A Paris judge today issued a fine of 1.7 million Euros - or $2.6 million - against eBay for allegedly violating a 2008 injunction that forbid the sale of luxury products by LVMH (Moët Hennessy Louis Vuitton). Almost immediately, the online retailer issued a response to the ruling, calling the injunction itself an "abuse of 'selective distribution'" that hurts consumers.
In June 2008, the French courts fined eBay nearly 40 million Euros for not doing enough to block the sales of counterfeit goods on the site. In addition, it was ordered to block sales of authentic perfume made by the LVMH brands because the company had agreements in place to control who sells the perfume.
Today's fine stems from allegations that more than 1,300 LVMH items have been posted to the site since the injunction was issued, according to a post on TechCrunch Europe.
In a statement, Alex von Schirmeister, General Manager of eBay in France, called these restrictive exclusive contracts anti-competitive and said that the fine is disproportionate and out of step with legal decisions in other courts.
This whole thing reminds me of a recent conversation I had with a friend who covered the retail and fashion (luxury) industries for years. I was complaining about having to haul all the way across town to buy a specific gift on the holiday gift list because from the only local retailer who sells it.
Some brands want to be associated with specific retailers, she told me. Some retailers want to be associated with specific brands. They both want to capture a specific clientele and likely invest a lot of research dollars into determining where their products will be sold. What's so wrong with that?
If I make a specific product, shouldn't I be able to control the distribution of such products? Maybe I don't want my product in your store because I don't find your clientele to be attractive - for a number of business reasons. But that doesn't mean that LVMH is necessarily being anti-competitive. Instead, I see the company just protecting the image of the brand that it built. If it wanted to be associated with eBay, it would put its products for sale on eBay.
EBay's appeals are expected to be heard in May 2010, according to TechCrunch.