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COTY: Frankfurt court confirms luxury brands may prohibit sales on third party platforms

  • United Kingdom
  • Germany
  • Competition, EU and Trade


Sellers of luxury products may prohibit their business partners from offering their goods on third party platforms. In a judgment of 12 July 2018, the Higher Regional Court of Frankfurt1 followed the guidance it had sought from the European Court of Justice (“ECJ”)2 and confirmed Coty’s view that Amazon is not an appropriate channel on which to sell its luxury perfumes to customers. Coty may, therefore, continue to use its restrictive selective distribution system to sell the perfumes to end customers.

Following a preliminary reference, the ECJ held that a restriction on business partners from selling luxury goods on third party platforms was a proportionate way of preserving the luxury image of the goods. Furthermore, it stated that a selective distribution system for luxury goods, designed primarily to preserve the luxury image of those goods, is capable of falling outside the prohibition under Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”) on anti-competitive agreements altogether. This could also include the ban on authorised distributors of luxury goods from using third-party platforms in a ‘discernible’ manner for internet sales. Furthermore, the claimant can benefit from the safe harbour under the Vertical Agreements Block Exemption3 (“VBER”) since such a ban is not a hardcore restriction.

The ECJ’s Coty judgment has been seen as an important victory for high-end luxury brands, as it enables them to tightly control the online channels through which their products are sold, thereby preserving an ‘aura of luxury’.

The Frankfurt court found that all of the criteria set by the ECJ were met in the present case. An absolute ban on using online marketplaces can be a proportionate means of preserving the luxury image of the goods.

The court left open whether Article 101(1) TFEU was altogether inapplicable. The court found that – in the present case and based on the last version of the contracts – the selective criteria were applied in a uniform and non-discriminatory manner, as the witnesses had convincingly stated. This, the court stated, sufficed to at least constitute a derogation under the VBER, as the market shares of the parties did not exceed 30 percent in the relevant markets and the agreements did not contain any “hard core” restrictions. In particular, no customer group within the meaning of Article 4 (b) VBER was excluded, as online customers could also buy the luxury perfumes in brick and mortar stores.

The judgment is not yet final. Although an appeal was not admitted by the Higher Regional Court, the parties may try to challenge the non-admission before the Federal Court of Justice.

It will be interesting to evaluate the decision in more detail once the full text becomes available. In particular, the decision may point to what was necessary to convince a court of the criteria being met. This will make it easier to find guidance when assessing whether other high-quality or high-technology products are caught by this exception.

  1. Case 11 U 96/14 (kart), see the press release here.
  2. Case C-230/16, Coty Germany GmbH v Parfümerie Akzente GmbH. See the full text of the judgment here.
  3. COMMISSION REGULATION (EU) No 330/2010 an vertical agreements, can be downloaded here.

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