Luxury product manufactures can block retailers from selling their merchandise on online marketplaces like Amazon. The European Court of Justice has ruled on the matter after cosmetics manufacturer Coty filed a complaint.
Coty wanted to block German perfume chain Akzente from selling its products on Amazon’s German website and that is when the matter went to court. A judge has now ruled that when a brand collaborate with a small group of retailers, it can say where its products can and cannot be sold, in order to protect the brand’s image, according to the FD.
It is no secret that some luxury brands are not too keen on online sales. Only recently have some companies buckled and accepted online sales, but these companies usually still only sell on their own online platform. This is a way for them to avoid their products’ image being tarnished.
The ruling is not only bad news for retailers intent on using online marketplaces, but also for the marketplaces themselves. Amazon would love to have luxury brands on its platform as a means to attract an even broader audience. This decision prohibits that, unless the online giant can reach an agreement with the brand itself.
German judges had previously ruled, in a court case revolving around sports brands Asics and Adidas, that retailers could choose where the products are sold. The European Commission then claimed that manufacturers should be able to decide, in order to protect their brand’s image.
Asics had told retailers that they could not sell its products on online marketplaces, but had to reverse that decision in Germany following the court ruling. It remains to be seen how that will now change considering the fact that the European Court of Justice’s ruling only applies to luxury brands.