The European Court of Justice has ruled that luxury brands can block retailers selling their products online on platforms such as Amazon and eBay.
In a case led by US cosmetics brand Coty, the court decided on 6 December that online marketplaces detracted from the image of luxury goods.
It highlighted that luxury brands have no contractual relationship with these platforms, which in turn are not required to comply with brands’ quality criteria. This criteria is imposed on all its authorised distributors, under the terms of their selective distribution agreements.
Coty had begun court proceedings against German retailer Parfümerie Akzente, which sold its goods on sites against Coty’s wishes.
Stephen Sidkin, chair of the fashion law group at law firm Fox Williams, said that in light of the ruling, a luxury brand will be able to enforce a provision in its selective distribution agreements regarding the resale of its goods. The prevision will seek to protect the image of the brand.
Sidkin told Drapers: “In my opinion, luxury brands which do not have such provisions in their selective distribution agreements [should look] to include them as soon as possible.
“Amazon, eBay, and other discernible third party platforms [will look] to have direct contractual relationships with luxury brands in order to be able to continue to offer them on their platforms.”
He added that luxury department store retailers such as Harrods, Selfridges, Harvey Nichols and Liberty are largely expected to enjoy a boost, since online marketplace customers would need to revert to these as authorised product distributors.