Europe’s highest court has commenced a case that could decide if luxury brands can stop retailers from selling their products via online marketplaces such as Amazon or eBay.
The case in question concerns German company Coty, a subsidiary of US beauty products maker Coty Inc, which wants to stop a retailer from selling its goods on online marketplaces.
It is currently before the Luxembourg-based Court of Justice of the European Union (ECJ).
Luxury goods companies have locked in a dispute with online retailers for the last decade, as they believe they have the right to choose who distributes their products in order to preserve their image and exclusivity.
However, the online retailers argue that restrictive distribution deals are anti-competitive and hurt consumers.
The EU court’s ruling on the Coty case will be crucial because companies are seeking ways to curb sales of their products online.
Coty the retailer they‘re in court with has breached an agreement which prohibits the sale of its products via third parties.
Lobby group Computer & Communications Industry Association (CCIA), whose members include Amazon, eBay, Facebook, Google and Yahoo, agreed that the problem was a broader one than just luxury good companies protecting their turf.
“We do not consider this to be a ‘fight’ with or against luxury brands,” CCIA director Jakob Kucharczyk, said.
“This issue is far more relevant because online marketplace bans are imposed with respect to a range of day-to-day, mass market products which makes them anti-competitive and unjustifiable.
“That’s the real problem, not a handful of high-end luxury brands that don’t use outside distributors,” he said.
The Coty case originally went to a court in Germany which subsequently asked the ECJ for guidance.
The dispute is in the spotlight now because of the European Commission’s push for more cross-border online sales to boost growth and jobs, and catch up with the US and Asia.