On 26 July 2017, Advocate General (AG) Nils Wahl of the European Court of Justice (ECJ) handed down his opinion in the seminal Coty case concerning restrictions on the use by resellers of third-party Internet platforms. This opinion should interest any company selling via distributors or acting as a distributor in the EU.
The case, a reference from a German court, concerns whether a supplier of luxury goods (here, luxury cosmetics) operating a selective distribution system may prohibit its authorised retailers from selling its products in a discernible manner on third-party platforms such as Amazon or eBay. The AG, advising the ECJ (which is not bound to follow the opinion), said that in principle and under certain conditions, such a prohibition, which seeks to preserve the luxury image of the products concerned, is not anti-competitive for the purposes of EU competition law.
The conditions that would deem a prohibition not anti-competitive are that the clause: (1) is applied dependent on the nature of the product, (2) is determined in a uniform fashion and applied without distinction and (3) does not go beyond what is necessary. These issues would be decided by the local German court that asked the ECJ to opine.
The AG also considered whether an agreement that included a restriction found to be anti-competitive could still qualify for the EU’s “block exemption” for vertical agreements. This issue is of most general interest, including outside the selective distribution context, since the vast majority of vertical (particularly distribution) agreements in the EU are analysed under the block exemption.
The AG said, in his view, the restriction on using platforms in a discernible manner would not disapply the block exemption from agreements including such a clause. Assuming that the ECJ follows this view, the AG’s opinion provides much-needed certainty in this area.