Coty, Amazon, and the Future of Vertical Restraints: Evolving Distribution Norms on Both Atlantic Shores

Abstract

Coty Germany, GmbH v. Parfümerie Akzente, GmbH, a late 2017 decision of the European Court of Justice (ECJ), set off something of a tizzy along North Atlantic shores concerning the future of vertical restraints and distribution relationships in online commerce sectors. Generally, Coty seemed to reflect the sense that online distribution posed threats to them that were new or special. Firms and their lawyers saw need to protect their brands from the rapacity of big, no-frills, price-cutting online retailers, including above all Amazon. Sure enough, the same anxieties find expression in other broad policy initiatives relating to online commerce, including the “Better Deal” program of Democrats in the U.S. Congress and the European Union’s ambitious new “Digital Single Market” program. But all this anxiety might look rather different if—contrary to our usual habit—consider it in historical context. In fact recent developments may not really be so new, at least not any ways relevant to competition policy. In fact, technological innovation in distribution, and the tension that has always characterized relations of suppliers and distributors, is an old story, and has been associated with some of the bitterest politics in antitrust history. And in times past, when similar anxieties of aggressive or innovative distributors have been met with private trade restraints or lobbying for protectionist government intervention, it has often enough turned out that the motives were not so pure and the changes that were feared were not ultimately so bad.

Keywords: Coty, ECJ, EU law, European competition law, vertical restraints, RPM, Amazon, Sylvania, retail distribution

JEL Classification: L40, L42, L81, N42, N44