UK Court of Appeal overturns CAT judgment, highlighting the importance of economic context

The UK Court of Appeal judgment in Deckers v Up & Running is important reading for anyone advising on vertical agreements and a significant vindication of the role of economic analysis in competition law.

The case arose when Deckers terminated its supply relationship with specialist running retailer Up & Running after the retailer proposed to sell surplus stock of Deckers’ HOKA brand shoes through an anonymised clearance website.  The Competition Appeal Tribunal (CAT) initially found that this amounted to an infringement ‘by object’, focussing narrowly on whether Deckers' conduct had a legitimate purpose.  The Court of Appeal disagreed, confirming that this is only one part of a strict four-part test.  Crucially, economic context – including market structure, competitive conditions, and the realistic scope of any restriction – must be examined too.

Applying that test, the Court drew on the CAT’s factual findings, informed in part by the economic evidence put before the CAT by RBB’s Adrian Majumdar.  Deckers was only the sixth-largest supplier of specialist running shoes in a competitive market, the restriction targeted a single batch of excess Covid-era stock via a single website, and retailers remained free to discount, while consumers could purchase HOKA products through other channels.   

The Court found that the CAT had erred by treating objective or purpose as effectively the whole test, rather than as one of four cumulative components.  Moreover, because the factual evidence available to the Court was clear, it was able to reach its own substantive judgment that there was no infringement of competition law.  In the Court’s view, the act of termination did not, on the facts as found, amount to a restriction by object under section 2 CA 1998 – and it would in any event have been exempt under Article 2 VBE. 

The judgment reaffirms that the 'by object' classification cannot be used as a shortcut to bypass economic analysis.  Market structure, competitive conditions, and the realistic effect of a restriction all remain highly relevant, even at the object stage. 

RBB supported Deckers in the CAT proceedings.  Adrian MajumdarAdrian MajumdarPartner served as the economic expert for Deckers, with support from Iestyn WilliamsIestyn WilliamsPartner and Lucy HoldenLucy HoldenAssociate Principal.