Deckers v Up & Running: Court of Appeal clarifies the test for competition restrictions by object

The Court of Appeal has allowed Deckers UK Limited's appeal against a Competition Appeal Tribunal ("CAT") judgement that found it had infringed section 2 of the Competition Act 1998 by terminating its supply agreement with specialist running retailer Up & Running (UK) Limited. The judgement, handed down on 8 May 2026, resolves a significant question about when restrictive steps taken by suppliers within selective distribution systems constitute unlawful restrictions on competition by object.

The dispute arose after Deckers refused to permit Up & Running to sell surplus HOKA-branded running shoes through an anonymised website, runningshoes.co.uk, that the retailer had proposed to use to clear excess Covid-period stock at discounted prices. Deckers instead relied on Clause 15 of its terms and conditions — which required distributor consent for online sales not operating under a name identical or similar to the retailer's bricks-and-mortar business — to terminate the supply relationship on 12 months' notice.

The CAT had found for Up & Running on two grounds: that the termination amounted to an online sales restriction and, more significantly, that it constituted resale price maintenance ("RPM") — a "hardcore" restriction that, absent legitimate justification, was prohibited without further economic analysis. The Competition and Markets Authority intervened in the appeal, supporting Deckers's argument that the CAT had misstated the applicable legal test.

Lord Justice Green, with whom Lords Justice Snowden and Zacaroli agreed, held that the CAT had erred by reducing the object restriction test to a single question: whether the impugned measure pursued a legitimate aim. That approach elevated one component of a well-established four-part test into the whole of it. The correct test, drawn from a line of CJEU authority including Cartes Bancaires, Generics and Super Bock, requires an assessment of the agreement's content, its objective or purpose, its legal context, and its economic context — all four elements being cumulative, though their relative weight will vary with the facts.

The Court rejected the CAT's reading of Super Bock as establishing that RPM is restrictive by object in "almost all circumstances" and confirmed that no presumption attaches to conduct classified as a hardcore restriction under the EU Vertical Block Exemption. The concepts of "hardcore restriction" and "restriction by object" are not co-extensive; the latter always requires a sufficient degree of harm to competition, assessed on the full facts.

Applying the correct test to the CAT's own findings, the Court concluded that the act of termination could not have exerted a sufficient adverse effect on competition to engage the prohibition. Deckers held a modest market share — sixth largest among suppliers of specialist running shoes, competing in a busy market where roughly ten suppliers shared approximately 70% of volume. The restriction itself was narrow in scope, targeting a single, one-off tranche of surplus stock via a single anonymised website. Retailers and consumers alike remained free to discount and purchase HOKA products through physical stores and branded online outlets without restriction.

The Court further held, obiter, that even if a prima facie infringement had been established, the Vertical Block Exemption would have applied. Citing Coty, it held that Articles 4(a) and 4(c) are engaged only where retailers are restricted from discounting freely or consumers are denied access to goods in any real and practical sense — neither of which was true on these facts.

The judgement provides important clarification for suppliers operating selective distribution networks across consumer goods sectors, affirming that the careful design of distribution arrangements, including controls over online sales channels, does not inevitably cross the threshold into prohibited object restrictions.