Selective Distribution: it is not prohibited to prohibit according to the CJEU

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Selective Distribution: it is not prohibited to prohibit according to the CJEU

Selective Distribution: it is not prohibited to prohibit according to the CJEU

In a recent decision, the Court of Justice of the European Union issued a reminder that, under certain conditions, the distribution of luxury products by a selective distribution system is not in opposition to European directives.

On a European level, Article 101-1 of the Treaty on the Functioning of the European Union (TFUE) prohibits, by principle, any concerted practices which may affect trade between Member States and which have the object ,or effect, of preventing, restricting or distorting the competition rules within the internal market.

Selective distribution joins a priori in this form of restrictive competition practices in that it limits the distribution of products only to distributors approved by the supplier.

In a distribution contract, a German supplier of luxury products has, in order to preserve its image, forbidden its distributors to sell its products via a trading platform on the Internet : "Amazon.de".

The sale of the products via their own online shop however remains possible.

Requested for preliminary rulings by a German Court of Appeal, the Court of Justice of the European Union considers notably that:

  • Preserving the luxury image of prestige products justifies the existence of systems of selective distribution, which are consistent with Article 101-1 provided that the choice of resellers is based on objective criteria of a qualitative nature, fixed in a uniform manner and applied on a non-discriminatory basis.
  • The contractual clause, which prohibits distributors from using third-party companies for sale via  internet, is also lawful and compatible with these provisions, provided that it is equally objective and uniform, non-discriminatory, but especially proportionate to the objective of preserving the luxury image of the products.
  • The court considers that the ban on the online sale of luxury products on this type of platform allows the supplier to verify that these products will be sold online in an environment that corresponds to the qualitative conditions agreed on with its authorized distributors.

The prohibition of the principle of restrictive competition practices therefore suffers a few regulated exceptions, but remains beneficial for the consumer who will be able to rely on the distributor website to buy the luxury products.

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