(Updates with Pierre Fabre comment in sixth paragraph.)
Oct. 13 (Bloomberg) -- A unit of Pierre Fabre may have breached European Union antitrust rules with distribution agreements blocking online sales of personal-care brands such as Avene, Ducray and Klorane, the EU’s top court said.
While the EU Court of Justice in Luxembourg said it was for the French court in charge of the case to decide based on the facts of the dispute, it ruled that “the need to maintain the prestigious image of” Pierre Fabre Dermo-Cosmetique “is not a legitimate aim for restricting competition.”
Pierre Fabre Dermo-Cosmetique is challenging a decision by the French competition authority, which said in 2008 the company’s distribution agreements breached competition rules. The case is pending before the Paris appeals court, which in 2009 sought the EU tribunal’s guidance on whether sales restrictions, such as those in this case, could benefit from an exemption under EU competition rules.
The EU court today also rejected arguments that the need to provide customers with personal advice and to protect against the incorrect use of the company’s products justified a ban on Internet sales.
It said the French court should decide whether the company qualifies for an exemption under EU law for agreements that improve the distribution of products or contribute to promoting economic progress.
Pierre Fabre said in a statement it opposes online sales of skincare cosmetics because only the presence of a trained pharmacist guarantees that consumers get the right advice. The Paris-based company said distance selling is also more “favorable to counterfeiting.”
The company said it’s “pleased” that the EU court sees the possibility of an individual exemption. It expects the French appeals court to rule in the first quarter of 2012.
The ruling “confirms that a restriction on selective distributors that results in a ban of online sales, is a restriction that violates competition rules unless objectively justified,” the European Commission, the EU’s executive agency, said in a statement.
The case is: C-439/09, Pierre Fabre Dermo-Cosmetique SAS v. President de l’Autorite de la Concurrence, Ministre de l’Economie de l’Industrie et de l’Emploi.
--With assistance from Heather Smith in Paris. Editors: Peter Chapman, Robert Valpuesta
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