Luxury perfumes on Amazon

EU Court approves marketplace restriction for luxury perfumes

As a brand, one of the most worrying aspects of running your company is the thought of third-party sellers damaging your brand's image by selling online on marketplaces that are inappropriate or using marketing material that does not fit your purpose. Nevertheless, many brands find their products being sold on marketplaces and do not know what to do against it. 

For everyone working with luxury brands, here is some great news: in July 2018 Higher Regional Court of Frankfurt ruled that luxury brands are permitted to restrict authorized sellers from selling on online marketplaces, following an earlier EU court ruling. 

The groundbreaking marketplace restriction was imposed by the company Coty Germany on Parfümerie Akzente, to prohibit it from distributing Coty perfumes – like Hugo Boss, Calvin Klein and many more – on a third-party online marketplace. Although Akzente is an authorized distributor, the Frankfurt court confirmed that the restriction can be justified as the main aim is to preserve the luxury image of Coty’s products that they have worked hard to build up.

The restriction will not affect the ability of Parfümerie Akzente to distribute the perfume on its own proprietary online shop. This ruling might pave the way for luxury brands to be able to protect their brand image in the future when it comes to sales marketplaces, who are becoming more and more important in eCommerce environment. This ruling will give brands a higher level of protection for their brand image.

The EU court of justice recently confirmed in relation to this case that, suppliers can preserve the “aura of luxury” by using selective distribution systems if the following are met:

  • Authorized resellers must be chosen on the basis of objective, qualitative criteria.

  • These criteria must be laid down uniformly for all potential resellers and applied in a non-discriminatory manner.

  • Within a selective distribution system, suppliers can control the manner in which authorized distributors resell online. In this context, controls are permissible where they require distributors to resell only in their own business name and:

    • a. on their own website, or

    • b. on a third party platform, but only if this can be done in a manner not discernible to customers.

What looks set to be interesting in the future is finding out what the EU court of justice used as criteria to qualify luxury goods. Because they have not elaborated on this at the moment it looks as though companies will try and use this ruling to protect goods that are only semi-luxury or quasi-luxury. Although they will have less of a case than full luxury brands, they will no doubt use this ruling as a backup to help protect their brand identity. 

If you are worried about where your brand is being sold online, you can find out more about our sales tracking service here. We are also able to help with test purchases, online monitoring and domain monitoring, to ensure your brand protection is tailor-made to your needs and has no unwanted extras.