Luxury Brands Win Right to Block Sale of Goods on Amazon in Europe

As of Wednesday, the European Union court decided that luxury brands are allowed to restrict selling of their own products on web platforms such as Amazon.com and eBay.com. This was ruled in an effort to protect brands' image, which has been a concern for many as online shopping continues to expand. Luxury companies will now have the power to control and protect their exclusivity.

The European Court of Justice ruled that luxury companies are within their rights to enforce certain condition on contract with retailers so long as the conditions serve to safeguard their image without any discrimination amongst retailers.

The case originates from a dispute between American based cosmetics manufacturer, Coty Inc. and its retailer Parfümerie  Akzente GmbH on Amazon.com. Coty objected to the selling of its products, which includes brands such as Calvin Klein and Marc Jacobs, because of contractual classes that prevent selling through third parties.

The Court ruled"“The quality of luxury goods is not simply the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury. That aura is an essential aspect of those goods in that it thus enables consumers to distinguish them from other similar goods.”

On the other hand, retailers argue that the court's ruling will adversely affect selective distribution systems for brand-name products. They claim manufacturers will argue that they are protecting a luxury image as well. In U.S, laws allow retailers almost complete control over how they sell products on platforms such as Amazon. Brands and companies have little say in how their products are treated after they are sold to wholesalers. Internet advocates argue that the court's decision deprive consumers of choice and lower prices.

This decision will have a huge impact on how brands market their products. Luxury goods that are often sold on Amazon and other online platforms are sold at lower prices which lowers the exclusivity that often comes with the product. Now that retailers will not be able to sell at discount prices as easily, luxury brands will be able to keep their desired exclusivity and image. This will undoubtedly affect how they decide to market their products.

https://www.wsj.com/articles/luxury-brands-win-right-to-block-sale-of-goods-on-amazon-in-europe-1512560861