On 26 July 2017, Advocate General Wahl ("AG Wahl") delivered his non-binding opinion to the Court of Justice of the European Union ("CJEU") in a case concerning a request for a preliminary ruling by a German court relating to a dispute between a supplier of luxury cosmetics in Germany, Coty Germany GmbH ("Coty"), and one of its authorized resellers, Parfümerie Akzente GmbH ("Parfümerie Akzente"). Parfümerie Akzente distributes Coty's products at brick and mortar locations as well as online. The sales at issue in the case are those made through the third-party platform 'amazon.de'. Parfümerie Akzente argues that the fact that Coty is prohibiting it from selling the products through 'amazon.de' constitutes a violation of Article 101(1) TFEU.

Article 101(1) TFEU prohibits agreements between companies that restrict competition. In the application of Article 101 TFEU, it must as a first step be established whether the agreement in question is capable of restricting competition as such. If an agreement is found to be restrictive of competition it may still, as a second step, be exempted, either under Article 101(3) TFEU or under a block exemption regulation.

AG Wahl first recalls that European competition law protects competition as a whole, not just price competition. Selective distribution enables the supplier to maintain the brand image or the image of quality of its products by selecting authorized distributors. By allowing selective distribution systems, competition between suppliers of branded goods is stimulated. Therefore, a selective distribution system does not necessarily restrict competition (it may on the contrary have pro-competitive effects). According to AG Wahl this is in line with the CJEU decision practice in both Metro, Pierre Fabre and trademark related cases.

AG Wahl secondly considers if the clause at issue in the present case falls within the scope of Article 101(1) TFEU, by applying the Metro criteria. In so doing AG Wahl concludes that it must be accepted that a supplier, for the purpose of preserving the brand image or prestige image of the products sold, prohibits its distributors from using third parties in a discernible manner. Such a restriction is in AG Wahl's opinion thus allowed under EU Competition law. AG Wahl concludes that such a restriction may be an appropriate means of achieving the objectives pursued by Coty, considering that Coty is in no position to exercise control over the distribution of its products by a third-party platform with which Coty has no contractual relationship. It also seems clear from AG Wahl's opinion that he does not consider the Metro criteria to be limited to luxury products.

AG Wahl points out that even if the Metro criteria are not fulfilled in the present case and the clause in question is contrary to Article 101(1) TFEU, it can still be exempt under Article 101(3) TFEU or the block exemption Regulation No 330/2010. AG Wahl thus clearly does not consider platform bans to constitute so-called "hardcore restrictions" (such as restrictions of the retailer's customers and restrictions of passive sales to end users).

It is now up to the CJEU to give its judgement in the case (either following AG Wahl's opinion fully, partially or not at all) and then ultimately for the national court to give judgement on the merits of the case at hand. Source: Advocate General's Opinion in Case C-230/16 Coty Germany 26/07/2017

http://curia.europa.eu/juris/document/document.jsf?text=&docid=193231&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=384080