Selective Distribution by Luxury Goods Suppliers: A Response to Kinsella Et Al

"In the last issue of this journal, we outlined the economic principles underlying the use of selective distribution by luxury good suppliers, specifically the restraints placed by these suppliers on the extent to which downstream retailers can distribute their products over the internet. Our article was based on a report prepared for the LVMH Group in the context of the European Commission’s public consultation on on-line commerce in 2008. Kinsella, Melin and Schropp of Sidley Austin LLP, who are assisting eBay in EU competition matters related to selective distribution by luxury good suppliers, offered a lengthy comment on

our article in the same issue of this journal.

Finding little to disagree with in the statements and analysis that we offer in our article, Kinsella et al expand the set of statements we actually make to a set of arguments that they then incorrectly attribute to us. In this expanded set of arguments, they find much to disagree with. So would we.

We offered in our article a relatively straightforward analysis of the area of selective distribution by suppliers of luxury goods, concluding that economic principles supported a cautionary approach to regulatory intervention in the choice of selective distribution as part of a supplier’s overall distribution strategy. Our concern with the lengthy and scattered comment by Kinsella et al is that the authors have, through various errors and misattributions in their comment, obfuscated the economic principles underlying an important area of competition policy. In this response, we briefly summarise the theme of our article and then delineate both the comments of Kinsella et al and our responses."