Luxury brands can lawfully prevent their authorised dealers from selling their products on third party online platforms such as Amazon.com and eBay, according to Advocate General Wahl's Opinion for the European Court of Justice (ECJ) in Coty v Parfümerie Akzente, published on 26 July.
Under Coty's distribution contracts, dealers can only sell Coty's luxury cosmetic products online through their own websites. Coty applied to the Frankfurt Oberlandesgericht for an order prohibiting dealer Parfümerie Akzente from selling Coty products on Amazon.de. In April 2016, the Oberlandesgericht asked the ECJ for guidance on whether a marketplace ban constitutes an unlawful ban on passive sales. Online sales are generally considered to be "passive" sales under EU competition law.
Luxury goods suppliers can sell their products through a selective distribution system where necessary to preserve the product's image and quality, and to ensure that the product is used correctly. Such selective distribution systems do not infringe EU competition law if dealers are appointed based on qualitative, objective criteria which are applied uniformly and in a non-discriminatory fashion, and those criteria go no further than necessary to protect the product.
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