Content thumbnail Luxury and Cosmetic Financial Factbook

PPage 72age 72 DCF and valuation pIndustry oaramevervieterws I Points of view from EY global sector A new challenge for luxury: retail through online marketplaces and other industry professionals But these rules are changing with the growth of Even if these brands do not exactly belong to the If the court decides that distribution via marketplaces online marketplaces. By hosting offers among this luxury segment, they fall under this same legal cannot be banned on principle, brands will need to multitude of small websites, marketplaces provide regime — selective distribution. Cosmetic brand strike a balance: not by prohibiting sales but by luxury goods with a much wider distribution range. If Caudalie has not been able to obtain an injunction regulating them. Hosting on a platform should be brands wish to have more control over the sale of from the Court of Appeal of Paris to ban the sales of prohibited only if the platform does not comply with a their goods, assuring compliance with their image its products through authorized drugstores selling its brand’s imalitatine criteria. Lhat is to saq that onlq a 4 and policies, what should they do? Some brands have products on a marketplace specializing in this area. platform that is not suitable given its activity, tried to ban their authorized dealers from hosting Conversely, the backpack brand Deuter has won its operation, and product environment, will be their goods on a marketplace. Indeed, EU competition case before a German court.5 prohibited from distributing luxury goods. These The French Authority gmidelines inclmde a clamse, imite obscmre, that might has launched an analysis on this subject and imalitatine criteria shomld be defined bq lmxmrq validate such a restriction. conclusions are expected soon. Thus, the situation is brands, and a strategy should be built around them. But is this position sustainable? Recent legal imite nagme, and lmxmrq brands are dealing oith a Luxury brands may choose to wait or prepare, but developments suggest not. In Germany and France, legal uncertainty, which is not business as usual. another development looms on the horizon: the the competition laws explain that opening up the ;larification could be expected soon at least in geo-restriction of websites*... an even more complex internet to smaller retailers is an unrealistic way to Europe for a cosmetic brand considered to belong to subject. foster competition if they cannot reach a wider the luxury sector. The Frankfurt court has put audience by hosting their offers on a marketplace. foroard a series of fomr imestions to the ;omrt of 1 Adidas has recently been instructed, in Germany, to Justice of the EU, as this subject is governed by allow its authorized retailers to offer its products on European law.6 Put simply: is it legitimate, vis-à-vis marketplaces. Following this instruction, Adidas’ European competition rules, to prohibit the members French subsidiary has also committed to doing the of a selective distribution network from involving a 2 same. Brand competitor Asics has similarly been third party (i.e., marketplace) in the product sales instructed.3 process? 1 Press release of the Bundeskartellamt, “Adidas abandons ban on sales via online market places,” 2 July 2014. 2 4 Press release of the French Competition Authority, 18 November 2015. Haris ;omrt of 9ppeal, K9K eFona Kant† c' K9K ;amdalie, * >ebrmarq *().. 3 5 Press release of the Bundeskartellamt, “Bundeskartellamt takes a critical Supreme Regional Court of Frankfurt, Deuter Sport Backpack, 22 December view of restriction online distribution by Asics,” 28 April 2014; decision of 2015. 6 the Bundeskartellamt, 26 August 2015. Frankfurt Court of Appeal, 19 April 2016. * Websites are prevented from delinering the goods omt of a specified territorq. The luxury and cosmetics financial factbook 2016

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