July 26, 2017 / 8:26 AM / 4 months ago

Luxury firms' online battle boosted by EU court adviser's Coty stance

LUXEMBOURG (Reuters) - A decade-long battle by luxury brands to defend their image neared an end on Wednesday when an adviser to Europe’s top court said Coty can block a German retailer from selling its beauty products via online marketplaces.

Luxury brands say they should have the right to choose who sells their products to protect their image and exclusivity.

“A supplier of luxury goods may prohibit its authorized retailers from selling its products on third-party platforms such as Amazon or eBay,” Advocate General Nils Wahl at the European Union’s Court of Justice said in a non-binding opinion.

Wahl’s view relates to a dispute between the German business of Coty, whose brands include Marc Jacobs, Calvin Klein and Chloe, and German retailer Parfümerie Akzente, which sells Coty’s goods on sites including Amazon against its wishes.

Judges at Europe’s highest court, who follow their advisers’ opinions in four out of five cases, will rule on the case “Coty Germany GmbH v Parfümerie Akzente GmbH” in the coming months.

“We are satisfied that the general counsel understands our position,” Coty said.

Parfümerie Akzente did not immediately respond to a request for comment.

Denis Waelbroeck, a partner at law firm Ashurst, said there is a commercial sense to the luxury brands’ arguments against so-called free riders, companies who may benefit from others’ marketing efforts without paying the costs.

“I don’t think free riding deserves a particular reward. Competition rules do not allow free riding on heavy investments made by luxury goods companies,” he said.

EU antitrust regulators crafted rules in 2010 which allow brand owners with less than a 30 percent market share to block online retailers without a bricks-and-mortar shop from distributing their products.

Reporting by Michele Sinner and Foo Yun Chee; editing by Alexander Smith and Elaine Hardcastle

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