Top Court of Europe Rules: Luxury Goods Makers Can Ban Online Sales

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The top court of Europe has ruled that makers of luxury goods can block retailers from selling their items online.

In a move that is possible to have far-reaching consequences, the Court of Justice supported the case that was brought by Coty, a  US cosmetics giant, which makes and CoverGirl and Rimmel brands, among others.

Coty contended that online platforms that are selling its high-end products were responsible for damaging the image of its luxury brands.

And today, the European Union court decided: “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.”

The case involved the German subsidiary of Coty and Parfumerie Akzente, a German retailer which sells the goods of Coty on various sites including Amazon against the wishes of the company.

Luxury owners have long battled against what they state are free riders who are cashing in on their branding and exclusivity.

Online platforms including eBay and Amazon, in turn, say that online sales curbs are anti-competitive and are hurting small businesses.

The said issue is important in Europe, whose companies account for seventy percent of worldwide luxury good sales.

In two test cases in the past years, the German cartel office forced Asics and Adidas to remove such bans, saying that online platforms were important for small- and medium-sized companies and consumers.