French cosmetics maker Pierre Fabre Dermo-Cosmetique has a policy of banning online sales. But e-commerce sites like eBay have complained, and the issue has now landed in Europe's highest court.
Some luxury brands kept their products offline
According to a recent study by the Centre for Retail Research, a British industry analysis firm, European online retailers have turned a brisk business recently, with their sales figures surpassing those in the United States for three consecutive years.
The report also said European online spending had outpaced the U.S. market for the past three years.
But not all companies are interested in seeing their wares offered on the Internet's sprawling network of virtual bazaars.
Luxury brands like French cosmetics maker Pierre Fabre Dermo-Cosmetique (PFDC) currently restrict Internet sales of their products. Instead, they cultivate an image of exclusivity by selling only in retail shops.
They may soon be forced to abandon their policy, as a high-ranking adviser to the European Court of Justice (ECJ) on Thursday declared such regulations to be anti-competitive.
One of court's advocates-general, Jan Mazak, wrote in an opinion that the company's "absolute refusal" to allow French distributers to sell the company's products online to be "disproportionate."
"An absolute ban on selling via the Internet, in the context of a selective distribution network which goes beyond what is objectively necessary in order to distribute goods in an appropriate manner in light of their material qualities, aura and image, has the object of restricting competition," Mazak wrote.
The European Court of Justice is likely to uphold the opinion of Advocate-General Mazak
Some Internet advocates have lauded this decision.
"Intellectual property monopolists need to be forced to accept the benefits of the borderless online world, if they refuse to embrace them voluntarily," wrote Joe McNamee of the European Digital Rights Initiative, a non-profit based in Brussels, in an e-mail sent to Deutsche Welle.
"What they fail to realize is that these borders, both for physical and digital products, are fatally undermining respect for intellectual property law, thereby legitimizing and encouraging the very infringements of which they so bitterly, so often and so misguidedly complain."
Opinion likely to be upheld by the ECJ
PFDC sells cosmetics marketed under the brand names Avene, Klorane, Galenic and Ducray. It had argued its products should only be sold in stores on medical grounds, something which Mazak dismissed as "objectively unfounded."
Next the decision will go before the judges of the ECJ, who uphold the opinions of their advocates-general more than 80 percent of the time.
Online retailers like eBay had previously complained about PFDC's policy, which ran afoul of French competition regulators in 2008 and came to the ECJ by way of an appeals process.
Author: Gerhard Schneibel (Reuters)
Editor: Cyrus Farivar