Global News Journal

Luxury brands ride high in online trade dispute

The European Union’s competition regulator made an important move this week, issuing revised rules governing the sale of goods and services over the Internet in Europe.

The so-called “vertical restraints block-exemption regulation”, unveiled on Tuesday, set down new guidelines for online retailers who don’t operate a ‘bricks-and-mortar’ outlet. In doing so, it sought to resolve a debate that has been going on for years between luxury brand retailers such as Gucci and Chanel and discounters who sell big-name brands more cheaply from warehouses over the Internet.

If how quickly a company sends out a press release welcoming an EU decision is a measure of how popular that decision is, then the European Commission’s updated rules were just what luxury goods manufacturers were waiting to hear.

The European Alliance, which represents three-quarters of global luxury brands, and French luxury group LVMH immediately applauded the move, saying it recognised their arguments that image and exclusivity are essential to their multi-billion euro industry.

In essence, manufacturers can now bar online retailers that don’t have bricks-and-mortar outlets from distributing their products.