Advocate General at the EU Court of Justice Issues Opinion In Coty Germany Case on Online Marketplace Bans

BY Heather Greenfield
July 26, 2017

Brussels, BELGIUM — Advocate General Nils Wahl delivered his opinion in the Coty Germany case (Case C-230/16). The case deals with contractual provisions a producer of luxury cosmetics imposed on his authorized retailer, prohibiting the latter the sale of products on open online marketplaces. The key question pending in front of the Court of Justice of the EU (CJEU) is whether these distribution restrictions are compatible with EU competition law or not.

In today’s opinion, the Advocate General states that a producer of luxury goods may, under certain conditions, prohibit his authorized retailers from selling his products on third-party online marketplaces. According to the Advocate General, this prohibition cannot as such be considered illegal under competition rules because it aims to preserve the luxury image of products and is likely to improve competition based on qualitative distribution criteria.

The Computer & Communications Industry Association has advocated for open and competitive markets since 1972. Online marketplace bans have long been a concern because they deprive European sellers of more opportunities and consumers of more choice and price competition. The following can be attributed to CCIA Europe Director Jakob Kucharczyk:

“The Opinion of the Advocate General is not easy to square with the importance of online marketplaces for a thriving e-commerce environment. Popular marketplace apps help European sellers reach consumers, who increasingly shop on mobile devices.”

“Using online marketplaces does of course not absolve sellers from their contractual obligations. On this point, we hoped for more nuance, as we don’t see how a blanket marketplace ban can be a proportionate measure if sellers can fulfil legitimate distribution criteria. In these instances, consumers will remain deprived of greater choice and price competition while for many sellers an important online distribution channel will remain effectively closed. We hope when the Court of Justice issues its ruling, it will include more nuance on this point and consider a more forward-looking approach.”

“Having said that, it is only very difficult to draw general conclusions from the Opinion. The need to preserve a luxury image of products stands very much at the centre of the Advocate General’s reasoning. The majority of marketplace bans do not concern luxury products, but mass market products that can be found in just about any physical store. There is nothing in the Opinion to suggest that manufacturers of these products can continue to deprive consumers from greater competition and price transparency.”

For media inquiries, please contact Heather Greenfield [email protected]

 

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