George S. May Business Blog

Online retailer, eBay, slammed in French court with a huge fine

A French court has tossed a fine of near $2.6 million toward eBay for, basically, negligence. The case was brought on by French super power LVMH (Loius Vuitton Moet Hennesy) in which LVMH accused eBay for violating an injunction barring French residents from buying or selling of certain lines of perfumes and cosmetics. eBay will appeal the ruling.

From the WSJ:

“LVMH Moet Hennessy Louis Vuitton said Monday that a French court fined eBay €1.7 million ($2.6 million) over perfume listings, despite filtering technology that the online auctioneer said is screening out unlawful items. The court accused eBay of “the unlawful marketing” of Christian Dior, Givenchy and other LMVH cosmetics.

EBay said in a statement Monday that it has taken steps to hide LMVH products from French shoppers and that the illegal listings LMVH submitted contain misspelled brand names or only pictures of products, which enabled them to slip through the cracks.

Alex von Schirmeister, eBay’s general manager in France, added that the fine is disproportionate given the company’s compliance, and that the decision enforces “anti-competitive” distribution practices.

LMVH, also in a statement, called the decision “an important step” against unlawful practices. “Selective distribution ensures the security and quality of products for consumers. It generates numerous jobs and contributes to the ongoing world-wide success of European luxury goods brands,” it said.

The Paris court fined eBay €40 million in June 2008. LMVH said then that eBay hadn’t taken the necessary steps to bar counterfeit goods from auction listings, but even LMVH’s authentic products are forbidden from listings, because of the company’s distribution arrangements with other retailers.”

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