Reassurance for brands on control of product distribution
The Court of Appeal’s ruling in Deckers v Up & Running provides brand owners with useful reassurance about the extent of their ability to retain control over the distribution of their products. Provided that brands avoid clear “hardcore” restrictions and stay within market share thresholds, this control remains strong.
The claim and appeal decision
The case incorporates both IP rights and competition law and involves Deckers, the owner of the running brand HOKA and supplier to Up & Running (U&R). U&R initially sold Deckers’ stock on an approved website but, during the Covid pandemic, it also proposed the use of a different, unapproved website (“runningshoes.co.uk”) to sell surplus stock at a discounted rate. This was done without permission and Deckers eventually terminated the supply agreement on 12 months’ notice.
In response to this, U&R brought a claim under the Competition Act 1998, alleging that the termination had restricted U&R’s ability to make effective use of the internet and had disguised resale price maintenance. It was argued that, due to the lack of a “legitimate aim”, these were “by object” restrictions under the Chapter I Prohibition of the Competition Act – meaning there was no need to prove actual anti-competitive impact.
The Competition Appeal Tribunal initially found in favour of U&R, holding that the restrictions represented bans on passive sales and resale price maintenance. It was also held that the Vertical Agreements Block Exemption Regulation (VABER) did not apply and so there was no safe harbour.
The Court of Appeal, however, has now reversed this. In its judgment on 8 May 2026 the Court found the restrictions did not in fact satisfy the “by object” infringement test. The content, legal context, objectives and economic context all needed to be considered and had not been given appropriate weight in the first instance. Also relevant was the fact that the restriction in question only applied to one website and that other authorised channels remained available to U&R for the selling of discounted stock. The Competition Appeal Tribunal was criticised, in addition, for applying the relevant legal test (known as the Cartes Bancaires test) too narrowly. In simple terms, conduct should only be treated as inherently problematic where it is, by its nature, clearly capable of harming competition.
A favourable outcome for brands' distribution strategies
The ruling resolves the uncertainty arising from the Competition Appeal Tribunal’s earlier decision and confirms that brand owners remain able to exercise a high degree of control over distribution. This ensures that their products are sold in appropriate environments, reflecting the desired image of the brand. Selective restrictions, such as requiring approved websites, will not automatically be held to be anti-competitive. Provided that brand owners steer clear of stringent restrictions such as resale price maintenance or outright online sales bans, their ability to structure distribution networks remains robust.
