Luxury brands can ban online sellers

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Luxury beauty company Coty can stop retailers from selling its products online, Europe's top court has ruled.

Any third-party platform ban must have the objective of preserving the luxury image of the goods, be applied uniformly and not in a discriminatory fashion, and be proportionate to the objective pursued.

Though the contracts allow authorized dealers to sell Coty goods over the internet through their own web-shop channels, they expressly forbid the utilization of third-party online retailers like Amazon.

"The prohibition at issue in the main proceedings enables the supplier of luxury goods to check that the goods will be sold online in an environment that corresponds to the qualitative conditions that it has agreed with its authorized distributors", the ruling states.

Brand owners have previously argued that they should have the right to choose their distributors to protect their image and exclusivity.

Coty, whose brands include Marc Jacobs, Calvin Klein and Chloe, welcomed the ruling, which carries legal weight across the 28-nation EU.

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

Parfumerie Akzente said it meets the terms for online sales set by luxury owners. That said, the ruling does make clear that third-party platform bans do not amount to a hardcore restriction of competition, and thus it will be open to brand owners to seek to justify their use on a case-by-case basis.

"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".

The case is C-230/15 Coty Germany.