Too chic for Amazon: Luxury firms in European Union can pick sales sites

Pop star Rita Ora promotes the Rimmel London range of cosmetics More

Coty's case was unsuccessful initially - the trial court found that the contract terms conflicted with German or EU competition law - but the Higher Regional Court in Frankfurt sought guidance on appeal from the European Court of Justice.

Coty allows its products to be sold by authorized dealers but puts a number of restrictions on how such sales are carried out, finding such terms necessary to preserve its branding image.

One of those distributors, Parfümerie Akzente, sold Coty's goods through Amazon's German website.

In a move that could have far-reaching consequences, the Court of Justice backed the case brought by U.S. cosmetics giant Coty - which makes Rimmel and CoverGirl brands, among others.

Luxury goods brands may block distributors from selling their products on e-commerce sites such as Amazon and eBay following a ruling by the European Court of Justice.

Online platforms say such curbs are anti-competitive and hurt small businesses.

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The issue is significant in Europe, whose companies account for 70% of global luxury good sales.

"A supplier of luxury goods can prohibit its authorised distributors from selling those goods on a third-party internet platform such as Amazon", the ECJ said.

Many luxury brands have taken a dim view of Amazon for a long time-they want to be able to maintain their luxury image by only selling their products through high-end channels, and Amazon isn't that.

"It is a clear ruling for the protection of luxury brands' image, the defence of our teams' work and the protection of consumers' rights and information", Coty said.

The issue has split European Union countries, with Germany more eager to promote e-commerce.

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