EU Commission published a policy brief on marketplaces ban in light of the Coty Judgement

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In its final Report on the E-commerce Sector Inquiry published in May 2017, the Commission identified different types of marketplaces restrictions, mostly found in selective distribution agreements. The development of such practices led to new questions regarding the compatibility between contractual restrictions and EU competition rules in the field of e-commerce that required the interpretation of the European Court of Justice (ECJ). At the occasion of the judgement on Coty Germany v. Parfümerie Akzente, delivered in 2017, the ECJ clarified that selective distribution systems could be compliant with EU competition rules under certain circumstances and based on specific criteria – such as the preservation of a luxury image of products in the Coty case.

The case was initially brought to the ECJ by a German Court which had sought guidance on whether preventing distributors from selling products on third-party sites was against EU competition law. In this case, Coty Germany had set up a selective distribution network through authorized distributors required to accept a contractual clause forbidding them to sell via third-party platforms in a “discernible manner towards the consumer”. In its judgement, the Court considered that since the prestigious image and the “aura” were an essential aspect of the luxury goods sold by Coty, and that the selective distribution network aimed specifically at preserving the prestige of the brand, then prohibiting its authorized retailers from selling products on third-party online marketplaces was appropriate and therefore authorized under EU competition law. In a Policy Brief recently published, the European Commission presented its views on marketplace bans in the light of the Coty judgment. The Commission stressed once again, as the ECJ established, that a selective distribution system for luxury goods can comply with Article 101(1) TFEU provided that the decision is based on objective and transparent criteria. The Commission added that this decision not only applied to luxury goods, but also other types of goods as acknowledged by the Court of Justice in previous judgments in relation to “high-quality” and “high-technology” products. According to the brief, the Coty cases therefore “only clarifies that a selective distribution system compliant with Article 101(1) TFEU can also be operated for luxury goods in order to preserve the luxury image of those goods”.

The Commission also added that it agreed and welcomed the interpretation of the European Court of Justice in this case, particularly the clarification of the conditions for lawful contractual clauses, and that in DG Competition’s view, marketplace bans did not indeed amount to a hardcore restriction.

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