Selective distribution and online sales

On 6 December 2017, the Court of Justice of the European Union ("CJEU") rendered a long-awaited judgment in case C-230/16 opposing Coty Germany, a supplier of luxury cosmetics, to Parfümerie Akzente, one of its authorised selective distributors.

In this case, the Higher Regional Court of Frankfurt am Main had sought a preliminary ruling from the CJEU as to the validity of a contractual clause prohibiting Parfümerie Akzente from distributing Coty goods via third-party platforms such as eBay or Amazon.

First of all, the CJEU confirmed its well-established case-law according to which a selective distribution system for luxury goods designed, primarily, to preserve the luxury image of those goods, does not constitute an agreement contrary to Article 101 (1) of the Treaty on the Functioning of the European Union ("TFEU"), provided that (i) resellers are chosen on the basis of objective criteria of a qualitative nature, (ii) laid down uniformly for all potential resellers and applied in a non-discriminatory fashion, and (iii) that the criteria laid down do not go beyond what is necessary.

Next, the CJEU ruled that Article 101(1) TFEU does not preclude a contractual clause which prohibits authorised distributors of luxury goods from using, in a discernible manner, third-party platforms for internet sales, on condition that (i) such a clause has the objective of preserving the luxury image of the goods, (ii) it is laid down uniformly and not applied in a discriminatory fashion, and (iii) it is proportionate in light of the objective pursued.

Finally, the CJEU stressed that, in the event that the Higher Regional Court of Frankfurt am Main should conclude that the clause at issue falls, in principle, under Article 101(1) TFEU, the clause does not constitute a hardcore restriction and may benefit from the block exemption of Regulation 330/2010 of 20 April 2010 relating to vertical agreements.

With this judgment, the CJEU largely followed the Advocate General’s opinion delivered on 26 July 2017 although, contrary to the latter, it expressly limited its analysis to luxury goods. It gives welcome guidance to producers of luxury goods who are operating selective distribution systems that, in the absence of an absolute ban on online sales, an online marketplace ban is not a restriction "by object" within the meaning of Article 101(1) TFEU, although room for discussion remains around the delimitation of the concept of “luxury goods”.