the luxury brands may require a selective distribution system to preserve the quality of their products. An "aura of luxury" is essential to characterise and distinguish luxury products. Any damage to this aura could affect the inherent quality of the products.

The CJEU also clarifies its Pierre Fabre2 ruling in which it seemed to consider that preserving an image of prestige was not a sufficiently legitimate reason for restricting competition. The CJEU now explains that the need to preserve the image of Pierre Fabre's cosmetic and hygiene products did not justify an absolute ban on online sales. The prohibition imposed on authorised distributors in a selective distribution system on making use in a discernible manner of third-party platforms for online sales is not per se contrary to Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). Whether or not such a prohibition breaches Article 101(1) TFEU depends on whether:

  • that provision is necessary to preserve the image of the luxury products;
  • it is determined in a uniform fashion and applied without distinction; and
  • it does not go beyond what is necessary.

In Coty, the CJEU gives some guidance on these points. A prohibition on third-party online platform sales helps brands control how their products are sold. This is an essential element of a selective distribution network, but luxury brands may struggle to control distribution of their products through third-party online platforms as there is no direct contractual relationship between the brand and the platform.

In addition, third-party online platform bans are not absolute bans on online sales. During its e-commerce inquiry, the EC found that most internet sales are made through distributors' own websites and that online platforms are not necessarily a significant distribution channel.

Finally, the CJEU considers that the ban on using third-party online platforms in a discernible manner does not constitute a hardcore restriction under Articles 4(b) or (c) of VABE. Provisions which restrict sales channels do not limit the customers to whom the distributor can sell, or the territory in which these sales may be made. Further, authorised distributors could still sell relevant products through platforms in a non-discernible manner (i.e. without third party branding) that does not undermine the luxury image of the brand and its products.

4. Practical consequences

The CJEU's judgment provides much-needed clarification for luxury brands on their ability to restrict distributors' sales on third-party online platforms within a selective distribution network. The CJEU's emphasis on the importance of preserving an aura of luxury reinforces why the display of products and the sale environment are so important to brands and could assist in justifying other qualitative restrictions.

Nonetheless, both selective distribution and the control of online sales methods must be justified by the nature of the products and must be necessary and proportionate. Not all products will be by their nature suited to distribution through a selective network. Even where the use of a selective distribution network is justified, an absolute prohibition on the resale of products through third-party online platforms in a non-discernible manner (i.e. with no third party branding) is still likely to be considered too restrictive and therefore a breach of Article 101 TFEU.


1. Coty Germany GmbH, 6 December 2017, C-230/16.

2. Pierre Fabre Dermo-Cosmétique, 13 October 2011, C 439/09.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions