A recent landmark ruling will help luxury and technical brands to prevent sales of their products on online marketplaces – like Amazon, and eBay. Our commercial lawyer, Declan Goodwin, shares his view.
Luxury and technical brands and retailers have used selective distribution systems for decades. This type of distribution system is used to help preserve their luxury status, and their associated high levels of customer service. But, over the last 10 years, with the growth of retail platforms like Amazon and eBay, retailers outside of these selective systems have found ways to successfully circumvent them.
The European Court of Justice has ruled that online marketplaces ‘detract from the image’ of these luxury brands, and ruled that brands can block them from selling their product if they don’t expressly allow it. To be able to offer the luxury products, online retailers will have to have direct contractual relationships with the brands.
It’s a shot in the arm for luxury and technical brands, who may well see a boost in sales margin, as consumers revert to their authorised distribution systems. But, how long will it take for the likes of Amazon and eBay to find another way of selling these high end items? Watch this space.
Beauty giant Coty has won a landmark ruling in the European Court of Justice, allowing it to place a ban on its products being resold on online marketplaces such as Amazon. The company makes fragrances and make-up for some of the world's biggest brands including Calvin Klein, Rimmel London, Playboy and Max Factor. The case was brought to the ECJ due to a dispute between Coty and one of its licenced distributors, a perfume retailer in Germany called Parfumerie Akzente. The court ruled that the "selective distribution systems" used by luxury brands to limit where their products are available can be seen as an aspect of competition. Limiting distribution helps to maintain "the prestige image", according to the ruling.