HOKA shoes – Court of Appeal clarifies approach to restrictions in selective distribution systems

The Court of Appeal’s decision in Deckers UK Ltd v Up & Running (UK) Ltd [2026] EWCA Civ 553 provides important guidance on the assessment of restrictions in selective distribution agreements and, in particular, the circumstances in which a contractual provision can be characterised as a restriction of competition under the Competition Act 1998.

Background

Deckers UK Limited (“Deckers“), owner of the HOKA running shoe brand, operated a selective distribution system under which authorised retailers were permitted to sell HOKA products through approved physical stores and approved websites. Up & Running (UK) Limited (“U&R“), a specialist running retailer, had been an authorised distributor under that system for several years.

During the COVID-19 pandemic, U&R launched a new and separate website dedicated to the sale of discounted stock. The proposed website was not one of the online sales channels that had been approved by Deckers. Deckers refused consent for its products to be sold through this new separate discount website and subsequently terminated the parties’ distribution relationship on the basis that U&R had breached its contractual obligations.

U&R brought a competition law claim, arguing that the requirement to sell only through approved websites (the “Website Restriction“) and the resulting termination amounted to unlawful restrictions of competition. U&R contended, among other things, that the arrangements constituted a restriction on internet sales and/or a form of resale price maintenance (“RPM“), both of which it characterised as restrictions.

The CAT’s decision

The Competition Appeal Tribunal (“CAT“) initially accepted U&R’s arguments. It concluded that Deckers’ arrangements were designed to limit discounting and preserve greater control over the sale of HOKA products. The CAT found that the Website Restriction operated as a disguised RPM measure and therefore was not compliant with the Competition Act 1998. The CAT also concluded that the relevant Vertical Agreements Block Exemption Regulation (“VABER“) was unavailable.

The Court of Appeal’s decision

The Court of Appeal unanimously overturned the CAT’s decision.

The central issue was not whether Deckers preferred retailers to avoid aggressive discounting. Few manufacturers are likely to object to full-price sales. Rather, the question was whether the contractual arrangements disclosed a sufficiently serious degree of harm to competition that they could properly be categorised as restrictions.

Drawing on established UK and EU competition law principles, including Cartes Bancaires, the Court stressed that identifying an infringement requires consideration of the provision’s content, objectives and economic and legal context. A finding cannot be based solely on the supplier’s commercial motivation.

The Court considered that the CAT had focused predominantly on Deckers’ purpose while paying insufficient attention to context. In particular:

• U&R remained free to sell HOKA products online through its approved website;
• the arrangements did not amount to a prohibition on internet sales;
• there was no direct contractual requirement as to resale prices; and
• the relevant market circumstances did not demonstrate the type of obvious competitive harm normally associated with such infringements.

The Court therefore concluded that neither the Website Restriction nor the termination of the distribution arrangement could properly be characterised as an infringement.

Importantly from an IP perspective, the Court also accepted that brand owner(s) may operate a selective distribution network and impose certain conditions in order to protect the brand and the integrity of its image.

Block exemption

Having rejected the CAT’s analysis of the alleged infringement, the Court also held that the arrangements were capable of benefiting from the applicable VABER safe harbour. The restrictions imposed by Deckers were not equivalent to a complete ban on online sales and did not fall within the category of hardcore restrictions that would automatically remove the benefit of the exemption.

Comment

The decision is notable less for what it says about selective distribution than for its discussion of infringements.

For brand owners, the judgment confirms that controls over authorised online sales channels will not automatically be equated with RPM or a ban on internet sales. For claimants, the judgment serves as a reminder that evidence of a supplier’s desire to limit discounting is not, without more, enough to establish a competition law infringement. Indeed, had a preference for higher retail prices been sufficient, a significant proportion of selective distribution systems might have found themselves unexpectedly competing in a rather different tribunal.

This judgment is helpful for brand owners as it illustrates that they may exercise a reasonable degree of control over the channels through which licensed/authorised sellers market their goods and may object if these are contrary to the brand’s integrity.