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French Court Erects New Barriers to e-Commerce

As advocates for choice, competition, and innovation on the Net, we’re troubled to read about a ludicrous court ruling against online commerce. The French Tribunal de Commerce in Paris ordered eBay to pay 39 million Euros to French luxury goods maker LVMH. Mike Masnick of Techdirt shares our outrage here.

Judging by media coverage of this ruling, one would think it’s all about preventing sales of counterfeit goods. But it’s actually much farther-reaching than that, in a way that’s incredibly damaging to the growth of ecommerce, small business and consumer choice in Europe.

The French Court ruled that eBay must halt the sale of legitimate, genuine LVMH perfumes on the eBay site. Essentially, the Court held that a big business like LVMH can stop customers and owners of its products from re-selling them to someone else.

This is blatant discrimination by French authorities against the e-commerce channel. eBay is appealing the ruling (read their take on the ruling on their company blog, eBay Ink). The outcome of this appeal could impact the future of e-commerce around the world.

Imagine if efficient online marketplaces like eBay, Overstock, Amazon and others had to pull the plug on entire categories of items, preventing perfectly legal sales of authentic items. Millions of shoppers use these sites to find great deals on things they want or need. During tough economic times, many people look to the Web to help stretch a household budget. And millions of people around the world use the Web as a tool for running their small businesses.

And if you think that this is just another example of “France being France”, think again. This backward, anti-competitive perspective may be coming to a court near you. Any day now, the Federal District Court in New York will rule on Tiffany’s lawsuit against eBay. Again, Tiffany is crying counterfeits, and trotting out dubious data on online sales. But we believe Tiffany’s real interest here is to shut-down any distribution of Tiffany products that isn’t completely controlled by Tiffany. Got a gift of earrings that just aren’t your style? If the New York court rules the wrong way, you may no longer have the option of selling them online.

Of course, counterfeits are a scourge to any marketplace. They undermine brand integrity and cheat buyers. And counterfeits have been a problem long before the Internet existed. eBay and others have worked hard to stem the sale of fake items. But go to any urban sidewalk, bazaar, or back alley, and you’ll likely find the counterfeit trade still thriving.

So when manufacturers and retailers cry “counterfeit” and point fingers at the e-commerce channel, their true motives are exposed. They’re calling for competition prevention – not consumer protection. And when courts agree with them, we all lose.

–Steve DelBianco