Luxury brands win rights to protect their exclusivity with Amazon ban

By Rose Adams | 07 Dec 2017 | Wealth

EU court rules luxury brands can ban distributors from selling goods on websites including Amazon and eBay

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Luxury goods suppliers can now prohibit distributors – such as shopping platforms Ebay and Amazon – from selling their products on their sites thanks to a new ruling from the European court of justice. It's an historic result for brands including LVMH, Richemont, and Gucci, who fear commonplace distribution via these third party sites could damage the brand. The ban preserves the luxury image of the goods, ensuring that both the luxury products and company stocks remain a good investment.

The ruling took place at the European court of justice as cosmetics giant Coty – which owns a huge number of successful beauty brands such as Calvin Klein – brought proceedings before the German courts against one of its authorised subsidiaries and retailers, Parfümerie Akzente, in a case pending at a Frankfurt court, with a view to prohibiting it from distributing Coty goods via Amazon.

The ECJ said: "According to the Court, the prohibition, imposed by a supplier of luxury goods on its authorised distributors, of the use, in a discernible manner, of third-party platforms for internet sales of those goods is appropriate to preserve the luxury image of those goods.

"The Court notes in this context that the quality of luxury goods is not simply the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury. That aura is an essential aspect of those goods in that it thus enables consumers to distinguish them from other similar goods. Therefore, any impairment to that aura of luxury is likely to affect the actual quality of those goods."

LVMH COO Jean-Jacques Guiony recently revealed: "We believe the business of Amazon does not fit with LVMH, full stop, and it does not fit with our brands."

The case has set an example that could allow other luxury brands to stop their distributors selling their goods on Amazon, eBay and other online marketplaces too.