On 14 July the UK Competition Appeal Tribunal (CAT) issued its judgment in the damages claim brought by Sainsbury's against MasterCard. It held that certain interchange fees set by MasterCard were anti-competitive and awarded damages of £68.6m, plus interest. The decision has many significant features from a competition litigation perspective, including that it is: the first time the CAT has awarded damages in a claim for breach of the Article 101 TFEU/Chapter I prohibition on anti-competitive agreements; the CAT's highest award of damages to date; its first judgment in a 'stand-alone' competition claim; and the first case in which a UK court has given judgment on the passing-on 'defence'. For more information on these aspects, see our competition disputes team's e-bulletin on the decision.
From a general commercial litigator's perspective, it is also of interest for the CAT's award of compound interest on part of the damages, following the principles established by the House of Lords in Sempra Metals v IRC  1 AC 561 – see our post on that decision. It is the first time compound interest has been awarded in a competition decision. The CAT noted that it was clearly established by Sempra Metals that interest losses are in principle recoverable, but subject to proof of loss. Precisely what must be pleaded and proved to succeed in a claim for interest must depend on the facts of the individual case. It referred to JSC Bank v Ablyazov  EWHC 867 (Comm), in which the court declined to award compound interest in the absence of any pleaded case as to the use to which the monies would have been put (see post), and contrasted Equitas Ltd v Walsham Brothers  EWHC 3264 (Comm), where the court found that "general evidence" that the claimants had suffered loss by being kept out of their money was sufficient.
Here, the CAT found that Sainbury's claim for interest was sufficiently pleaded. It concluded that, in respect of half of the overcharge, Sainbury's had not suffered an interest loss as the overcharge had been passed on to customers (though not in a manner which allowed MasterCard to benefit from the pass-on 'defence'). It awarded compound interest on the other half on the basis that, if the overcharge had not been made, Sainsbury’s would have: (i) had higher cash balances on which it received interest (20%); and (ii) required less borrowing and therefore not incurred the cost of borrowing (30%). The CAT therefore ordered interest to be paid at the rate that Sainsbury’s would have earned on its cash balances for the 20%, and at the rate that Sainsbury’s would have saved by taking out less new debt for the 30%. The parties must now calculate the interest payable, which is likely to be very significant.