EU to decide if companies can stop online sales

 

Europe’s top court will begin a case today to determine whether luxury goods companies can stop retailers from selling their products via marketplaces such as Amazon or eBay.

Owners of luxury brands have been fighting with online retailers for the last decade, arguing that they should have the right to choose who distributes their products to protect their luxury image and exclusivity.

Online platforms dispute this, saying that such restrictive distribution deals are anti-competitive and hurt consumers.

The European Commission is pushing for more cross-border online sales to boost growth and jobs, and catch up with the United States and Asia.

The case before the Luxembourg-based Court of Justice of the European Union (ECJ) concerns German company Coty, a subsidiary of US beauty products maker Coty, which wants to stop a retailer from selling its goods on online marketplaces such as Amazon.

Coty says this breaches its agreement with the retailer which prohibits the sale of its products via third parties. The case originally went to a court in Germany which later asked the ECJ for guidance.

The EU court’s ruling will be crucial because companies are seeking to curb sales of their products online

Lobby group Computer & Communications Industry Association (CCIA), whose members include Amazon, eBay, Facebook, Google, Rakuten and Yahoo, said the problem was broader than just luxury good companies protecting their

CCIA director Jakob Kucharczyk, said: “We do not consider this to be a ‘fight’ with or against luxury brands. This issue is far more relevant because online marketplace bans are imposed with respect to a range of day-to-day, mass market products which makes them anti-competitive and unjustifiable.”

A court adviser is expected to give a non-binding recommendation in about six months, followed by the court judgment a few months later.