Luxury brands can enforce selective distribution

Luxury brands can exercise full control of where there products are sold online, with an EU court ruling brands have the right to block retailers from selling goods in online marketplaces which do not preserve the ethos and quality of luxury products.

In a landmark judgment by the European Court of Justice, European luxury brands can control distribution, ensuring a their high standards are uniform in both their bricks and mortar and omni channel markets.

The news comes from the European Cultural and Creative Industries Alliance (ECCIA) who welcomes the judgment regarding the validity and appropriateness of selective distribution for luxury products.

The law ensures brand image is protected

In a press release, the ECCIA stated: The judgment which is consistent with constant EU case-law clearly states that the quality of luxury goods is not simply the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury. Consequently, the use of selective distribution systems in order to preserve the image and prestige of luxury brands is compatible with the current competition regulations when it is applied on the basis of objective criteria.”

The Court confirms the freedom of the lead company of a selective distribution network to organise its network according to these criteria and to impose a prohibition on the use, in a discernible manner, of third-party undertakings for internet sales.

The ECCIA is composed of five European cultural and creative industries organisations which include Altagamma (Italy), Circulo Fortuny (Spain), Comité Colbert (France), Meisterkreis (Germany) and Walpole (UK). Between them represent over 400 brands and cultural institutions.

Michael Ward, Walpole’s Chairman, stated: “As founding members of the ECCIA we welcome the judgment today as it provides further clarity as to the legitimacy of our distribution model.”

“The judgement recognises the importance of our business practices where they are necessary to preserve the luxury image of our goods and in line with the existing regulations on vertical restraints and related guidelines. It recognises the distribution strategy of luxury brands which offer a true omnichannel experience in keeping with the quality of our products and the highest standards of service expected by our customers.”

Photo credit: Louis Vuitton website; Chanel backstage, source: Chanel website