The ruling came from a decision referred to the court by the Higher Regional Court, Frankfurt am Main of Germany from a dispute between luxury beauty company, Coty Germany, and their distributor, Parfümerie Akzente, about sales on Amazon.
Coty allows its products to be sold by authorized dealers but puts a number of restrictions on how such sales are carried out, finding such terms necessary to preserve its branding image.
Manufacturers of goods that aren't luxury brands "still have no carte blanche to sweepingly limit their distributors' use of sales platforms, according to our assessment", Mundt added.
Online platforms such as Amazon and eBay in turn say online sales curbs are anti-competitive and hurt small businesses. The CJEU has ruled that, in the context of selective distribution, a supplier of luxury goods can, in principle, prohibit authorised distributors from using 'in a discernible manner' third-party platforms such as Amazon.
Coty, whose brands include Marc Jacobs, Calvin Klein and Chloe, welcomed the ruling, which carries legal weight across the 28-nation EU.
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Brand owners have previously argued that they should have the right to choose their distributors to protect their image and exclusivity.
"A selective distribution system for luxury goods, designed primarily to preserve the luxury image of those goods, does not breach the prohibition of agreements, decisions and concerted practices laid down in European Union law", it said, adding that the system must not discriminate against particular resellers.
European competition law can not stop a luxury retailer that does not want its wares being trafficked via the online retail giant Amazon, the EU's highest court ruled Wednesday. In two test cases in recent years, the German cartel office forced Adidas ADSGn.DE and Asics 7936.T to drop such bans, saying online platforms are crucial for small- and medium-sized companies and consumers. "Germany will have to align with European case law and accept this kind of restrictions unless it contradicts some conditions in competition law", he said.
The decision out of Luxembourg comes in response to contractual proceedings that the luxury retailer Coty Prestige initiated in Germany against one of its authorized retailers.