On 17 June 2020, the UK Supreme Court handed down judgment in a consolidated set of appeals in the multilateral interchange fees (MIFs) litigation relating to the MasterCard and Visa card schemes. The judgment addresses a mix of issues, some of which will have far-reaching consequences for competition litigation in the UK. The Supreme Court upheld the Court of Appeal’s findings that the MIFs were in breach of Article 101(1) TFEU as they restricted competition on the acquiring market, removing competition for the merchants service charge (MSC). The MIFs were an important part of the MSC (90%), which was not subject to the competitive process as the MIFs were set by collective agreement.
Most of Visa and MasterCard’s grounds of appeal were dismissed, with the exception of the ground relating to the issue of the degree of precision required from defendants in damages claims on the level of pass-on. The Supreme Court held that there is no reason why the pragmatic approach that common law takes in calculation of damages (the “broad axe” principle) should not also apply to the quantification of pass-on. The Court noted that whilst this approach would provide a shield to claims by a defendant, it would also provide a sword to potential claimants further down the supply chain.
The Supreme Court also allowed the cross appeal by Asda, Arcadia, Morrison’s (AAM) on the Court of Appeal’s remittal to the CAT for reconsideration of the Article 101(3) TFEU exemption on which MasterCard had lost after a full and fair trial. To remit the case for reconsideration of the application of Article 101(3) was against the principle of public policy and justice that there should be finality in litigation.
The three cases will now be remitted to the Competition Appeal Tribunal (CAT), in the two cases involving Sainsbury’s for reconsideration of the application of Article 101(3) TFEU and for all three cases to determine the level of damages, based on the loss suffered by the retailers and how much of this was passed on to their customers.
Read the full briefing here.