Reinier advises national and international companies
reinier.russell@russell.nl +31 20 301 55 55Manufacturers of luxury goods are allowed to prohibit retailers from offering the products for sale on websites such as amazon and eBay.
The European Court of Justice so ruled in a case in Germany last week. Coty Germany sells high-end cosmetics in Germany. They market the luxury goods via authorised resellers. These resellers have to fulfil a number of requirements regarding setting, services and store design. Said requirements are set to guarantee the luxury image of the products.
Coty Germany sued one of its authorised vendors. The vendor sold Coty products via ‘amazon.de’. The contract included that the retailer was allowed to sell products via his own website but not via a third-party e-commerce platform such as amazon or eBay.
The question is whether such contractual terms are contrary to competition law. The European Court of Justice ruled that a system of selective distribution for luxury products meant to retain their luxury image is not contrary to competition law.
The fact is that the quality of luxury goods does not just arise from the tangible characteristics of the product but also from the image that provides a luxurious appearance. This particular appearance is an essential characteristic of these products. Resale of the products via e-commerce platforms to third parties may harm the luxury image. A contractual provision where the manufacturer prohibits the retailer from selling the products via online platforms of third parties is therefore legal when it is meant to retain the luxury image of the products.
The ruling is a setback for eBay, amazon and other e-commerce platforms. Manufacturers of high-end brands may from now on intervene when their authorised vendors offer the products on online platforms too. Hence, the resellers will have to create their own websites if they intend to sell products online and cannot take advantage of the name of larger online platforms. The judgement of the European Court of Justice is in line with previous Dutch decisions.
Do you need help drafting these or other terms in a distribution agreement or would you like to modify contractual terms? Please contact us:
Employees who consume alcohol and drugs during work or who want to work under the influence remain a problem for employers. What measures can you take against this? Are you allowed to test an employee if you suspect they are under the influence?
An earn-out in the event of a company takeover offers opportunities and risks. The former director and major shareholder remains involved in the company and part of the purchase price remains dependent on future performance. What aspects are important here?
What should you bear in mind if you want to change the rent for your business premises? When are you allowed to adjust the price yourself? And in which cases do you have to go to court?
In principle, a continuing performance agreement can always be terminated, even if no arrangements have been made in this regard. But you can’t just do it. What do you need to take into account when terminating the agreement? And what if you want to deviate from the arrangements made about terminating the agreement?
On 28 June 2025, the European Accessibility Act will come into force. From that data, digital products and services must also be accessible to people with disabilities. Which companies, products and services does the Act apply to? What disabilities should you take into account? What are the consequences of not complying with the Act?
If a contract has ended, there may still be obligations you want your contract partner to fulfil, such as warranties or confidentiality. You can regulate this through survival clauses. What should you look out for when including such clauses?
