By Jonathan Parker and Calum Warren

Summary

The Court of Justice of the European Union (CJEU) has handed down its much-anticipated judgment in Case C-230/16 Coty Germany GmbH v Parfümerie Akzente GmbH (Coty). The case concerns the legality of a prohibition of sales on third-party platforms discernible to the public within Coty Germany’s selective distribution system. The CJEU stated that selective distribution for luxury goods is compatible with Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) provided that both:

• Distributors are chosen on the basis of objective criteria of a qualitative nature applied uniformly to all potential distributors in a non-discriminatory fashion
• The criteria do not go beyond what is necessary

The CJEU addressed the specific issue of the prohibition on discernible third-party platform sales within Coty Germany’s selective distribution system. The court stated that this type of restriction is a justified and proportionate means of protecting the brand image of luxury goods and does not amount to a “hardcore” restriction within the meaning of the EU Vertical Restraints Block Exemption Regulation (VBER). The CJEU’s judgment provides important clarifications on the use of selective distribution for luxury goods and the EU courts’ assessment of such distribution.