Brand reputation is intimately connected with the manner and context in which products are purchased, so the Opinion of the Advocate General of the CJEU in the Coty (C‑230/16) reference (issued on 26 July 2017) will be welcomed by luxury brand owners seeking to maintain the highest standards for their brands.
The AG’s Opinion was that contractual limitations in relation to which particular on-line sales platforms may be used by a distributor to sell branded goods should not be considered anti-competitive if justified by the nature of the goods concerned. Such a restriction must, however, be applied on the basis of objective criteria, in a non-discriminatory manner and the restriction should not go any further than is necessary to achieve protection of the luxury image of the products involved. It would be for the referring national court to examine whether the contractual clause was justified by the type of product, whether it was determined in a uniform fashion and applied without distinction and whether it went beyond what was necessary.
For a full analysis of the AG’s Opinion see our Competition, Regulation and Trade e-bulletin here.