Coty ECJ Judgment – Can brand Owners stop their distributors selling on online market places?

In early December the European Court of Justice delivered an important judgment, which will be warmly welcomed by brand owners. It clarifies the position on their ability to restrict dealers selling on market places such as Ebay or Amazon. Here is a snapshot of its conclusions:

  • Luxury brand owners can use the protection of the luxury image of their products as the sole justification for implementing a selective distribution system, provided that the criteria imposed for entry into the system are objective, applied uniformly and in a non-discriminatory manner.
  • Restricting distributors of luxury products within a selective distribution network from selling on third party online platforms is not a hardcore restriction and therefore can benefit from the verticals agreement block exemption.

The judgment is limited to the distribution of luxury brands in a selective system, leaving residual uncertainty for other brand owners. However, the European Commission seems to be satisfied that the reasoning behind the judgment also applies to market place bans by other brand owners and therefore that the restriction can generally benefit from the block exemption in any distribution network and for any products. The German authority is unfortunately less convinced, and it is possible that we will see them testing the extent of the Coty judgment by bringing a case against a brand owner that does not operate a selective distribution system but who seeks to prevent its distributors selling on online marketplaces.

Asics - Price comparison site restrictions

The Commission analysed price comparison tools restrictions in great detail in its e-commerce enquiry. Its final report concluded that such tools are an important mechanism to facilitate price comparison on the internet. The Commission concluded that it considers absolute price comparison tool bans hardcore passive sales restrictions on the basis that they can prevent effective internet selling without bringing competitive advantages.

At the end of January, Germany's Federal Court of Justice confirmed a previous decision by Germany's competition authority and stated that ASICS could not forbid its dealers from using price comparison websites. This confirms the position as expressed by the Commission in its e-commerce enquiry, but is of course only the decision of one, pro-internet selling, Member State with no wider application in Europe.