Ebay to appeal against French €40m counterfeit goods penalty

Ebay was yesterday ordered to pay nearly €40m ($63m) to the French luxury goods group, LVMH, in a court ruling the internet auction site admitted could have wider implications for online commerce.

The Paris court ruling said Ebay had failed to prevent counterfeit products being sold over its website and had breached selective distribution agreements for luxury perfumes.

Ebay immediately announced it would against appeal the ruling which it said would buttress restrictions on the way goods could be sold and, hence, on consumer choice. "Today's ruling is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice," it said.

"The attempt to use the ruling to confuse the separate issues of counterfeit and restrictive sales suggests that the counterfeit suits are being used by certain brand owners as a stalking-horse issue to reinforce their control over the market".

The Paris-based Tribunal de Commerce ordered Ebay to pay €19.28m to Louis Vuitton Malletier and €16.4m to Christian Dior Couture on the grounds the online retailer's negligence allowed counterfeit goods to be sold through its site. It also fined the US company €3.19m for breaching a selective distribution network agreements when it sold perfumes under the Christian Dior, Guerlain, Givenchy and Kenzo marques on its site. Ebay is also required to publish the decision on its sites in French and English.

LVMH hailed that the ruling as an important step in the battle to protect brands from "parasitical practices".

But Ebay claimed it had already stepped up its fight against counterfeits, and was investing more than $20m a year to tackle this problem. "We employ over 2,000 people to carry out this fight . . . When we find counterfeit goods on our sites we take it down."

Ebay's main concern was focused on the impact the decision might have for brand owners distribution practices - and the impact on e-commerce generally. "Overzealous enforcement of restrictive sales practices are anti-competitive and gives consumers a bad deal," it said.

This is an area where Ebay has been lobbying hard in Brussels, urging EU officials to clarify competition rules and also update consumer and trademark law. An Ebay official said that it was not taking any immediate action on existing "live" listings as a result of the ruling.

Moment of truth, Page 17