Could luxury brands ban platforms from selling their parts online?

Luxury brand products being sold on various ecommerce platforms such as eBay, Amazon and AliBaba have raised quite many speculations around the globe. The issue has been raised legally and will now be heard at the highest court in Europe. Presently the brands are focusing on saving their own equity interests therefore drastic change in the industry is expected.

A German company Coty which is a subsidiary of a US beauty products company Coty Inc has filed a case against a retailer that is trying to sell Coty’s products online. Coty aspires to stop this retailer and is using their full efforts in ensuring that the case goes in their favor. The case is being heard at the Court of Justice of European Union (ECJ) in Luxembourg where both parties are presenting evidences to support their plea.

According to the opposition, Retail Gazette, luxury brand companies have tussled with retailers over past couple of years. The brands believe that they have the right to distribute their products to preserve the image of their brand and its exclusivity as well. Online retailers argue that this approach minimizes competition and ultimately affects the customer. This particular case is being closely watched by brands and retailers equally because this will determine the brands right to control sales online.

Brands cherish uniqueness and avoid online platforms so their products don’t become widely available for majority of customers. They argue that the desirability factor reduces largely and customers tend to lose interest in a particular brand. However, companies such as LVMH have announced to sell their products online but they won’t be partnering with any luxury retailer. They’ll sell their products directly to the end consumer through their own website.

Furthermore, Coty has rejected any accusations on it and merely argues that they want the chastity of their luxury brands safeguarded. They want to uphold the prestige of their brands. eBay has also issued a statement on this subject which refutes the idea of the ban. eBay argues that having these restriction on such platforms would only help brands have artificially high prices for their products. The company said that this isn’t a fight against luxury brands but rather imposing such brands will limit the competition and limit customer choice.

A non-binding opinion will be offered by an ECJ court advisor on which further decision will be formulated in coming months.