The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Pavis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Wednesday, 6 December 2017

BREAKING NEWS - CJEU holds that preserving luxury image of products in selective distribution agreements is not contrary to competition law

The Court of Justice of the European Union has issued its decision in the matter of Coty Germany v Parfümerie Akzente. The Court has essentially sided with the AG Wahl’s opinion on this case [reported on this blog here].

The case saw Coty Germany, a seller of luxury cosmetic goods and its distributor, Parfümerie Akzente, disputing over a contractual clause which prevented the distributor from selling the luxury products on third–party platforms which operate in a discernible manner towards consumers. The distributor was free, however, to use their own electronic shop window or third-party platforms not discernible to the consumers. Coty Germany brought proceedings against Parfümerie Akzente in order to prevent it from selling on the platform “amazon.de”.

The Oberlandesgericht Frankfurt am Main asked the CJEU, essentially, whether this clause is lawful under competition law (the implications of this question for trade mark owners in distribution agreements are extremely relevant).

According to the press release, the CJEU stated that:

“…a selective distribution system for luxury goods, designed primarily to preserve the luxury image of those goods, does not breach the prohibition of agreements, decision and concerted practices laid down in EU law, provided that the following conditions are met: (i) resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion; and (ii) the criteria laid down must not go beyond what is necessary.”

Furthermore it held that, a contractual clause in a selective distribution agreement that: (i) has the objective of preserving the luxury image of the goods in question; (ii) it is laid down uniformly and not applied in a discriminatory fashion; and (iii) it is proportionate in the light of the objective pursued; is not in principle precluded to stop authorised distributors from using, in a discernible manner, third party platforms for internet sales, if these principles are met. It will be the Oberlandesgericht Frankfurt am Main which will have to determine whether these conditions are met in the case at hand.

Also, the Court clarified the vexata quaestio of the scope of the Pierre Fabre (C-439/09) judgment. According to the press release, it held that in Pierre Fabre it did not intend to set out a statement of principle for which the preservation of a luxury image of products cannot justify a restriction of competition. In that case there was a blanket prohibition on internet sales justified by the undertaking with the preservation of the luxury image of its products, which on those terms could not be justified.

The judgment is available here (only in German and French for the moment).

Stay tuned for a more thorough analysis!

6 comments:

Jani Ihalainen said...

The judgment is now available in English: Link

Cecilia Sbrolli said...

Thank you, Jani!

Tertius said...

So is the distributor through an unauthorized channel just in breach of the agreement or is it also infringing the brand owner's trade mark by using it in a way that does not have the owner's consent? In the latter case, presumably the brand owner's rights do not become exhausted by placing the goods on the market through this channel so, even though the goods are genuine, they nevertheless remain infringing? This sounds like a potential nightmare for innocent purchasers and third parties in general!

Belgian ANON said...

Very dodgy

As a simple patent attorney I interpret this as '1: the item is a luxury item because the sales channels are selectively chosen' and '2: the sales channels are chosen to support the luxurious nature of the item'

Vicious circle, anyone?

Where's the indepedent support, even a shadow of it, of the item truly being luxurious, instead of just being over-priced? Surely that must be required.

Andy said...

This case brings to mind the thoroughly disreputable Net Book Agreement practices of the last century in the UK

Paul Magrath said...

Yes this is what you could call Retail Pride Maintenance. Basically exclusivity trumps competition. Why not justify your cartel by saying it's a mechanism to support your brand mystique?

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