On 6 December 2017, the Court of Justice issued its much-anticipated judgment in the Coty case. The ruling is not likely to be welcomed by online platforms, such as Amazon. The Court considers that suppliers of luxury products can ban their authorised distributors from using third-party platforms for the online sale of their products. The Court's position is in line with the Advocate General's opinion issued earlier this year (see Eubelius Spotlights September 2017).
The case concerns a request for a preliminary ruling, which was submitted in the context of a dispute between Coty Germany, a supplier of luxury cosmetics in Germany, and one of its authorised distributors, Parfümerie Akzente. Coty Germany prohibits the members of its selective network from using third-party platforms, in a discernible way, when selling its luxury products online.
The referring court asked whether Coty's selective distribution network, which is primarily designed to preserve the luxury image of its products, restricts competition.
The Court of Justice first confirms that luxury products may require the implementation of a selective distribution system in order to preserve their luxury image, since any deterioration of that image is likely to have an effect on the quality of the products.
Secondly, with regard to the clause containing the prohibition against the use by authorised distributors of third-party platforms, the Court holds that this prohibition appears to be lawful (subject to some verification by the national court). The Court accepts that, like the selective distribution system, this prohibition is intended to preserve the luxury and prestigious image of the products. As it does not entail an absolute ban on online sales, it does not – according to the Court – go beyond what is necessary to protect that image. The Court agrees that alternative measures, such as authorising the distributors to use such platforms on the condition that these platforms comply with the quality criteria imposed by the supplier, cannot be regarded as being equally effective.