Photo: Elise Amendola / AP
The European Court of Justice ruled Wednesday that luxury brands have the right to prevent retailers from selling their products on third-party marketplaces like Amazon.com if the restriction is motivated by the desire to preserve the brand's exclusive image.
Why it matters: Brands have chafed at their inability under U.S. law to prevent retailers, who sometimes acquire products without the brands' consent, from reselling that merchandise through online marketplaces.
"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," the decision reads, further arguing that restricting where luxury goods are resold isn't anticompetitive, but necessary to protect the integrity of the product.
The ruling resulted from a suit in which U.S.-based Coty, which manufacturers luxury cosmetics brands like like Marc Jacobs and Chloe as well as more mainstream brands like Covergirl, argued that German retailer Parfümerie Akzente was violating the terms of its contract by reselling its brands on Amazon.com.