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Further to being overruled by the French Supreme Court, the Paris Court of Appeal moved from its initial reasoning in the Caudalie case to a more conservative position, in line with the Court of Justice of the European Union’s Coty Germany ruling. Its decision outlines a highly protective market environment for luxury brand owners, and possibly beyond the luxury products sector.

Authors: Marc Lévy Natasha Tardif Khushbu Kumar

In a recent decision of July 13, 2018, the Paris Court of Appeal confirmed the lawfulness of the marketplace ban clause in Caudalie’s online selective distribution agreements.

The structure of Caudalie’s selective distribution network

In setting up a selective distribution network for the sale of its cosmetic products by pharmacies, Caudalie put into place two agreements:

-     A selective distribution agreement covering authorized resellers at points of sale

-     A selective distribution agreement covering authorized resellers on websites (although only authorized resellers that already have a point of sale can be authorized to resell on their own websites)

This combination of agreements prevents all pure players from being part of Caudalie’s distribution network, and prohibits resellers from selling on websites other than their own, such as internet marketplaces.

In April 2013, on becoming aware that its products were being sold on the online platform 1001pharmacies.com, Caudalie brought an action for injunctive relief against eNova, the company operating the platform.