A supplier of luxury goods can prohibit authorised distributors from selling those goods on third-party internet platforms

Print this page 08-12-2017
IPPT20171206, CJEU, Coty v Parfumerie Akzente

A selective distribution system for luxury goods designed, primarily, to preserve the luxury image of those goods complies with article 101(1) TFEU to the extent that resellers are chosen on the basis of objective criteria of a qualitative nature that are laid down uniformly for all potential resellers and applied in a non-discriminatory fashion and that the criteria laid down do not go beyond what is necessary. On these conditions, article 101(1) TFEU does not preclude a contractual clause which prohibits authorised distributors to use third-party platforms for the internet sale of the contract goods: these being matters to be determined by the referring court. This prohibition does not constitute a restriction of customers or a restriction of passive sales to end users, within the meaning of Article 4(b) and 4(c) of Regulation No 330/2010 regarding vertical agreements and concerted practices. 

 

COMPETITION

 

Court of Justice of the European Union Press Release:  “A supplier of luxury goods can prohibit its authorised distributors from selling those goods on a third-party internet platform such as Amazon. Such a prohibition is appropriate and does not, in principle, go beyond what is necessary to preserve the luxury image of the goods.[…].

 

By today’s judgment, the Court, referring to its settled case-law, states first of all that a selective distribution system for luxury goods, designed primarily to preserve the luxury image of those goods, does not breach the prohibition of agreements, decisions and concerted practices laid down in EU law, provided that the following conditions are met: (i) resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion; and (ii) the criteria laid down must not go beyond what is necessary. The Court notes in this context that the quality of luxury goods is not simply the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury. That aura is an essential aspect of those goods in that it thus enables consumers to distinguish them from other similar goods. Therefore, any impairment to that aura of luxury is likely to affect the actual quality of those goods.

 

Next, the Court finds that the prohibition of agreements, decisions and concerted practices, laid down in EU law, does not preclude a contractual clause, such as that at issue in the present case, which prohibits authorised distributors of a selective distribution network of luxury goods designed, primarily, to preserve the luxury image of those goods from using, in a discernible manner, third-party platforms for internet sales of the goods in question, provided that the following conditions are met: (i) that clause has the objective of preserving the luxury image of the goods in question; (ii) it is laid down uniformly and not applied in a discriminatory fashion; and (iii) it is proportionate in the light of the objective pursued. It will be for the Oberlandesgericht to determine whether those conditions are met.

 

The Court observes in this respect that, subject to the Oberlandesgericht’s inquiries, the clause at issue appears to be lawful. It is common ground that the contractual clause at issue has the objective of preserving the image

of luxury and prestige of Coty goods. Furthermore, it follows from the documents submitted to the Court that the Oberlandesgericht considers that that clause is objective and uniform and that it applies without discrimination to all authorised distributors. Furthermore, according to the Court, the prohibition, imposed by a supplier of luxury goods on its authorised distributors, of the use, in a discernible manner, of third-party platforms for internet sales of those goods is appropriate to preserve the luxury image of those goods.

 

That prohibition also does not appear to go beyond what is necessary to preserve the luxury image of those goods. In particular, given the absence of any contractual relationship between the supplier and the third-party party platforms enabling that supplier to require those platforms to comply with the quality criteria which it has imposed on its authorised distributors, an authorization for those distributors to use such platforms subject to their compliance with pre-defined quality conditions cannot be regarded as being as effective as the prohibition at issue. […]”

 

Read the full press release here

 

IPPT20171206, CJEU, Coty v Parfumerie Akzente

 

ECLI:EU:C:2017:941 - C-230/16