In Deckers UK Ltd v Up & Running (UK) Ltd (Rev1) [2026] EWCA Civ 553, Green LJ clarified the principles applicable to answering the question of whether an alleged restriction of competition is by object. In so doing, Green LJ underlined that the objective (or purpose) of a purported restriction is but one of a four-part test, requiring the decision-maker also to consider the content, legal and economic context of the purported restriction.
Summary of the facts
Deckers operates a selective distribution system for its HOKA branded running shoes, of which, until 2021, Up & Running (“U&R”) was a part. As part of the distribution agreement between the parties, U&R: (a) was restricted from supplying shoes to anyone other than consumers; (b) had to obtain Deckers’ permission if it wanted to sell the product over the internet; and (c) if selling via a website, had to have a domain name identical or similar to the name of its bricks and mortar shops.
As a result of Covid, U&R had a surplus of stock, which it wanted to sell at a reduced price through a new, anonymised website. Deckers refused its agreement to this proposal and, when U&R implemented it anyway, Deckers terminated the relationship. U&R then brought proceedings against Deckers, alleging that Deckers had infringed s.2 Competition Act 1998, which prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which may affect trade within the UK, and which have as their object or effect the prevention, restriction or distortion of competition within the UK. In particular, U&R advanced two closely intertwined “by object” bases: (i) that the arrangements imposed an unlawful restriction on U&R’s ability to market and sell HOKA products online (an online sales restriction); and/or (ii) that Deckers’ attempt to prevent sales via the anonymised website was, in substance, an attempt to discipline U&R and prevent discounting, amounting to Resale Price Maintenance (RPM).
Relevant principles
Green LJ began by stating that object and effect are alternative routes of analysis. In an object case, there is no need to investigate or establish “actual” effects. The question and standard of proof for an object case is that the restriction reveals a “sufficient degree of harm”. When answering this question (and to surmount the burden of proof), Green LJ stressed that unsubstantiated allegations or assertions would not suffice.
In relation to the impugned (horizontal or vertical) measure, Green LJ underlined the necessity to apply a four-part test:
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- Content: This involves an assessment of the actual scope of the impugned measure.
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- Objective/purpose: An objective analysis is to be taken as to the purpose of the impugned measure, although where evidence of subjective intention exists, it can be taken into account.
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- Legal context: This is to include consideration of the existing caselaw on the alleged type of the infringement; whether the agreement is horizontal or vertical; and, whether there are legal or regulatory barriers to entry.
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- Economic context: This includes the nature of the goods or services affected and the actual conditions of the functioning and structure of the market, which will include the nature and extent of inter-brand competition. Market shares will be important.
Application
Applying all four parts of the test to the facts, Green LJ arrived at the view that there was no basis upon which the CAT could have drawn the conclusion that Deckers’ act of termination had the object of restricting competition. By focussing on the objective/purpose of the purported restriction, Green LJ concluded that the CAT had not properly considered the economic context for it. In this respect, Green LJ placed importance on the fact that the shoes U&R wanted to sell were, as a matter of logic, a very small proportion of the market share of both U&R and Deckers (being surplus Covid stock). Having regard to this, Green LJ asked whether the purported restriction really could be said to “sufficiently harm” competition in the relevant market.
Concluding thoughts
RPM is a real and pressing issue for suppliers, distributors, retailers and the Competition and Markets Authority (CMA). In relation to the latter, it is noteworthy that, of the 20 warning letters sent by the CMA in 2024, at least 14 concerned practices that could be (or were) characterised as RPM. In this respect, one point for suppliers to note is that Deckers’ employees were clearly aware of how competition law applied to their relationships with retailers and they knew (through policy documents and compliance training) that they were not entitled to interfere with the way retailers set prices. It was, therefore, not part of U&R’s case that Deckers was involved in the implementation of a wider RPM policy.
Finally, U&R’s counsel argued in their submissions that Deckers had been “cloth eared” in its failure to seek to understand the commercial dilemma U&R found itself in. Green LJ’s response was that it was not the role of competition law to unravel an otherwise freely entered into contract, which, because of unforeseen circumstances, turns out to be adverse. He added that competition law was not designed to save parties from bad bargains, or deals they came to regret. Whilst this is of course correct, it is worth noting (as a separate policy observation) that parties sometimes reach for competition law where they consider themselves to have been treated unfairly and have no other effective remedy. The judgment is a reminder, however, that competition law is not a general fairness jurisdiction: it will only assist where the legal test for a competition restriction is met.
