Court of Appeal Backs HOKA's Restrictions on Online Sales

Key Takeaways

• Court of Appeal reversed CAT, deeming HOKA's online‑sale limits non‑by‑object.
• Vertical Agreements Block Exemption applied, shielding approved‑website restriction.
• Decision hinges on Deckers' market share staying below 30 %.
• Brands can enforce approved‑site rules if not hardcore RPM.
• CMA’s challenge highlights need for economic‑effects evidence in object cases.

Pulse Analysis

The clash between intellectual‑property rights and competition law has long shaped how brands manage distribution. While IP grants exclusive control over a product, competition regulators scrutinise any contractual clauses that may stifle market entry or price competition. In the footwear sector, Deckers’ HOKA line illustrates this tension: the company permitted sales through a single, approved online portal, aiming to protect brand integrity and prevent deep discounting that could erode full‑price sales.

In *Deckers UK Ltd v Up & Running (UK) Ltd*, the Court of Appeal applied the ‘by‑object’ test from the EU’s Cartes Bancaires precedent. It concluded that the restriction to an approved website did not, in itself, reveal a sufficient degree of harm to warrant a presumption of illegality. Because Deckers’ market share remained under the 30 % ceiling and the arrangement lacked a hardcore resale‑price‑maintenance element, the Vertical Agreements Block Exemption covered the practice. The judgment also underscored that the Competition Appeals Tribunal must demonstrate a clear anti‑competitive intent before classifying a restriction as ‘by‑object.’

For brands, the decision offers a clearer roadmap: vertical distribution controls are permissible when they are proportionate, do not exceed market‑share thresholds, and avoid outright bans on online sales. However, the CMA’s involvement signals that regulators will still probe the economic impact of such clauses, especially where discounting or channel‑splitting could distort competition. Companies should therefore pair contractual restrictions with robust economic analyses to ensure compliance and mitigate the risk of future challenges.