July 27, 2021

Volume XI, Number 208

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July 27, 2021

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July 26, 2021

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Frankfurt Court Approves Online Marketplace Restriction for Luxury Perfumes

The Higher Regional Court of Frankfurt ruled on 12 July 2018 that manufacturers of luxury products are permitted to restrict authorised resellers from reselling on online marketplaces.

The marketplace restriction at issue was imposed by Coty Germany on Parfümerie Akzente, one of its authorised distributors, to prohibit it from distributing Coty perfumes on a third-party online marketplace. The Frankfurt court confirmed that the restriction is justifiable as it is aimed at preserving the luxury image of Coty’s products. It also found that the restriction, which did not affect the ability of Parfumerie Akzente to maintain its own online shop, did not go further than necessary to achieve this aim. As part of a wider selective distribution system that was administered based on objective, qualitative criteria and uniformly applied in a non-discriminatory manner, the marketplace restriction also fell within the safe harbour under the EU Vertical Block Exemption Regulation.

The decision of the Frankfurt court follows the preliminary ruling of the European Court of Justice (CJEU) issued in December 2017, which we previously wrote about here. It confirms that within a selective distribution system, manufacturers of luxury goods can protect their brand image by imposing certain restrictions on unsuitable sales channels. Any such restriction should, however, be carefully constructed to avoid going beyond what is necessary to preserve an “aura of luxury”. Although this is a member state decision, its interpretation of the CJEU ruling will be of persuasive value.

As the CJEU’s ruling formally relates to selective distribution systems for luxury products, it will be interesting to see how competition authorities and courts will now approach similar restrictions on the resale of quasi-luxury or even non-luxury goods, for which the brand protection justification will likely be weaker. One of the areas which may be of particular interest is technologically advanced products, which may engage different (but equally legitimate) justifications for resale restrictions, such as the need to provide better customer service during and after sales to properly instruct customers and ensure correct usage.

©2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume VIII, Number 207
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About this Author

Gillian Sproul, Greenberg Traurig Law Firm, London, Litigation Attorney
Shareholder

Gillian Sproul focuses her practice on advising clients on the impact of EU and UK competition law on their transactions, operations and business strategy. She represents clients in cartel and abuse of dominance cases, energy regulatory investigations and market inquiries before the EU and UK regulators and courts and has obtained EU, UK and other national clearances for numerous complex M&A and joint venture transactions. Her experience extends also to advising clients on competitor co-operation and information exchange, distribution and licensing and compliance....

440203-349-8861
Lisa Navarro, Greenberg Traurig Law Firm, London, Corporate Law, Health Care and Litigation Attorney
Shareholder

Lisa Navarro advises on the application of UK and EU competition and regulatory law in various sectors including water, music publishing, sports, hospitality, shipping, health care and chemicals, both in relation to behavioural issues and merger control.

Lisa also advises UK and international companies on the requirements of the UK's Bribery Act 2010, from both a compliance and enforcement perspective.

Areas of Concentration

  • Competition law

  • Merger...

440203-349-8757
Addiped Cheng, Greenberg Traurig Law Firm, London, Antitrust Litigation Attorney
Associate

Addiped Cheng is an attorney Greenberg Traurig's Competition and Regulatory Group. She advises clients on all aspects of EU, UK and Hong Kong competition law, including behavioural competition advice, contentious matters and UK/EU merger control.

In addition to competition law, Addiped also advises on anti-bribery and corruption issues, and has assisted clients in conducting internal investigations into fraud, bribery and corruption. Addiped’s experience spans a range of industries including gaming, racing, airlines, construction and...

440203- 349- 8700
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