Europe's top court to rule whether luxury brands can deny shoppers right to buy online

Europe’s top court will rule on Wednesday whether luxury brands can block retailers from selling their products on online platforms such as Amazon and eBay, a move which may end a decade-long battle that has split EU countries.

The dispute between U.S. cosmetics maker Coty and German retailer Parfumerie Akzente, which sells Coty’s goods on sites including Amazon against Coty’s wishes, reached the Court of Justice of the EU after a German court asked for guidance on whether online sales bans on third-party sites curb competition.

Wednesday’s ruling could set a precedent for whether luxury products makers can prevent their products being sold by retailers on online platforms across Europe, a market worth billions of euros.

Coty, whose brands include Marc Jacobs, Calvin Klein and Chloe, received a boost in July when a court adviser backed its case and argument that such a ban protects the image and exclusivity of its products.

After intense lobbying by LVMH and Richemont , EU antitrust regulators drew up rules in 2010 to allow brand owners with less than a 30 percent market share to block online retailers without a bricks-and-mortar shop from distributing their products.

Germany however has rocked the boat. In two test cases in recent years, the German cartel office forced Adidas and Asics to drop such bans, saying online platforms are crucial for small- and medium-sized companies and consumers.

The German sentiments are understandable in view of the widespread use of online platforms, said lawyer Anne MacGregor at Dechert.

“In Germany 62 percent of retailers use online marketplaces, more than in other EU countries. The UK CMA (Competition and Markets Authority) has also spoken out against restricting online sales too vigorously,” she said.

The Luxembourg-based court’s ruling could determine who has the upper hand on competition policy in this issue, said Assimakis Komninos, a partner at White & Case.

“There is a battle as to who sets competition policy in the EU. Will it be the Commission or will competition authorities be allowed to go their own way as in the case of Germany?” he said.