Mar 30, 2017
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Coty says not against online sales, wants to protect luxury brands

Mar 30, 2017

German beauty products maker Coty rejected claims that its distribution policies imply a blanket ban on online sales, arguing that its main concern was to safeguard the cachet of its luxury brands such as Marc Jacobs, Calvin Klein and Chloe.

The company argues it wants to protect the cachet of luxury brands - Chloé

The comments by the company, part of U.S. group Coty Inc, came in a landmark case which could determine whether luxury goods companies can stop retailers from selling their products via online marketplaces such as Amazon or eBay.

Brand owners have for the past decade argued that they should have the right to choose their distributors to protect their image and exclusivity. Online platforms say such curbs are anti-competitive and hurt small businesses.

The issue is significant for Europe which accounts for 70 percent of global luxury sales.

The company told Europe's top court that its dispute with German retailer Parfumerie Akzente, which sells its goods on sites including Amazon against its wishes, was not about imposing a ban on such trade.

The company's agreements preventing retailers from selling on third-party online platforms are aimed at preserving the image and quality of its products, its lawyer Andreas Lubberger told the Court of Justice of the European Union (ECJ).

"In Germany, we have a saying a picture is worth a thousand words, in this case a name is worth a thousand words," he said.

Coty brought the original case in a Frankfurt court which subsequently sought guidance from the ECJ.

Parfumerie Akzente's lawyer Oliver Spieker questioned the validity of Coty's arguments.

"If you are talking about a well-known marketplace which sells products to consumers, then you need proper considerations to ban it," he told judges.

"Amazon and eBay already sell well-known brands, do these brands have more to lose than Coty? L'Oreal for example has a platform on Amazon," he said.

The German government, a proponent of online trade, said online platforms were key outlets for small- and medium-sized enterprises.

"Restrictions must never be abused in order to close off new innovative formats of distribution," its lawyer Thomas Henze said.

Luxembourg sees a blanket ban as disproportionate and unjustified, its lawyer Philippe-Emmanuel Partsch said. Amazon's European headquarters is located in the Grand Duchy.

France, home to luxury brands such as Louis Vuitton, Chanel and Christian Dior, sprang to Coty's defense.

Online curbs safeguard the prestige and image of such products in the eyes of consumers, Julie Bousin, lawyer for the French government, said.

Italy, Sweden, the Netherlands and Austria also intervened in the case. An ECJ court adviser will issue a non-binding opinion in the coming months. Judges who follow such recommendations in four out of five cases, will rule shortly after that.

The case is C-230 Coty Germany.


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