Reed Smith Client Alerts

The Court of Justice’s judgment in Coty constitutes a shift from what has been EU and French decisional practice in recent years, which tended to favour the development of e-commerce over the protection of brand owners. This shift had already been initiated by the French Supreme Court – however prudently – in Caudalie.

Authors: Marc Lévy Natasha Tardif Audrey Augusto

In its judgment of 6 December 2017, the Court of Justice of the European Union (CJEU) upheld a clause prohibiting authorised retailers in a selective distribution system from selling luxury goods on third-party online platforms, such as Amazon (see our previous alert on the Coty case).

The CJEU ruled that to fall outside the prohibition laid down in Article 101(1) of the Treaty on the Functioning of the European Union, such a clause must (i) have the objective of preserving the luxury image of the goods, (ii) be laid down uniformly and not applied in a discriminatory fashion, and (iii) be proportionate in the light of the objective pursued.

This decision constitutes a shift from what has been EU and French decisional practice in recent years, which tended to favour the development of e-commerce over the protection of brand owners.

It clarifies both the CJEU’s and the French court’s position in Pierre Fabre, by drawing a distinction between an absolute ban of online sales – which breaches Article 101(1) – and a prohibition from selling on marketplaces.

This clarification is more than welcome, in particular in light of the European Commission’s E-commerce Report, in which the Commission stated that absolute marketplace bans should not be considered as hardcore restrictions, but added that this did not mean that such bans were generally compatible with EU competition rules.