The Higher Regional Court of Frankfurt ruled last Thursday that Coty Germany’s ban on distributors selling products over the Amazon.de platform is a justifiable restriction of online sales. The full judgment has not yet been released, but the court has published a statement (in German) summarising the decision.
This ruling follows the decision of the Court of Justice of the European Union (‘CJEU’) at the end of last year in a preliminary reference arising from the dispute (see here). The CJEU ruled the restriction of sales through third party platforms such as Amazon is not a hardcore restriction of competition, and may be justified where it has the objective of preserving an ‘aura of luxury’ that is linked to the quality of the goods. However, the CJEU stated that it was for the national courts to decide whether such restrictions are justifiable and proportionate, on a case-by-case basis.
Following the CJEU’s reasoning, the Frankfurt court found that the selective distribution system implemented by perfume supplier Coty, including the ban on sales over third party platforms such as Amazon.de, was compatible with competition law because it was based on objective qualitative criteria applied uniformly and without discrimination, and because it did not go beyond what was necessary to preserve the luxury image of the goods. It also confirmed that the specific clause banning the advertising and selling of Coty products via Amazon.de was proportionate to the objective of preserving the quality of these luxury products. The Frankfurt court therefore concluded that Coty’s selective distribution did not infringe EU competition law.
The findings of the Frankfurt court are not surprising given the strong steer given by the CJEU in the reference proceedings. However, we will be reading the full judgment closely when it’s available, to see if there is any indication that the German courts support the view of the German Competition Authority, the Bundeskartellamt, that the CJEU’s decision should be limited to genuinely prestigious products or whether it can be applied more widely…