The Court of Justice of the EU nds that luxury goods’ suppliers can prevent authorized distributors from selling such goods …

Coty Germany (“Coty”) is a luxury cosmetic goods’ supplier in Germany Coty preserves the luxury image of its products by marketing certain brands through a selective distribution network The authorized distributors which are part of the network are asked to observe certain requirements concerning environment, décor and furnishing Authorized distributors can sell Coty’s products on-line as long as they employ their own electronic shop window or non-authorized third-party platforms. The la er is only permi ed if the use of such platforms is not discernible to the consumer. Selling through a third-party platform which is discernible for the consumer is expressly banned in the network

In this context, Coty brought an action before German courts against one of its authorized distributors, Parfümerie Akzente, in order to prevent the la er from using amazon.de to sell

Coty’s products The German Court decided to refer a preliminary question to the Court of Justice of the EU in order to ascertain whether such a contractual prohibition is allowed by EU Competition Law

In its judgment, the Court of Justice of the EU starts by stating that selective distribution for luxury goods, intended to preserve their image and quality, does not violate the prohibition of agreements, decisions and concerted practices laid down in article 101(1) of the Treaty of the Functioning of the European Union (“TFEU”), provided that (i) the choice of resellers is based on objective criteria of a qualitative nature, such criteria are laid down uniformly for all potential resellers and not applied in a discriminatory way; and (ii) the criteria in question do not go beyond what is necessary

The Court of Justice of the EU also emphasizes that the quality of luxury goods is not merely the result of their material characteristics, but also of the allure and prestigious image which grants them an aura of luxury This aura is an essential aspect of those goods in as much as it enables consumers to distinguish them from other similar goods

In addition, the Court of Justice of the EU nds that article 101(1) TFEU does not preclude a contractual clause, which prohibits authorized distributors of a selective distribution network of luxury goods from using, in a discernible manner, third-party platforms for internet sales of the goods in question, as long as: (i) the clause is aimed at preserving the luxury image of the goods concerned; (ii) it is laid down uniformly and not applied in a discriminatory manner; and (iii) it is proportionate in the light of the objective pursued

The referring court will have to assess whether these conditions are met in the case at issue If the clause in question falls under article 101(1) TFEU, it is possible that the said clause might bene t from a block exemption established in Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, as pointed out by the Court of Justice of the EU

In this regard, the Court of Justice remarks that, in circumstances such as those of the main proceedings, such a prohibition does neither constitute a restriction of customers nor a restriction of passive sales to end users This type of restrictions would be automatically excluded from the bene t of a block exemption in view of its anticompetitive e ects.