Luxury goods companies may ban sales of their products on online platforms like Amazon to preserve their aura of exclusivity, the European Union’s top court said Wednesday.
The European Court of Justice ruled in favor of the German branch of luxury cosmetics group Coty, whose brands include Calvin Klein and Marc Jacobs, which sought to keep its products from selling on non-authorized digital sale platforms.
The court said Coty’s effort to limit distributors “is appropriate to preserve the luxury image of those goods,” adding that it “does not appear to go beyond what is necessary.” Coty wanted to ban an authorized distributor from selling its products on Amazon.de in a case pending at a Frankfurt court, which requested a ruling from EU judges.
The Computer and Communications Industry Association said the ruling was “bad news for consumers who will face fewer choices and also less competition when they want to shop online.”
Germany’s antitrust agency said it was examining the EU court ruling, but expected it to have only a limited effect on its own decisions.
The court in Luxembourg “apparently made a great effort to limit its statements to the realm of real prestige products, where the luxurious aura is a significant part of the product itself,” said Andreas Mundt, the head of the Federal Cartel Office.
Manufacturers of goods that aren’t luxury brands “still have no carte blanche to sweepingly limit their distributors’ use of sales platforms, according to our assessment,” Mundt added.