Object Restrictions Require a Four-Part Contextual Test: No Presumption from “Hardcore” Labels in Selective Distribution

Case: Deckers UK Ltd v Up & Running (UK) Ltd (Rev1) [2026] EWCA Civ 553
Court: England and Wales Court of Appeal (Civil Division) (Green LJ, Snowden LJ, Zacaroli LJ)
Date: 8 May 2026
Appeal from: Competition Appeal Tribunal, [2024] CAT 61
Core topic: Chapter I / section 2 Competition Act 1998 (agreements restricting competition), “by object” analysis in selective distribution; interaction with Commission Regulation (EU) 330/2010 (EU Vertical Block Exemption, “VBE”).

1. Introduction

The appellant supplier operated a selective distribution system for “HOKA” specialist running shoes. The respondent retailer sought to sell surplus stock via a new, generic, anonymised website (“runningshoes.co.uk”) aimed at clearance sales. The supplier refused consent under a contractual online-sales permission clause (Clause 15) and terminated supply for breach.

The retailer claimed damages in the CAT, alleging a section 2 Competition Act 1998 infringement “by object” in two overlapping ways:

• an unlawful restriction on online selling (an “Online Sales Restriction”); and/or
• an attempt at resale price maintenance (“RPM Restriction”), said to mute discounting via the anonymised site.

The CAT found an infringement “by object” and held the VBE inapplicable. The supplier appealed. The Competition and Markets Authority intervened and supported the appeal on the legal test.

2. Summary of the Court of Appeal’s decision

The Court of Appeal allowed the appeal. It held that the CAT mis-stated and mis-applied the law on “restriction by object” by effectively treating objective/purpose (and the absence of a plausible legitimate aim) as determinative, and by over-reading the significance of “hardcore” categorisation under the VBE.

Applying the correct test to the CAT’s unchallenged factual findings, the Court concluded:

• the termination did not have the “object” of restricting competition within section 2 CA 1998 when properly analysed in its legal and economic context; and
• in any event, the conduct would have been block exempt under Article 2 VBE: Articles 4(a) (price restrictions) and 4(c) (active/passive sales restrictions to end users in selective distribution) were not triggered on the facts.

3. Analysis

3.1 The factual platform (what the CAT found, and the appeal court accepted)

The Court proceeded on the CAT’s findings, including that:

• retailers could sell in-store and via their branded websites; they could discount below recommended prices in those channels;
• the supplier circulated recommended resale prices but did not enforce them across the network;
• the respondent wanted to use an unbranded clearance site for surplus Covid-era stock;
• the supplier refused, partly to protect the selective distribution model (control of “inconsistent channels”), and partly due to concern about deeper discounting through a new clearance channel;
• there was no general attempt to curb discounting through stores or branded websites.

3.2 The central legal correction: the “by object” test is cumulative and contextual

The Court held the CAT erred by “eliding” objective/purpose with the rest of the test. The correct approach, derived from the CJEU jurisprudence and adopted in UK appellate authority, is that a restriction is “by object” only where, assessed by reference to:

• content (scope/operation of the restraint),
• objectives (objective aims from a competition standpoint),
• legal context (including decisional practice and regulatory setting), and
• economic context (market structure, inter-brand competition, market shares, barriers to entry),

the measure reveals a sufficient degree of harm to competition such that there is no need to examine effects.

Standard of proof point: the Court emphasised (drawing in particular on Ping Europe Limited v CMA [2020] EWCA Civ 13) that the threshold is not merely a “real (non-fanciful) potential or capacity” to restrict competition; it is whether the measure reveals a sufficiently serious harm on the evidence.

3.3 Precedents cited and how they shaped the outcome

(a) The selective distribution “safe harbour” and its limits: “Metro” line

The CAT relied on the “Metro” framework to describe a safe harbour for qualitative selective distribution systems. The Court accepted the safe-harbour criteria as orthodox (derived from Metro SB-Großmärkte v Commission [1977] ECR 1875, L'Oréal [1980] ECR 3775, and AEG-Telefunken v Commission [1983] ECR 3151) but rejected any suggestion that falling outside Metro means an object infringement is “very likely” or “almost inevitable”.

Influence: The “Metro” cases explain that selective distribution can legitimately mute price competition to protect service/quality and avoid free-riding. That background makes it especially important not to treat any price-muting consequence as automatically an object restriction.

(b) The foundational object/effects rubric: Groupement des Cartes bancaires (CB) v European Commission (11th September 2014) ("Cartes Bancaires")

The Court treated Cartes Bancaires as the key articulation of the “by object” methodology, particularly its insistence that:

• the concept is to be interpreted restrictively, and
• analysis must consider the real conditions of functioning and structure of the market.

Influence: This directly contradicted the CAT’s approach of effectively deciding object by purpose/justification alone, without economic contextual evaluation.

(c) UK appellate application in online-sales restraints: Ping Europe Limited v CMA [2020] EWCA Civ 13

Ping was important in two ways:

• it endorsed the multi-factor approach to object restrictions (including market context), and
• it clarified the seriousness threshold (“reveals sufficient degree of harm”, not just “non-fanciful capacity”).

Influence: The Court used Ping to calibrate evidential intensity: vertical restraints in a consumer market typically require more contextual evidence than classic horizontal cartel behaviour.

(d) Misread by the CAT: Generics (UK) Ltd v CMA ECLI:EU:C:2020:52 (22nd January 2020) ("Generics")

The CAT treated Generics (notably paragraphs [87]–[89]) as supporting a decisive “only plausible aim” test. The Court of Appeal rejected that reading, explaining those paragraphs address a specific defence in the patent-settlement context and do not displace the broader four-part framework repeatedly reaffirmed in the same judgment.

Influence: The Court used Generics to reinforce (not undermine) the need for market-structure analysis and the balancing of pro-competitive effects as part of deciding whether harm is “sufficient”.

(e) “Hardcore” is not “by object”: Super Bock Bebidas SA v Autoridade da Concorrência [42(7)] ("Super Bock")

The CAT relied heavily on Super Bock to suggest RPM is “in many, if not almost all circumstances” restrictive by object and that “hardcore” status under the VBE effectively signalled object restriction.

The Court held Super Bock says the opposite on the key point: the referring court must still assess whether the vertical RPM agreement presents a “sufficient degree of harm” in the light of the multi-factor test, and “hardcore” under the VBE is part of legal context but does not create a presumption of an object restriction.

(f) Discretionary powers and governance rules: European Superleague v FIFA ("Superleague)

The CAT treated Superleague as authority that unconstrained discretion (without transparent criteria) is “by its very nature” a by-object restriction. The Court distinguished it: Superleague concerned association rules governing entry into an EU-wide market where the bodies held substantial market power and could erect barriers to entry. It does not support an abstract proposition that any contractual discretion in a vertical distribution agreement is inherently a by-object restriction.

(g) Market concentration as economic context: Banco BPN/BIC Português SA and others v Autoridade de Concorrencia BNP (29th July 2024) ("BNP")

The Court used BNP to illustrate that “object” assessment remains context-driven: in highly concentrated oligopolistic markets, limited evidence may suffice; in less concentrated vertical consumer markets, more is required.

(h) Internet bans and context: Pierre Fabre Dermo-Cosmétique SAS v Président de l'Autorité de la concurrence (13th October 2011) ("Pierre Fabre")

The Court held the CAT over-extracted from Pierre Fabre. That case itself stresses that even where an internet restriction may be serious, the national court must examine content, objectives, and legal and economic context to decide whether the clause is objectively justified and whether it is “by object”.

(i) Commission decisional practice: Case AT.40428 - Guess ("Guess")

The CMA’s intervention highlighted that the Commission’s approach in Guess treated “lack of legitimacy” as relevant but not dispositive: a separate step remains—whether the restraint reveals a sufficient degree of harm in its context.

3.4 The Court’s application to the facts: why this termination could not be “by object”

Having corrected the legal test, the Court held the CAT’s own findings compelled the conclusion that the termination did not reveal a sufficient degree of harm to competition:

• Content/scope was narrow: it concerned a specific clearance site for a limited tranche of surplus stock, not pricing across the selective network.
• Vertical restraint in a competitive market: the agreement was intra-brand; strong inter-brand competition reduces the likelihood that a narrow intra-brand constraint will be sufficiently harmful.
• Economic context (market structure and shares): the CAT accepted that the parties’ shares were “unlikely to be significant”; there were numerous competing suppliers. The Court treated market shares and inter-brand rivalry as central to “sufficient harm”.
• No barriers to entry: nothing akin to the regulatory and IP barriers central to Generics.

The Court therefore concluded the CAT could not properly find “object” infringement on this factual basis.

3.5 VBE analysis: “hardcore” exclusions require a practical, factual fit

The CAT held the VBE did not apply because:

• Article 4(a): alleged restriction of the buyer’s ability to determine its sale price (RPM), and
• Article 4(c): restriction of active or passive sales to end users by selective distribution members.

The Court disagreed. It read the VBE (including recitals) as focusing on whether the agreement in practice restricts price-setting freedom or customer access in the relevant sense. Here:

• retailers (including the respondent) could still discount at will via physical stores and their branded websites; and
• customers could still “usually” access the products via multiple online and offline channels.

In reaching that conclusion, the Court relied particularly on the “usual ability to find and buy” logic from Coty Germany GmbH v Parfümerie Akzente GmbH ("Coty"), which distinguished a total online ban (as in Pierre Fabre) from more limited platform/channel constraints that do not, in substance, restrict passive sales to end users.

4. Impact

4.1 For selective distribution and luxury/brand suppliers

• Greater legal certainty against “purpose-only” findings: suppliers facing allegations of object infringement must still be judged through market reality (scope + inter-brand competition + market structure).
• Design of online channel controls: restrictions on anonymised sites, third-party platforms, or naming/brand association can be assessed as part of network integrity—yet must still be calibrated and evidenced within a coherent legal/economic context.

4.2 For competition litigation and enforcement practice

• CAT reasoning discipline: tribunals must show the “precise reasons” why a measure reveals sufficient harm; conclusory reliance on “only plausible aim” is not enough.
• Market shares and inter-brand rivalry are not optional: the judgment restores these as core elements of economic context in vertical “object” cases.
• Hardcore ≠ object: the judgment reinforces a separation between (i) block exemption architecture and (ii) Article 101(1)/section 2 object/effect characterisation.

4.3 Post-Brexit methodology: section 60A CA 1998

The Court’s structured discussion of section 60A CA 1998 and the Withdrawal Act 2018 confirms an approach of:

• pre-IP completion day CJEU principles being “presumptively binding” for consistency, absent reasoned departure; and
• post-IP completion day CJEU decisions being persuasive, not binding, but still usable where they reflect settled principles.

5. Complex concepts simplified

5.1 “Restriction by object” vs “restriction by effect”

• By object: so harmful in context that effects need not be proven; still requires a strict, evidence-based conclusion that the measure reveals a sufficient degree of harm.
• By effect: requires assessing actual or likely market effects (prices, output, choice, innovation), typically with more economic evidence.

5.2 Selective distribution and the “Metro” safe harbour

Selective distribution can be lawful where selection criteria are objective, uniform, necessary for the product, and proportionate. Even outside that safe harbour, unlawfulness is not automatic; the agreement is assessed under the normal “object/effect” framework.

5.3 RPM and “hardcore restrictions” under a block exemption

• RPM (resale price maintenance): supplier pressure or obligations that fix or set minimum resale prices.
• Hardcore restriction (VBE Article 4): removes the benefit of automatic block exemption; it does not itself answer whether the conduct is “by object” or “by effect”, and it does not create a presumption of harm.

5.4 Passive sales (selective distribution)

“Passive sales” broadly mean responding to unsolicited customer demand. Restrictions that prevent customers from finding/buying goods “in the usual way” online can be problematic; but limited constraints that still leave customers able to find and buy from authorised distributors may fall outside Article 4(c), as illustrated by Coty.

6. Conclusion

[2026] EWCA Civ 553 is a corrective authority on “by object” analysis in vertical restraints and selective distribution. It rejects a shortcut approach that treats anticompetitive purpose, lack of legitimate aim, or “hardcore” VBE labelling as determinative. The decision re-centres the orthodox requirement: only measures that, assessed by their content and legal/economic context, reveal a sufficient degree of harm qualify as object restrictions.

Bottom line: In selective distribution disputes—particularly those involving online channel controls and allegations of price-muting—courts and tribunals must do the full contextual analysis; narrow, episodic restrictions in competitive markets may be incapable of meeting the object threshold, and VBE exclusions must be applied to the measure’s practical effect, not its rhetorical label.