UK: UK Competition Appeal Tribunal Confirms Ban On Online Sales Is Inherently Restrictive Of Competition

Last Updated: 28 September 2018
Article by Becket McGrath and Christine Graham

On 7 September 2018, the UK's Competition Appeal Tribunal (CAT) upheld the August 2017 decision of the Competition and Markets Authority (CMA) ruling that Ping Europe Limited (Ping) had infringed EU and UK competition law by preventing online sales of its custom golf clubs in the UK.

In its judgment, the CAT agreed with the CMA that Ping's online sales ban was a 'by object' restriction of competition, meaning that it infringed the Chapter I prohibition of the UK Competition Act 1998 (CA98) and Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) "by its very nature". Although the CAT accepted that the Internet ban pursued the legitimate commercial objective of promoting custom fitting of clubs in-store, it found that Ping could have used other, less restrictive measures to achieve the same outcome. The CAT also noted that all other major brands allow online sales of custom fitted clubs and that Ping itself permits online sales in the US. Consequently, the CAT dismissed Ping's appeal. Ping's fine was, however, slightly reduced.

The CMA applied both EU and UK competition law in this case, as it is required to do as a National Competition Authority of a Member State. As long as the UK remains a Member State of the EU, the CAT is obliged to apply both EU law and the CA98 in a manner that is consistent with EU case law. Since the Court of Justice of the EU (CJEU) made it clear in its 2011 Pierre Fabre judgment that outright online sales bans are an 'object infringement' of Article 101, and so inherently unlawful, the CAT's ruling is ultimately unsurprising. The judgment is nevertheless interesting as it marks the first time that a UK court has examined the status of blanket bans on Internet sales under EU and UK competition law. The Tribunal's close analysis of the arguments raised by Ping to justify its policy also help clarify the boundary between agreements that are inherently unlawful and those that may be unlawful in particular circumstances.

Background facts

Ping is a manufacturer and distributor of golf clubs, golf accessories and clothing. It was a pioneer in custom fitting clubs, which consists of retailers conducting an initial customer interview, followed by a static measurement, a dynamic swing test and a ball flight analysis. Apart from the interview, which may be conducted by telephone, all steps are carried out 'face to face' in the retailer's premises.

Ping supplies its products to UK consumers via a selective distribution network of authorised retailers (referred to by Ping as 'account holders'), who must meet qualifying criteria before being admitted and to remain members. Starting in May 2000, Ping prohibited its UK account holders from selling custom fitted clubs over the Internet, on the grounds that online selling was inconsistent with face-to-face customer fitting. Noting that a "face to face dynamic fitting interaction" was the desired approach for all sales of clubs, at a minimum Ping required a "personal conversation" between the account holder and consumer, to convey the benefits of face to face custom fitting. While the personal conversation could take place over the telephone, execution of the sale via the Internet was expressly ruled out.

Acting on a complaint from an aggrieved retailer, the CMA launched an antitrust investigation in November 2015. It issued its infringement decision against Ping on 24 August 2017, fining the company £1.45 million. This was the first time that the CMA had penalised a straight ban on online sales, as opposed to combating restrictions on online pricing. Ping subsequently appealed, with the CAT hearing the appeal over two weeks in May.

The CAT's judgment

The fundamental issue on appeal in this case was whether Ping's sales policy was inherently unlawful (i.e. an object infringement, roughly equivalent to per se illegality in US law) or was objectively justified and hence lawful (in the sense of falling outside the CA98 Chapter I prohibition and Article 101(1) TFEU altogether). While there was some discussion during the trial of whether the policy met the formal requirements for exemption from the relevant prohibitions under s.9 CA98 and Article 101(3) TFEU, respectively, this aspect of the case appears to have been accorded less weight on appeal.

The CAT found that the issue of whether Ping's Internet ban was a 'by object' infringement was not entirely straightforward. Recent EU case law has at times blurred the dividing line between such cases, where conduct will always be viewed as anticompetitive, and situations where a restriction of competition needs to be proved by reference to the facts of a particular case. The essential difficulty is that, while the 'object' category is largely reserved for conduct that inherently lacks any pro-competitive rationale, such as price-fixing cartels (and is in principle therefore easy to identify), the single market objective underpinning much of EU competition law means that the category also includes vertical agreements that unduly restrict cross-border trade, even if they have pro-competitive aspects. Because online sales bans are viewed in EU law as a form of cross-border sales restriction, they are caught by this categorisation, notwithstanding the fact that manufacturers may have a business interest in limiting online sales that is unrelated to customer location. The desire of authorities to maintain flexibility when categorising 'obviously problematic' agreements has also contributed to the legal uncertainty.

It is nevertheless unsurprising that, applying the case law of the CJEU, the CAT concluded that the CMA was correct to find that Ping's Internet ban revealed a sufficient degree of harm to competition by its nature to constitute a 'by object' infringement, irrespective of Ping's legitimate aim of maximising custom fitting. The CAT rejected Ping's submission that the presence or absence of a 'plausibly pro-competitive rationale' was the key to identifying an object infringement. Consistent with EU case law, the CAT approached the issue by noting that an agreement may be deemed to infringe 'by object' in light of its likely harm to competition, regardless of the actual, subjective aims of the parties involved, even if those aims were in some way legitimate. Referring to the Court of Justice's judgment in Case C-209/07 Competition Authority v Beef Industry Development Society Ltd, the CAT stressed that the fact that the impugned measure may have a pro-competitive purpose was "irrelevant" to the assessment of whether it constituted an 'object' restriction for the purposes of Article 101(1).

The CAT observed that the CMA had carried out a detailed assessment of the outline sales ban's harm to competition by reference to its content, objectives and legal and economic context. In particular, it noted that the ban significantly restricted consumers from accessing Ping golf club retailers outside their local area and from comparing prices. The ban also significantly reduced the ability of, and incentives for, retailers to compete for business using the Internet. Noting the existence of significant and growing customer demand for online sales of custom fit clubs, the CAT therefore agreed with the CMA's finding and conclusion that the Internet ban was a 'by object' infringement.

Ping argued that the CMA was wrong to find that Ping's policy was disproportionate and hence not objectively justified. Although the CAT considered that the CMA was wrong to carry out a detailed proportionality analysis when assessing whether the policy was caught by the competition law prohibitions, it ruled that the CMA's ultimate conclusion that the Internet ban was not objectively justified was correct. In the CAT's view, Ping could still compete on non-price parameters (e.g. quality and innovation) against other manufacturers without the ban.

In addition, the CAT agreed with the CMA that there were suitable and appropriate alternative measures available to Ping to achieve its aim of promoting custom fitting, which were less restrictive than the Internet ban. This meant that the policy could not be exempted, as a ban on Internet sales was not 'indispensable' to achieving this objective.

Although the CAT found that the fine of £1.45 million imposed on Ping was "within the correct ballpark figure" for an infringement of this nature, it ruled that the CMA was wrong to impose an uplift of 10% on its penalty for director involvement in the policy (director involvement in an infringement being an aggravating factor for penalty purposes). In an interesting passage of the judgment, the CAT explained that director level involvement in an infringement can be seen as an aggravating factor when setting the level of fine because it shows that an intention to restrict competition extends to the top of a company. While this would be the case in a secret cartel, for example, it was not the case here, where the policy was public and, at least in Ping's view, a legitimate business practice that benefited customers. While the policy was ultimately found to be unlawful, the CAT stressed that the infringement was negligent rather than intentional. As a result, the uplift was not appropriate in this case and the CAT reduced the fine from £1.45 million to £1.25 million.


Although this has been described by the CMA as a "landmark case", the outcome itself is ultimately not surprising, given the clear position since the CJEU's Pierre Fabre judgment. What is perhaps more interesting is the aspects that were not controversial in this case. In common with many consumer goods manufacturers, Ping sells its clubs through selective distribution. The operation of selective distribution in an online environment is currently one of the most hotly contested areas of EU competition law. A particular area of controversy has been the status of bans on the use of third party marketplaces. While that was largely resolved by the CJEU in its Coty judgment, which ruled that such bans are lawful in a selective distribution environment, arguments continue over whether that finding is limited to luxury products or of general application. Although Ping's Internet sales policy did include a marketplace sales ban, this was ultimately incidental in the case as it formed simply one aspect of Ping's total ban on online sales.

The CJEU case law is clear that an online sales ban is qualitatively different from a marketplace ban. While the former is inherently unlawful, the latter is not. Since Ping operated a total ban on online sales, its related prohibition of marketplace use was not addressed by the CAT. Similarly, the fact that Ping's products are at the 'luxury' end of gold clubs did not save its policy, just as the high quality of Pierre Fabre's cosmetics did not save its requirement that they had to be sold in a pharmacy from being ruled unlawful.

The CAT's judgment confirms the position that, apart from a narrow category of products where online sales are genuinely impossible or contrary to the public interest, any ban will be contrary to EU law as well as the laws of the Member States. Whether this position shifts in the UK once domestic courts are no longer bound to follow EU precedent remains to be seen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions