Switzerland: The Coty Judgment On Selective Distribution Systems - Importance For Switzerland And Key Takeaways

Last Updated: 2 March 2018
Article by Patrick Rohn

In its Coty judgement of 6 December 2017, the ECJ confirmed that a supplier of luxury goods may establish a selective distribution system with the aim of protecting the luxury image of its products. To achieve this aim of protecting the luxury image, the supplier may prohibit authorised retailers from selling the products on third party platforms which operate in a discernible manner towards consumers, such as Amazon, eBay, and Zalando.

In the following, we will have a look at the key takeaways from the Coty case, and its importance for selective distributions systems in Switzerland.

1 ECJ approves the use of selective distribution systems subject to certain conditions

Selective distribution systems are systems in which (i) the supplier undertakes to sell the contract goods or services only to selected distributors on the basis of defined criteria, and (ii) those distributors undertake not to sell those goods or services to non-authorised distributors but only to end users or other approved distributors within the network.

Though selective distribution systems necessarily affect competition in the market, the ECJ confirmed that the implementation of a selective distribution network is not prohibited by Article 101(1) TFEU, to the extent that certain requirements are met, namely

  • the characteristics of the product in question necessitate a selective distribution network in order to preserve its quality and ensure its proper use,
  • resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion, and,
  • the criteria laid down do not go beyond what is necessary.

With particular regard to the question whether selective distribution may be considered necessary in respect of luxury goods, the ECJ found that a luxury image is a product-characteristic which necessitates selective distribution. The characteristics and conditions of a selective distribution system may, in themselves, preserve the quality and aura of luxury goods, and ensure their proper use. Of course there are also other high-quality and/or high-technology products which may necessitate selective distribution.

2 ECJ endorses the prohibition on internet sales by discernible third-party platforms

The ECJ endorsed the prohibition on internet sales by discernible third-party platforms and it found that such prohibition does not go beyond what is necessary. Prohibiting internet sales by discernible third-party platforms provides the supplier with a guarantee that its luxury goods will be exclusively associated with the authorised distributors, and it enables the supplier to check that the luxury goods will be sold online in an environment that corresponds to the qualitative conditions that it has agreed with its authorised distributors.

Dwelling on the appropriateness of the prohibition at issue, the ECJ stressed that authorised distributors remained permitted to sell the goods online both via their own websites (as long as they have an electronic shop window for the authorised store and the luxury character of the goods is preserved) and via unauthorised third-party platforms when the use of such platforms is not discernible to the consumer. The prohibition applied solely to the internet sale of the goods via third-party platforms which operate in a discernible manner towards consumers, which the ECJ considered appropriate to preserve the luxury image of those goods.

It has to be assumed that the same would apply in the context of selective distribution of other high-quality and/or high-technology products provided the prohibition on internet sales by discernible third-party platforms would help to preserve the legitimate goals pursued by the selective distribution system.

3 The situation in Switzerland

Though ECJ decisions have no binding effect on Swiss authorities and courts, the Coty judgment will certainly have a relevant impact on the practice of the Swiss Competition Commission ("ComCo") and Swiss competition law. The Verticals Notice of 28 June 2010 (as amended on 22 May 2017) issued by the ComCo explicitly states that the European competition rules shall, as a rule, apply by analogy.

On 12 June 2017, the ComCo issued its revised Explanatory Notes to the Verticals Notice. While the Explanatory Notes do not specifically refer to restrictions on sales via discernible third-party platforms, the ComCo expressed its general view on restrictions on online sales. The ComCo held that, as a rule, prohibitions and restrictions on online sales qualify as a serious restriction of competition. On the other hand, the ComCo stated that a supplier must be allowed to impose certain quality requirements regarding online sales on its distributors to the extent such requirements are appropriate to attain the legitimate objectives of the supplier's distribution system, in particular a selective distribution system.

In view of this it is safe to assume that the ComCo and Swiss courts will follow the ECJ and its considerations in the Coty judgment.

4 The key takeaways from the Coty case

The Coty judgement primarily affects suppliers of luxury products and it provides helpful guidance to them as to what is permissible. The key takeaways are:

  • it is permitted to establish a selective distribution system for the distribution of luxury products;
  • the restrictions imposed on the authorised resellers must be consistent with the aim of protecting the luxury image of the products, they should not go any further than is necessary, and they must be applied in a non-discriminatory manner;
  • restrictions on sales via discernible third-party platforms to protect a luxury image are permissible provided that this does not amount to a de facto prohibition on online sales;
  • the above applies accordingly to other high-quality and/or high-technology products which necessitate a selective distribution network in order to preserve their quality and ensure their proper use.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions