PARIS — Oral arguments made by Coty Germany and the distributor Parfümerie Akzente regarding third-party e-tailing were heard in the Court of Justice of the European Union, or CJEU, on Thursday morning.
In the European Union, although prestige beauty makers have long been able to control — through distribution contracts — how their products are sold in brick-and-mortar stores, legislation is much less clear when it comes to retailing in the digital sphere.
Manufacturers and suppliers generally contractually restrict distributors from selling their goods online.
“Though this practice is quite common, there is no clearly established rule if and which restrictions are allowed by antitrust law, especially in [the] case of luxury goods within selective distribution networks,” explained Benedikt Rohrrsen, a lawyer specializing in international distribution matters on the web site Legalmondo.com.
The Court of Justice, based in Luxembourg, has been asked to give a preliminary ruling on Internet sales restrictions.
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“A judgment is not expected before the end of the summer,” according to a Coty spokesman.
The recommendations will clarify the European court’s stance on distribution over third-party platforms, and then “probably all of the other antitrust authorities and courts in Europe will abide [by that],” Rohrrsen told WWD.
The Coty-Parfümerie Akzente case had been winding its way through the court system in Germany for a number of years before landing in Luxembourg.
The district court of Frankfurt has already ruled the ban of sales by third-party platforms as an unlawful restriction of competition. Then the court of second instance in Frankfurt deferred to the CJEU for a preliminary ruling about how European antitrust rules must be interpreted, according to Rohrrsen.
Once the court in Luxembourg makes its suggestions, the case will revert back to the court system in Frankfurt and be tried there.
The issue of third-party sales is one that reverberates on both sides of the Atlantic.
In 2010, the U.S. Supreme Court let stand an appellate ruling that found Costco Wholesale Corp. liable for copyright infringement after it sold Omega watches at steeply discounted prices without the Swiss firm’s authorization.