OLG Frankfurt – Selective prohibition on sale of luxury items online allowed

A supplier of luxury perfumes is allowed to prohibit its distribution partners from promoting and selling its products online via third party platforms. That was the verdict of the Oberlandesgericht (OLG) Frankfurt, the Higher Regional Court of Frankfurt.

The OLG Frankfurt’s decision was preceded by a preliminary ruling of the Court of Justice of the European Union (ECJ). We at the commercial law firm GRP Rainer Rechtsanwälte can report that the ECJ’s ruling from the end of 2017 found that a selective distribution system for luxury items designed primarily to safeguard a luxury image is allowed and does not violate the prohibition on cartels under EU law (Az.: C-230/16). In a judgment from 12 July 2018, the OLG Frankfurt applied the ECJ’s guidelines to its case.

The plaintiff in the case in question sells branded cosmetic products in Germany, and the defendant was one of the plaintiff’s authorized retailers (specialist dealers) required to comply with certain quality standards when selling the relevant products. The defendant sold the products in a brick-and-mortar store, on its online shop as well as on “amazon.de”. The point of contention concerned the sale of the products via the third-party vendor. The parties had agreed, among other things, that involving a third-party company in selling the products online was not allowed unless express permission had been granted in relation to said company. The relevant clause was revised to allow for selling online so long as the products’ luxury character remained intact. Any discernible involvement of a third-party company not among the authorized specialist dealers was expressly forbidden.

The defendant failed to sign the amended clause and continued selling the goods on Amazon, much to the annoyance of the plaintiff. The OLG Frankfurt granted the manufacturer’s action, ruling that the latter is allowed to demand that its products not be sold via third-party platforms such as Amazon. The Court went on to note, however, that this does not cover collaborations purely concerned with advertising, whereby the customer is redirected to the retailer’s online shop.

The supplementary agreement regarding the sale of the goods online was found to be an integral part of a qualitative selective distribution system. The OLG held that restrictions of this kind are allowed if they are necessary to safeguard the luxury image of goods whose quality is not based solely on their physical characteristics but also their prestigious image that lends them their luxury appearance and features.

Lawyers who are versed in the fields of competition law and antitrust law can offer advice in the event of disputes between dealers and companies.

https://www.grprainer.com/en/legal-advice/antitrust-law.html