Luxury brands can restrict sales on Amazon, EU judges rule

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Dec 07, 2017
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The case involved brands including Calvin Klein and Marc Jacobs

Brent Lewin/Getty Images

Online retailers are breaking the law if they sell luxury products without the brand owner’s permission, the EU’s highest court has ruled.

In a boost to Europe’s luxury brands, the Court of Justice of the EU ruled that manufacturers could restrict sales of their products through websites such as Amazon and eBay.

The issue is crucial to European companies, which are estimated to account for 70 per cent of global luxury good sales.

In their ruling yesterday, the EU judges confirmed that luxury brands could restrict sales through online marketplaces without breaching European competition rules.

The court said that proportionate restrictions of online sales could be justified within the context of a selective distribution network to protect the “aura of luxury” of specific high-value products.

This case concerned the selective distribution network operated by Coty, one of the world’s leading beauty companies with brands including Calvin Klein, Chloé, Davidoff and Marc Jacobs.

Legal experts said that the ruling was highly significant. Bonita Trimmer, a trademark expert at the law firm Browne Jacobson, said that the judgment was “great news for luxury brands”.

She said that the court had “recognised that the aura of luxury of prestigious goods can be legitimately protected. This aura can be just as much a part of the quality of upmarket products as the materials they are produced from”.

John Cassels, a competition law partner at the City of London firm Fieldfisher, described the ruling as taking “us back to the heady days of 1980s law, when brands were allowed to exercise greater control over where their products were sold”.

He added that the decision was “a boon for luxury brands and sensible recognition that their owners have a legitimate right to restrict sales on some channels, and in particular on internet marketplace platforms”.

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