eBay fined a further €1.7m by French in LVMH case
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.
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
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.
When I listed designer sunglasses on eBay France a few months ago (several brands, none of which were LVMH) they were not visible in search.
eBay gave the following explanation (translated):
“Thank you for your message in this August 8, 2009 telling us that your ads do not appear in search results.
I understand your question about this situation. As you know, following a decision by the Tribunal de Commerce de Paris June 30, 2008 prohibiting the sale on eBay, some perfumery, cosmetic or genuine brand group LVMH, we have to a series of restrictions in some categories.
Now, he is now banned eBay sellers offer for sale on the site eBay.fr of perfumery, cosmetics or certain brands of LVMH, and sell these items in France.
The restrictions currently affecting your items due to a technical problem that prevented some users to sell items that are not within the court, as is the case for you. Our teams are working to resolve it.
Therefore, we unfortunately can not give you an immediate solution and ask that you contact us again ended prematurely after selling your items for a refund of your insertion fees.”
It is only in the last couple of weeks that these listings have become visible in search, even though none of the brands were related to LVMH.
Whilst I don’t approve of companies restricting free trade, I can’t find any part of me that feels even remotely sympathetic towards eBay on this one. eBay showed me no sympathy when it was my livelihood and eBay account on the line by unfair VEROs so when this “issue” has come back to bite them I’m not shocked. Another good reason not to sell on eBay, if you ask me.
And the reason you still sell on Ebay is?
About a year ago, one of my suppliers sent me (& Others) a letter instructing me to end my listings of their product on Ebay.
Most of the sellers, including myself, did not relsit the items in question once they ended, others decided to give the supplier up and sell off what remained.
The supplier then opened up their own ebay shop selling their products.
Over the past year, some retailers, including myself have crept back on….
We all got some more letters about a month ago, telling us that our accounts were suspended until we took our listings down.
I sent a reasoned responce back, basically saying that i was going to continue to use online platforms along side my B&M and that i would still like to stock their products and they have my orders and its up to them!!
My order arrived 3 days later!!!!
Same thing happened to us Lee. The rights owner set up their own eBay store and forcibly removed all competition, and still expected us to buy their product.
I totally understand some companys when they say they don’t want their products being sold on auction sites (and we are happy to comply with this), but they can’t have it both ways.
I tried to buy the wife some charms for her chamilia bracelet earlier, eBay was a no go, 99p copy tat from china (another issue)
I found a retailer online who informed me they didn’t have the charms I wanted and couldnt get any because Chamilia have banned all online retailers except for ernest & jones from selling online. They are just selling off what stock they have.
Well screw you Chamilia, I don’t play those games.
Can you imagine why Chamilia do not want there products sold through eBay?
If I was an independent who had an established relationship with the company I would feel disappointed if they stopped me selling though a website but I would still feel it is a companies prerogative as to how and where there product is sold in the first instance. Ultimately this should provide benefit for those who have an existing relationship and will provide reassurance for the consumer.
It’s not just eBay – it’s all online retailers apart from their one selected rep. If you’d just invested several grand in their products, I suspect you’d feel that was your property bought in good faith of being able to sell it where you wanted, and that it was none of the mf’s business where or how you sold it.
I would imagine that before Chamilia sold you the stock they would let you know if they had any special conditions and would also check to see if they thought you were a suitable outlet for their product. If you were/are unhappy with those conditions don’t take the stock.
I can’t speak for the firm I wanted to buy from but I have made them aware of this blog post in case they have anything to say about the restrictions placed upon them.
I can imagine why they wouldn’t want them on eBay, I can’t imagine though why they would want to restrict themselves to just using one online retailer.
I also don’t know why they want to restrict themsleves to one online outlet (with a limited range). Maybe they are planning their own web presence, Maybe there are other outlets in the pipeline? Maybe a bad decision?
Whatever the reason surely it is their perogative how they release their product on to the market?
I tend to agree with you on it being there perogative, however I just don’t happen to like being told where to buy, so I ain’t buying any.
Wife has been collecting these charms for yonks, ernest & jones was always the most expensive..I guess that is why they have been singled out and the rest dumped.
I’ve had suppliers put the phone down on me as soon as I mentioned eBay, hence I don’t mention them now I have a web site. Never been refused product to sell on my own site. With the way things are in the current financial climate they’ve only been too eager to sell to me.
I think in most cases highlighted so far this all still boils down to the poor image problem eBay has.
You failed because your business plan was fundimentally flawed, I have no sympathy for you whatsoever, and revel in your pessimistic comments.
There’s a lot of imaginging going on. Can’t speak for jewellery but I know for a fact that cosmetics are being sold to eBay sellers with no warning they can’t sell them on eBay. Caveat emptor indeed.
Are these people buying the cosmetics direct from the manufacturers/agents?
In clothing I believe that sometimes stock is sold on with the understanding that it will be debranded and should be sold as generic product.
If a deal seems to be too good….
Actually I am getting tired of french fines on US companies in general. No matter how hard you try France will fine you if you are a large US multinational. You can bend over backwards over hot coals and you will still be fined. It simply isnt right that France is able to extract so much money that way.