The CJEU (Court of Justice of the European Union) has delivered a ruling to the effect that brands in the luxury category are allowed to block the selling of their products by distributors via third-party online platforms including eBay and Amazon. Coty, a luxury cosmetics firm, had initially filed the case in Germany seeking to ensure distributors only sold its makeup via their e-commerce platforms. Additionally the distributors were to only sell them through third-party platforms if consumers couldn’t make a distinction.
ParfümerieAkzente, one of the distributors, violated the agreement and sold Coty’s products via the German website of Amazon leading to the filing of a lawsuit by the luxury brands firm. However the regional court where the suit was filed referred the case to the CJEU on the basis that it was outside its jurisdiction as the actions of the plaintiffs could have been in contravention of the competition law in the European Union. Now the CJEU has ruled that the clause by Coty forbidding its distributors from selling on certain platforms was perfectly legal.
Control and exclusivity
Some of the reasons why luxury brands shun Amazon include fears that their image of exclusivity will be destroyed. Additionally they want to have control on high-end pricing. Last month for instance it emerged that Amazon was offering discounts on some items before letting third-party sellers know. This is problematic since some suppliers might be averse to having their products discounted because it destroys their high-end stature.
The ruling by the CJEU comes in the wake of a business row brewing between Amazon and Google with the online search giant threatening to prevent YouTube from being viewable on Fire devices starting next year. Additionally a workaround which Amazon introduced to allow access to YouTube via its smart speaker’s screen-based version has been blocked by Google.
Google vs Amazon
Previously Amazon had stopped stocked Google’s hardware products on its online retail platform. Just last month Amazon removed a Nest smart home kit from its platform. Since 2015, the online retail giant has declined to sell the Chromecast streaming device which is manufactured by Google. Also users of Google Cast have no access to Amazon Prime Video. According to analysts this will disadvantage consumers.
“It’s all very unfortunate for consumers, who will have little understanding of the commercial tensions between the two companies. I wonder whether the next step might be the intervention of a regulator to investigate whether they are behaving anti-competitively,” said CCS Insight’s Ben Wood.