Luxury goods makers can block online sales, Europe's top court rules

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Luxury retailers such as Harrods and Selfridges could benefit from the ban as online marketplace customers would need to revert to these as authorised product distributors, but online platforms argue that the decision could hurt small businesses.

The European Court of Justice decided on Wednesday that a ban was "appropriate to preserve the luxury image" of products.

The issue is significant in Europe, whose companies account for 70 percent of global luxury goods sales. Coty tells its distributors that they can only sell its makeup through their own "electronic shop windows", and can only use a third-party platform if the consumers can't tell that this is happening.

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The EU's top court was dealing with a case brought about by luxury cosmetics brand Coty in Germany.

Parfumerie Akzente said it meets the terms for online sales set by luxury owners. It subsequently upheld Coty's contractual clause which seeks to stop distributors forwarding luxury goods to third parties for onward sale without prior brandowner permission.

The court statement on its findings explains that it considers the retail platform of luxury goods as having an impact on the public perception of brands.

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The German cartel office said it expected the court's ruling to have a limited effect on its policy, noting that its decisions had involved brand manufacturers from outside the luxury industries.

"Our preliminary view is that such manufacturers have not received carte blanche to impose blanket bans on selling via platforms", he said. 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.

The case is C-230/15 Coty Germany.

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