ECJ strengthens selective distribution systems for Internet sales.
The selective distribution law is a thicket of jurisprudence, Regulations and Guidelines. Especially when it comes to Internet distribution of retainers, there is great uncertainty. Now at least in one area there is clarification by the ECJ:
What is it about?: Coty, a manufacturer of high-quality perfumery goods, has filed a lawsuit claiming that a retailer has sold the perfumes on a third-party platform (such as Amazon or eBay). This contradicts the luxury and prestige image of these goods, says Coty.
The ECJ has approved Coty’s view: The prohibition imposed by a supplier of luxury goods on its authorised distributors to use, in a discernible manner, third-party platforms for the internet sale of those goods is permissible under antitrust law. In legalese: Article 101 (1) TFEU does not preclude such a provision.
Furthermore, such a regulation should not be regarded as an inadmissible restriction of “a group of customers” or a restriction “on passive sales to end consumers” which, according to Article 4 of the Block Exemption Regulation, would be inadmissible.
What are the first conclusions from this:
- The first conclusion is actually a question: What are luxury goods? Only for such is this decision applicable. Ultimately, answering this question is up to the national courts, with the ECJ providing a guideline: the quality of luxury goods is based not only on their material characteristics, but also of the allure and prestigious image which bestow on them an aura of luxury, that is essential for the customers to be interested in these products. Restrictions in selective distribution systems will have to be measured against it. In theory, depending on the consumer rating in different countries, different results may be obtained: If a product is a luxury product in one EU Member State, this does not necessarily affect another member state
- Important, too, which is often overlooked: Findings of the ECJ do not apply to “externally unrecognizable” third-party platforms. Different providers offer retailers online-store solutions that are not obvious to the consumer. These are to be treated in the same way as the dealer’s own online-shop websites
- While it is not explicitly stated in the decision that restrictions on the distribution of branded goods on proprietary websites of distributors are possible, we believe that such restrictions are permissible if they are suitable for the achievement of the above mentioned guidelines and do not go beyond what is necessary..
Anyway: it remains exciting in distribution law!