Deckers v Up & Running: Court of Appeal overturns Competition Appeal Tribunal's RPM infringement decision

The Court of Appeal’s 8 May 2026 judgment in Deckers v Up & Running is an important development for brand owners operating selective distribution systems with online sales controls. It overturns the Competition Appeal Tribunal (CAT) finding that Deckers had imposed an unlawful online sales restriction and had engaged in resale price maintenance (RPM). 

The decision underlines the importance of economic and market context in assessing whether a given contractual restriction constitutes a "by object" infringement under Chapter I of the Competition Act 1998. The Competition and Markets Authority (CMA) was granted permission to intervene in the appeal and supported Deckers in arguing that the CAT had erred in its application of the legal test. For in-house legal teams, the judgment offers both comfort and a practical checklist for designing and enforcing channel rules in selective distribution systems.

Background

Deckers operates a selective distribution system for its HOKA branded running shoes, under which only authorised retailers may sell HOKA products. Deckers's terms and conditions require authorised retailers to seek permission before selling online (although it permits all retailers to sell HOKA products on their own websites provided they bear a substantially similar name to that of their physical stores).

Deckers supplied HOKA products to Up & Running (U&R), a specialist running retailer, from 2016 to 2021. In July 2020, U&R proposed launching a secondary anonymised clearance website called "runningshoes.co.uk" to sell surplus old stock at discounted rates. Deckers refused to grant permission to U&R to sell HOKA products on the site as this would be inconsistent with its brand strategy. U&R launched the site regardless, with some HOKA products being sold at 30% discount. Deckers subsequently terminated the supply relationship with U&R on 12 months' notice.

Competition Appeal Tribunal 

U&R brought a claim before the Competition Appeal Tribunal alleging two infringements of the Chapter I Prohibition of the Competition Act 1998:

• Deckers's terms and conditions included an unlawful restriction on U&R's ability to sell HOKA products online; and
• Deckers's actions amounted to an attempt to engage in resale price maintenance (RPM). 

The CAT upheld both claims, finding that Deckers's intention behind the termination was to prevent undue discounting of HOKA products, which the CAT treated as a form of hardcore RPM. The CAT also found that the broad discretionary power conferred by Deckers's terms and conditions was itself objectionable. The CAT effectively treated the absence of a plausible legitimate aim as being determinative of the "by object" nature of the restrictions contrary to the Chapter I Prohibition. 

It further held that the Vertical Block Exemption (VBE) did not apply as Deckers's conduct constituted hardcore RPM under Article 4(a) and a restriction on passive sales to end users under Article 4(c) VBE.

Court of Appeal decision

Deckers challenged the CAT's decision in the Court of Appeal on four grounds: 

• application of the wrong "by object" test; 
• mischaracterisation of the conduct as hardcore RPM; 
• misapplication of the law to the facts, including failure to consider economic context; and
• misapplication of the VBE. 

The Court of Appeal allowed the appeal on all grounds. 

'By object' legal test

The court held that the CAT had applied an incomplete version of the "by object" infringement test. A restrictive intent is only one component of the test. Drawing on relevant case law, the court confirmed that the necessary considerations when determining whether a potentially restrictive measure constituted a "by object" restriction of competition law (thereby relieving the competition authority from having to prove that the restriction had in practice resulted in an anti-competitive outcome) were four distinct components: content, objectives, legal context and economic context. 

The court emphasised that the legal test must be applied strictly and restrictively. The relevant standard is whether the impugned agreement or measure reveals a sufficient degree of harm to competition, not the lower threshold of a "real (non-fanciful) potential or capacity" to restrict competition. 

'Hardcore' does not necessarily mean 'by object'   

The court confirmed that RPM is not automatically a restriction "by object", nor is it presumed to be sufficiently harmful simply because it falls within the "hardcore" category under the VBE. The two concepts are not interchangeable, and a proper contextual assessment of whether the conduct reveals a sufficient degree of harm is still required in every case. 

It also rejected the proposition that broad contractual discretion on the part of the supplier is automatically a "by object" restriction merely because it could theoretically be exercised for anti-competitive ends.

No object restriction on the facts

Applying the correct test to the CAT's own factual findings, the court found no sustainable basis for a finding of any "by object" restriction of competition. 

On content or scope, the restriction was narrow: based upon a single website and U&R (and other retailers) remained free to discount through authorised channels. 

On economic context, Deckers was subject to strong inter-brand competition, meaning any attempt to sustain supra-competitive prices (prices above competitive levels ) would have resulted in loss of sales to other brands. 

Finally, the agreement was vertical rather than horizontal, presenting a systematically lower risk to competition with any restriction being intra-brand only. 

VBE applied in any event

The court did not agree with the CAT's initial finding and instead held that the practices in issue would in any event have been exempt under Article 2 VBE. With reference to case law, it identified the correct approach to be taken which involved an examination of scope and whether in a "real and practical sense" retailers could discount freely and customers could access the goods passively or actively. 

Key takeaways for businesses

“By object” remains a high bar: A problematic purpose underlying a restrictive provision is not enough. The court confirmed that content, objective, legal context and economic context are all necessary elements of a "by object" assessment. 

“Hardcore” does not (necessarily) equate to a "by object" infringement: Even if conduct is classified as a "hardcore" restriction under the applicable block exemption, this does not of itself indicate that it is to be treated as a restriction "by object". 

Context is important: Strong inter-brand competition, limited market share and narrow scope restrictions all weigh against a “by object” finding. 

Osborne Clarke comment

This judgment is a welcome recalibration for suppliers operating selective distribution arrangements. The CAT's original decision had created uncertainty by treating contractual discretion and anti-competitive purpose as effectively sufficient to establish a restriction "by object", regardless of market reality. The Court of Appeal has firmly corrected that approach, restoring economic reality to the centre of any "by object" analysis. The judgment does not, however, remove the need for careful design and governance of selective distribution arrangements. 

For further information or to discuss the implications of this decision for your business, please contact any member of our Competition Law team.