The UK Court of Appeal has handed fashion and premium brands a significant victory in the ongoing battle over online discounting and selective distribution. In a closely watched decision involving HOKA running shoe-maker Deckers and retailer Up & Running (“U&R”), the court overturned an earlier Competition Appeal Tribunal (“CAT”) ruling that had found Deckers’ distribution practices amounted to unlawful restrictions of competition “by object” under UK competition law.
The judgment provides important clarification for brands seeking to control online sales channels, preserve pricing integrity, and protect brand positioning in an increasingly fragmented digital marketplace.
The Case in Brief: Deckers operated a selective distribution system for HOKA-branded running shoes in the UK, supplying products only to approved retailers that met specified criteria relating to brand presentation and consumer experience. U&R, an authorized HOKA retailer, proposed launching a new online clearance platform under the generic domain “runningshoes.co.uk” to sell discounted excess inventory accumulated during the pandemic.
Deckers objected to the launch, arguing that the discount site conflicted with HOKA’s brand strategy and selective distribution model. When U&R launched the site anyway, Deckers terminated supply, prompting U&R to take action, alleging that Deckers’ conduct unlawfully restricted online sales and discounting and effectively amounted to indirect resale price maintenance (“RPM”).
The CAT sided with U&R in October 2024, concluding that Deckers’ restrictions amounted to unlawful “by object” restraints and fell outside both the Metro safe harbor and the Vertical Block Exemption framework.
The Court of Appeal’s Reversal
The Court of Appeal took a much narrower view. Rather than focusing solely on whether Deckers had a pricing-related objective, the court emphasized in its May 8 decision that determining whether conduct constitutes a “by object” restriction requires a broader contextual analysis. Specifically, the court said judges must assess the content and scope of the restriction, its objective, and its broader legal and economic context, including market shares and inter-brand competition. Applying that framework, the court concluded that Deckers’ conduct did not reveal a sufficient degree of harm to competition.
The judges stressed that the restriction was extremely limited in scope, applying only to one retailer, one anonymized website, and a relatively small tranche of clearance inventory. Importantly, retailers remained free to discount HOKA products through physical stores and branded websites.
The court also emphasized the broader competitive environment. Deckers held only a modest market share in a crowded athletic footwear market characterized by strong inter-brand competition and low barriers to entry. Even if Deckers’ actions were partly motivated by concerns over discounting, the court held that this alone was insufficient to establish a “by object” infringement.
THE BIGGER PICTURE: The ruling is especially significant for fashion, luxury, and premium brands that rely on selective distribution systems to preserve brand image, control online presentation, and maintain consistency across sales channels. In overturning the CAT’s decision, the Court of Appeal rejected the idea that falling outside the Metro safe harbor automatically renders a distribution system unlawful, that “hardcore” restrictions under block exemption rules automatically qualify as “by object” infringements, or that discretionary approval rights are inherently anti-competitive simply because they could be exercised improperly.
Instead, the court recognized that selective distribution systems may limit some forms of intra-brand competition and must be assessed in their full legal and economic context. That approach gives brands a stronger basis to defend carefully tailored online sales controls, particularly where market power is limited, inter-brand competition remains strong, and restrictions are proportionate to legitimate brand-protection objectives.
At the same time, the ruling does not give brands unlimited freedom to restrict online sales or discounting. Brands should ensure that approval criteria and online sales restrictions are clearly defined, consistently applied, and supported by legitimate commercial rationales.
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