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The Court of Appeal today handed down judgment in Deckers UK Limited v Up & Running (UK) Limited, re-emphasising the need to assess the economic context before identifying an infringement by object under Chapter I of the Competition Act 1998.
The judgment has wide implications for the economy and is required reading for those advising clients in relation to selective distribution systems and vertical agreements more generally.
The case concerned Deckers’s arrangements for distribution of its HOKA brand of running shoes. Deckers appealed the conclusion that these constituted an infringement by object of the Chapter I prohibition, which was itself based on the finding that they had no legitimate purpose outside the protection of the integrity of its selective distribution system.
The Court of Appeal conducted an extensive review of the case law relating to the identification of infringements by object, both generally and in the context of selective distribution. It recalled the four part test set out in Case C-67/13P Groupement des Cartes Bancaires (CB) v European Commission, summarising: “In relation to an impugned measure it is necessary to examine its: (a) content; (b) objectives; (c) legal context; and (d), economic context.”
It held that to assess the arrangements purely on the basis of their subjective purpose, without carrying out an assessment of the economic context, had been incorrect in law. It further concluded that the arrangements were not infringements by object, and would in any event have benefited from the block exemption for vertical agreements (Commission Regulation (EU) No 330/2010, which was the exemption in force at the relevant time).
Alison Berridge appeared for the Appellant, Deckers UK Limited (led by Marie Demetriou KC). Earlier in the proceedings, Jenn Lawrence also appeared for the Appellant.
Nicholas Khan KC appeared for the Respondent, Up and Running (UK) Limited.
Michael Armitage appeared for the Intervener, the Competition and Markets Authority.