Advocate General Nils Wahl today supported luxury goods makers' ability to restrict the sale of their goods over third party platforms.

On the face of it this seems to run counter to an ever more restrictive view taken on onlines sales bans (i.e. that you can't have them) but this opinion does not depart from that strand of jurisprudence.

To understand the reasoning one has to look at the specific facts:

  • the luxury goods manufacturers were operating a compliant selective distribution system;
  • core to that was retaining the prestige value of the products;
  • the restriction on authorised retailers was limited to sales over third party platforms such as Amazon or eBay, but did not extent to sales on the retailers' own online presence.

As a result, the Advocate General concluded that the restriction fell outside of Article 101 as it was part of a compliant selective distribution agreement. Even if it were caught by Article 101, it would benefit from an exemption under the Vertical Block Exemption (Regulation No 330/2010).

Key to his opinion is the question around whether such a third party ban is proporitionate to the other aims of the agreement (i.e. the selective distribution agreement) and, crucially, whether this is applied uniformily. The Advocate General believes so subject to the referring court confirming the factual matrix as applied to a traditional selective distribution analysis.

So a third party platform ban would still be questionable if some retailers were allowed to sell via third party platforms or if the quality standards or feel of retailers own online presence did not differ from third party platforms or otherwise departed from the quality criteria on which the selective distribution system was based.

Let's see whether the Court follows the Advocate General. If it does, the referring court (OLG Frankfurt/Main) will have to confirm whether the nature of the product does in fact lend itself to a selective distribution agreement and whether the manufacturer applied the restriction uniformly.