Luxury goods makers can block online sales, Europe's top court rules

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The CJEU said that the specific ban Coty has placed on sales of its goods via third party platforms "does not go beyond what is necessary in order to preserve the luxury image of those goods".

It said it is therefore up to national courts to determine whether luxury goods manufacturers rely on contract clauses that restrict who their authorised distributors can sell to or whether those distributors are barred from making "passive sales" over the internet to consumers, the court said.

This sales issue is crucial to companies in Europe, which are estimated to account for 70 per cent of global luxury goods sales, and the ruling is the latest stage in a long-running battle between online retailers and the luxury...

The case was bought by beauty giant Coty, which owns brands such as Marc Jacobs and Calvin Klein, but is expected to set a precedent.

Brand owners have previously argued that they should have the right to choose their distributors to protect their image and exclusivity. The case concerns a dispute between United States beauty products manufacturer Coty and German business Parfümerie Akzente, which sells perfumes and other toiletries over the internet.

Online platforms say such curbs are anti-competitive and hurt small businesses.

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It is no secret that some luxury brands are not too keen on online sales.

The ruling said luxury brands have no contractual relationship with online marketplaces, which in turn are not required to comply with brands' quality criteria.

This would not break competition rules by limiting consumer choice, it said. But luxury fashion brands are seem to be unhappy with its distributors selling the brand items online without the permission.

"Our preliminary view is that such manufacturers have not received carte blanche to impose blanket bans on selling via platforms", the office's president, Andreas Mundt, said in a statement.

"This judgment sets the principles for the European Union as a whole".

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