French Court Fines EBay $2.5 Million

A French court has fined eBay €1.7 million (US$2.5 million) for failing to comply with an earlier ruling that required the online retailer to prevent the sale of certain brands of perfume to French consumers on its sites.

The ruling is related to one of three lawsuits brought by LVMH, a company that controls brands including Christian Dior, Louis Vuitton and Givenchy. The suits charged eBay with unlawful marketing of perfume brands that included Christian Dior, Kenzo and Givenchy as well as the sale of counterfeit items on eBay.

In June, the Commercial Court of Paris ordered eBay to pay damages of €35.5 million related to the cases about counterfeit sales and €3.05 million for unlawfully selling items in breach of selective distribution network agreements. LVMH uses such agreements to limit the sales of its products to selected outlets.

The court also issued an injunction ordering eBay to stop allowing the genuine products to be sold to French consumers and said it would issue a €50,000 fine per day each time one of the products is found on an eBay site accessible to French consumers.

The Monday ruling fines eBay for failing to comply with the injunction.

EBay says that it uses state-of-the-art filtering software to check the millions of listings it receives daily for products bearing the LVMH brands. Between July 2008 and July 2009, eBay blocked and removed more than 20,000 listings, it said.

EBay has appealed all three of the cases with hearings for the cases scheduled in May.

In a statement, eBay said it believes the higher courts will overturn the ruling. "The injunction is an abuse of 'selective distribution'. It effectively enforces restrictive distribution contracts, which is anti-competitive," Alex von Schirmeister, general manager of eBay in France, said in a statement.

LVMH lauded the court's decision. "Selective distribution ensures the security and quality of products for consumers. It generates numerous jobs and contributes to the ongoing worldwide success of European luxury goods brands," it said in a statement.