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A few months ago, on this blog we discussed the opinion of the advocate general at the Court of Justice of the European Union, Mr. Wahl, in the Coty Germany GmbH versus Parfümerie Akzente GmbH case, C‑230/16, regarding the (i) admission of the luxury image of the products to justify a selective distribution system, and (ii) the lawfulness under competition law of the prohibition to sell luxury products on third-party platforms where the third parties are clearly recognized by the public, e.g., Amazon in this case.

The Court of Justice of the European Union (CJEU) finally issued its decision on this matter (CJEU judgment of December 6, 2017 [ECLI:EU:C:2017:941]). The CJEU adopts the same stance as the advocate general in his opinion, confirming that the preservation of the luxury image of the products can justify a selective distribution system if the requirements established in the Metro judgment (C-26/76, EU:C:1977:167) are met, i.e., that (i) the resellers are chosen based on objective criteria of a qualitative nature, established uniformly for all potential resellers and not applied in a discriminatory fashion; (ii) the characteristics of the product in question require such a network to preserve its quality and ensure its proper use; and (iii) the criteria established do not go beyond what is necessary.

The CJEU also clarified that the controversial judgment Pierre Fabre (C‑439/09, EU:C:2011:649), which has been interpreted as questioning whether the luxury image can support the selective distribution, must be interpreted as referring only to the case subject to its consideration (cosmetic and personal hygiene products), and not as establishing a general principle under which the luxury image does not justify establishing a selective distribution system.

However, the CJEU also confirms that the contractual clause prohibiting distributors in a selective distribution system from using third-party platforms for the internet sale of the contract goods, aimed at preserving the luxury image of those goods, is proportionate in relation to the objective. It also confirms that given that the clause does not prevent the distributors from selling over the internet (via their own stores), the prohibition does not go beyond what is necessary to preserve the luxury image.

Finally, the CJEU rules out the judgment establishing that this clause constitutes  a restriction of the distributors’ customers, within the meaning of Article 4 (b) of that regulation 330/2010, or a restriction of passive sales to end users, within the meaning of Article 4 (c) of that regulation, as it does not (i) prevent the distributors from selling products over the internet, (ii) restrict certain customers, and (iii) prevent the distributors from advertising on third-party platforms or using online search engines in a way that customers are usually able to find the online offer of the authorized distributors by using those search engines.

Based on the above, it is easy to conclude that the CJEU’s judgment is important for luxury product manufacturers that interpret it as a recognition of the protection of the luxury image and the prestige of their products as criteria whose preservation enables them to impose restrictions when organizing their distribution systems.

 

Autor: Jorge Llevat

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jorge.llevat@cuatrecasas.com

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