EU court adviser backs luxury brands’ fight to ban third-party sales via Amazon, Ebay

The Advocate General of the Court of Justice of the European Union has confirmed luxury goods manufacturers can prohibit their authorised retailers from selling products on third-party platforms such as Amazon or Ebay.

In a statement released on Tuesday, the Advocate General said such a prohibition would seek to “preserve the luxury image of the products concerned” and is not, under certain conditions, caught by the prohibition of agreements, as it is likely to improve competition based on qualitative criteria.

To this end, selective distribution systems relating to the distribution of luxury and prestige products must be based on objective criteria of a qualitative nature which are determined uniformly for all and applied in a non-discriminatory manner for all potential resellers, respond to the need to preserve the quality of the product and to ensure that it is correctly used, and the criteria established should “not go beyond what is necessary.”

The announcement is part of an action brought before the German courts by Coty. The German arm of the luxury cosmetics manufacturer is seeking an order prohibiting distributor Perfümerie Akzente from selling its goods via Amazon.de.

Authorised Coty distributors must meet a number of requirements in terms of environment, décor and furnishing, and are also entitled to offer and sell the contract goods on the internet, but only through their own e-commerce sites.

The Advocate General considers that a prohibition is likely to improve competition based on qualitative criteria, as it not only ensures that those products are sold in an environment that meets the qualitative requirements imposed by the head of the distribution network, but it also makes it possible to guard against the “phenomena of “parasitism.”

According to the advocate, far from imposing an absolute prohibition on online sales, Coty Germany only required its authorised distributors not to sell the contract products via third party platforms, since, according to the network head, such platforms are not required to comply with the qualitative requirements which it imposes on its authorised distributors.

Authorised retailers are still allowed to distribute the contract products via their own internet sites, and Coty does not prohibit those distributors from making use of third party platforms in a non-discernible manner in order to distribute the goods, he continued.

The Advocate General’s opinion is not binding on the Court of Justice, although in most cases it has an impact on the final decision.