eBay fined a further €1.7m by French in LVMH case

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The French Commercial Courts have fined eBay €1.7 million Euros (about $2.55 million) for failing to comply with a 2008 injunction to block French eBay users from buying or selling LVMH Group perfumes and cosmetics on any eBay website.

eBay say that they have done their utmost to respect the injunction and block French users from even being able to view the LVMH specified by the company. LVMH produced 61 ‘bailiff’ reports from July 2008 to July 2009, assessing the number of items they believed breached the injunction of which only 1,341 listings were fully detailed enabling eBay comply with the court order.

Items LVMH believe breached the injunction

• 323 (24.1%) were removed by eBay before being sold;
• 315 (23.5%) were not related to Brand Banned Items list. They were either items that are entirely different (23 listings) or items that are manufactured by the LVMH but not on the Brand Banned Items list;
• 506 (37.7%) did not contain in their title even the slightest indication with regard to the brand or name of the item in question;
• 358 (26.7%) had either in their title or description a misspelled or truncated spelling of the brand in question;
• 227 (16.9%) were impossible to identify other than by the image supplied.
NB – There is some overlap between some of the categories above, i.e. a listing could have had a misspelled title and have been removed by eBay before expiration.

eBay say that despite their best efforts to put systems in place to block the relevant LVMH products 81.4% were not described accurately enough to identify them and this is in spite of eBay manually viewing 199,331 listings in addition to the thousands automatically blocked by their filtering software. It appears likely that some sellers set out to deliberately circumvent the extensive systems that eBay had put in place in order to list their perfume on the site.
The good news for eBay is that the fine could have been even higher (up to €50,000 per day a banned item appeared on the site) and tends to suggest that the court recognised that eBay worked hard to prevent the items being viewed by French users.

Today’s outcome hurts consumers by preventing them from buying and selling authentic items online. The injunction is an abuse of ‘selective distribution’. It effectively enforces restrictive distribution contracts, which is anti-competitive.

We believe that the higher courts will overturn this ruling and ensure that eCommerce companies such as eBay will continue to provide a platform for buyers and sellers to trade authentic goods.
Alex von Schirmeister, General Manager of eBay in France

How suppliers are blocking online trade
How suppliers are blocking online trade
Today’s court ruling outlines the wider issue of companies attempting to control the market place. Whilst today this case concerns the ability of French eBay users to buy and sell perfumes online it opens the doors to legitimise restrictive practices by other manufacturers. eBay’s quarterly Online Business Index has already highlighted that in the UK 45% of sellers have been prevented from discounting goods, and 49% of suppliers banned merchants from selling their products online.
What might appear on the face of it to be a manufacturer restricting sales of their products in just one EU country has much further reaching implications and is something all online (and offline) sellers should be concerned about. Even eBay say that the list of products from LVMH was not exhaustive with some items missed off the original Brand Banned Items list and that they were never notified of other new products from LVMH since the list was created. Sellers are in the untenable position of investing in stock and only when they try to sell it coming up against selective distribution agreements prohibiting them from retailing their inventory.
If you disagree with the brand owners restricting how their products are sold and haven’t already signed eBay’s petition to the EU Parliarment defending the ability of Europeans to freely trade, you can make your voice heard on the Campaign for Consumer Choice website.


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