Protection of luxury brands versus free trade
The online auction retailer eBay has once again locked horns with manufacturers of
luxury goods, specifically in the form of Louis Vuitton. Louis Vuitton has for several years
waged law suits against eBay, in various EU countries, arguing that the sale of its luxury
goods on the eBay site has a detrimental impact on the exclusive nature of the goods and
as such should be prohibited. In reply, eBay has forcefully argued that such a control on
the distribution of the goods is contrary to the principles of free competition and is
anticompetitive.
In the latest decision handed down by the French courts, the ruling has gone in favour of Louis Vuitton. It has enabled Louis Vuitton to prevent the sale of its genuine goods on the eBay site and has also extended to enabling the company to stop the sale of counterfeit items. However, this cannot be taken as the final position for the sale of luxury items, because, in contrast to the French decision, the UK courts dismissed a corresponding claim made by L’Oreal. The UK decision did, however, hold eBay liable for the sale of fake fragrances and cosmetics.
eBay has indicated that it will file an appeal against the French decision on the basis that it constitutes an unfair restriction of trade to allow such a limitation on the sale of genuine goods and counterfeit goods. It can be expected that eBay will continue to defend its ability to sell as broad a range of goods as possible.
This is clearly a difficult path for the courts to tread, as an attempt is made to preserve
the integrity of brand owners on the one hand but also to enable free trade and fair
competition on the other.
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