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A French court found in favour of LVMH, a luxury goods group, which alleged that Ebay had allowed users to sell fake merchandise including handbags and perfume, damaging its reputation and sales.

LVMH is the largest luxury-goods holding company, owning brands such as Louis Vuitton, Christian Dior and Givenchy. The company criticised the sale of legitimate perfumes from some of its brands, as well as counterfeit ones, as only authorised distributors

The ruling is the second such case against Ebay in recent weeks. The company was ordered last month to pay a smaller 20,000 Euros fine to Hermes, the French luxury goods company.

Ebay has said that it will appeal the latest decision, which handed out penalties of more than 19 million Euros to Louis Vuitton and in excess of 17 million Euros to Christian Dior.

The court decision comes nearly two years after the companies filed an official complaint with the French courts, when Ebay France claimed to take an aggressive stance on fake goods.
"All sales of counterfeit products on eBay are totally illegal," it said in a statement.

L'Oreal has also taken legal action against Ebay in the past for the same allegations.

"L'Oreal has been facing an increasing volume of illicit trade in fake fragrances and fake cosmetic products on some online auction sites," the company said in 2007.