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Luxury Firms' Online Battle Boosted by EU Court Adviser's Coty Stance


FILE - Models gather at a trading post on the floor of the New York Stock Exchange for the IPO of Coty Inc., June 13, 2013.

A decade-long battle by luxury brands to defend their image neared an end on Wednesday when an adviser to Europe's top court said Coty can block a German retailer from selling its beauty products via online marketplaces.

"A supplier of luxury goods may prohibit its authorized retailers from selling its products on third-party platforms such as Amazon or eBay," Advocate General Nils Wahl at the European Union's Court of Justice said in a non-binding opinion.

Wahl's view relates to a dispute between the German business of Coty, whose brands include Marc Jacobs, Calvin Klein and Chloe, and German retailer Parfumerie Akzente, which sells Coty's goods on sites including Amazon against its wishes.

Luxury brands say they should have the right to choose who sells their products to protect their image and exclusivity.

Judges at Europe's highest court, who follow their advisers' opinions in four out of five cases, will rule on the case "Coty Germany GmbH v Parfumerie Akzente GmbH" in the coming months.

Coty did not respond to a request for comment.

Denis Waelbroeck, a lawyer at Ashurst, said there is a rationale to the luxury brands' arguments against so-called free riders, companies who may benefit from others' marketing efforts without paying the costs.

"I don't think free riding deserves a particular reward. Competition rules do not allow free riding on heavy investments made by luxury goods companies," he said.

EU antitrust regulators crafted rules in 2010 which allow brand owners with less than a 30 percent market share to block online retailers without a bricks-and-mortar shop from distributing their products.

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