European Court confirms certain restrictions on resale of luxury brands are justifiable

01 Aug 2018

Luxury brand owners are able to restrict their authorised retailers from selling their products on third party platforms, such as Amazon or eBay in order to protect the reputation of their goods. This was recently confirmed in a highly anticipated ruling by the Court of Justice of the European Union (CJEU) in the case of Coty Germany GmbH v Parfümerie Akzente GmbH.

Akzente had a distribution agreement with Coty, a German company which supplies luxury high-end cosmetics. Keen to preserve its luxury reputation, Coty imposed various contractual restrictions on the resale of its products; for example, all points of sale had to be approved by Coty. However in March 2012 Coty changed its selective distribution agreements to confirm that whilst Akzente was permitted to sell products online, they could only do so by agreed “electronic shopfronts”, and not via third party platforms such as Amazon or eBay.  Akzente refused to fall into line and a dispute arose over Akzente’s desire to sell Coty’s products on  

The case primarily turned upon whether a selective distribution system, such as that which Coty sought to impose, was contrary to Article 101 of the Treaty on the Functioning of the European Union, which prohibits as incompatible with the internal market any agreements which restrict or distort competition within the internal market. Initially the German court found that Coty’s selective distribution was contrary to Article 101; on appeal, however, the question was referred to the CJEU.

The CJEU confirmed that it is not contrary to Article 101 for luxury brand owners to restrict online sales via third-party platforms, providing that the restriction is laid down uniformly and not applied in a discriminatory manner. In addition, the objective of any restriction must be the preservation of the luxury image of the goods, and it must be proportionate to that objective.

Welcome news for luxury brand owners who wish to ensure that their goods are only sold via approved online platforms, but any brand owner attempting to restrict online re-sales must be careful not to offend EU competition laws. Legal advice should always be sought before imposing any resale restrictions.

Further reading

Supporting employees through the next lockdown

Managing your employees through uncertainty and equipping them to thrive, remain engaged and feel part of a team environment, must be a HR priority for 2021.
Read more Read

Remote working and home security

Blog, News & PR
With a large proportion of the workforce now working from home, security arrangements for home workers need to be addressed - Robert Ganpatsingh explains
Read more Read

Tenants take note: dilapidations damages to be subject to VAT

Blog, Legal Updates
Property expert Cheraine Williams explains why dilapidations could be about to get more expensive
Read more Read

Covid business interruption insurance payments due to small and medium companies

Blog, Legal Updates
Partner Jonathan Compton looks at the Supreme Court’s decision on business interruption insurance
Read more Read
  • Brighton Office

    1 Jubilee Street


    East Sussex

    BN1 1GE

  • Gatwick Office

    Griffin House

    135 High Street


    West Sussex

    RH10 1DQ

  • Guildford Office

    Wonersh House

    The Guildway

    Old Portsmouth Road



    GU3 1LR

  • Horsham Office

    Ridgeland House

    15 Carfax


    West Sussex

    RH12 1DY

  • London Office

    6 New Street Square

    New Fetter Lane


    EC4A 3BF

  • Get in touch