The Oberlandesgericht Frankfurt a. M. (Higher Regional Court) has requested a preliminary ruling from the ECJ. The German court wants to know, if a provision that prohibits the authorized resellers in a selective distribution network from making use of non-authorized third undertakings, is to be recognized as a restriction of competition. Advocate General Wahl said it wasn't the case in his opinion delivered on 26 July 2017.

The case is based on a dispute between the Coty Germany GmbH and one of its authorized resellers, Parfümerie Akzente GmbH. Parfümerie Akzente has for many years distributed Coty Germany’s products as an authorized reseller at brick and mortar locations, through its own online store and partly via Amazon's platform. In 2012 Coty revised their selective distribution network contracts. They no longer wanted authorized resellers to be allowed to use third party internet platforms discernibly to the public, as those did not have the same quality standards underlying as the authorized resellers' ones. Because of that Parfümerie Akzente was prohibited from distributing via Amazon.

The Advocate General reasons in his opinion that the protection of a product's image justifies the development of a selective distribution network. According to the decision Metro I (C-1677/77), the development of a selective distribution network on the basis of qualitative criteria is accepted as legal, as long as (1) the nature of the product in question, including the prestige image, requires selective distribution in order to preserve the quality of the product and to ensure that it is correctly used, (2) resellers are chosen on the basis of objective criteria of a qualitative nature which are determined uniformly for all and applied in a non-discriminatory manner for all potential resellers and (3) the criteria established do not go beyond what is necessary.

The Advocate General explains in his opinion, that distribution through an “electronic shop window” of the authorized reseller was not a restriction of competition and must therefore be legal, to preserve the luxury image of the products. Facilitating such a distribution system would not constitute a restriction ‘by object’ of the retailer’s customer group and/or of passive sales to end users. This was the main difference to the Pierre Fabre case in which a complete prohibition was considered.

You can find the opinion of the Advocate General here. It remains to be expected if the ECJ will follow the opinion given in this important case.

 

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