European Court of Justice decision allows Manufacturers to restrict sale of their products to retailers who will NOT sell online.

Manufacturers can now stop the sale of their products on sites like Amazon and eBay.

The decision maybe limited to the luxury products segment of the EU.

There is still a lot of unknowns concerning this decision. However, what most commentators do agree on is it is unlikely if not impossible for a Manufacturer or Distributor to be fined for placing restrictions on retailers. Because there is so many unanswered questions from the decision, and the decision leans to allowing the restrictions, the fines will not be triggered.

There seem to be two requirements the Manufacturer or Distributor must have to enforce the ban on sales.

(1) the resellers are chosen on the basis of objective criteria of a qualitative nature laid down uniformly for all potential resellers and are not applied in a discriminatory fashion; and

(2) the criteria laid down must not go beyond what is necessary.

Although a lot of the decision is still to be determined, the decision has allowed a sigh or relief on most manufacturers concerning their ability to restrict sales to online retailers and protect in their mind, the value of their goods.

What is not clear is the definition of luxury and how sweeping the decision is. Does “luxury” flow to the local stores or just high-end boutiques.

So this will be a wait and see as the courts work their way in tweaking and defining the decision.

You can read the original decision here: Judgment of the Court (First Chamber)

For more articles on the subject see:

Luxury Brands Win Right to Block Sale of Goods on Amazon in Europe

ECJ rules in favour of Coty over online sales ban

EU Court: Coty Verdict Strengthens Brands’ Position Against Online Platforms

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