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Luxury industry backs ruling on online sales

Luxury giants LVMH and PPR have spoken out in support of a European Commission ruling that allows brand owners to continue to control how online retailers distribute their brands.

The new regulatory framework from the European Commission rules that brands can continue to impose restrictions on who can distribute their products based on how the store or website is run.

Brands can impose a range of criteria on potential distributors, including an insistance that any etailer distributing product must also have a bricks-and-mortar store.

The ruling is a renewal of the Vertical Restraints Block Exemption Regulation and accompanying guidelines, which have been in place for ten years.

The ruling has assuaged the fears of some brand owners, many of whom were concerned that a change in regulations would result in them losing the power to prevent non-approved distributors, for example those who had received product from a secondary source, from selling their product.

The new ruling will come into force in June and will be valid until at least 2022.

PPR, which owns the Gucci Group, told WWD: “The luxury industry emerges strengthened by this decision, which confirms its right to control the quality of its physical and online distribution systems.”

French luxury goods group LVMH, which owns the Louis Vuitton brand among others, told WWD: “This framework will allow the luxury goods industry to continue to meet the expectations of consumers, to encourage the development of the digital economy, and to sustain our industry growth, which is based on culture and innovation providing over 800,000 jobs in Europe.”

Guy Salter, deputy chief executive of luxury brands trade body Walpole said: “A key element of the luxury goods business is a distribution model which supports and preserves the image of products, provides a prestigious and high quality selling environment and fulfils the expectations of the consumer with regard to purchasing a luxury product.

“The new regulatory framework ensures that there is not a disconnect between the rules that govern online and offline commerce.”

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