The outcome of the ongoing court case regarding the sale of luxury beauty products sold on sites such as eBay and Amazon will set a standard for companies being able to monitor and prohibit the sale of their prestige goods online.
The European Court of Justice said a supplier could prohibit the selling of its goods on platforms such as Amazon to protect its luxury image.
"The prohibition at issue in the main proceedings enables the supplier of luxury goods to check that the goods will be sold online in an environment that corresponds to the qualitative conditions that it has agreed with its authorized distributors", the ruling states.
Luxury owners have long waged a battle against what they say are free riders cashing in on their exclusivity and branding.
Online platforms say such curbs are anti-competitive and hurt small businesses. That said, the ruling does make clear that third-party platform bans do not amount to a hardcore restriction of competition, and thus it will be open to brand owners to seek to justify their use on a case-by-case basis.
The EU court said Coty's effort to limit distributors "is appropriate to preserve the luxury image of those goods", adding that "it does not appear to go beyond what is necessary". In two test cases in recent years, the German cartel office forced Adidas and Asics to drop such bans, saying online platforms are crucial for small- and medium-sized companies and consumers.
Germany's antitrust agency said it was examining the European Union court ruling, but expected it to have only a limited effect on its own decisions.
Germany will now have to fall in line though, said a competition lawyer, who declined to be named.