This case is very important in that it is one of the first judgments where damages have been awarded for breach of competition rules in UK. It relates to MasterCard's alleged anticompetitive card fees (credit and debit cards). The award was for £68,582,245 plus interest which is a significant sum, but there are numerous other claims likely to emerge. In addition to the recently filed UK consumers class action against MasterCard, Esso Petroleum is also suing MasterCard and Visa at the High Court in London. Other retailers have been observing the outcome of this case.
This case is worthy of in-depth review but the client alert concentrates on two main aspects; the dismissal of Article 101(3) defence and the treatment of the passing-on 'defence', which are likely to be the subject of further judicial review.
MasterCard is seeking permission to appeal against the recent UK competition court ruling that awarded J Sainsbury £68.6 million (plus interest) in damages based on alleged infringement of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and of the Chapter I prohibition under the Competition Act 1998. This is due to the application of MasterCard's UK multilateral interchange fees (MIF) in the absence of a bilateral agreement. MasterCard's UK MIF was part of the MasterCard Scheme Rules.
Case background
In 2012 Sainsbury filed its lawsuit against MasterCard UK seeking damages for the amounts it paid in merchant service charges for processing purchases made with MasterCard UK credit and debit cards (when referring to credit cards below we include debit cards) since December 2006. In short, Sainsbury's contended that, in the absence of the UK MIF, the merchant service charge charged to merchants by acquiring banks in the UK would be lower, because the level of the interchange fees would be lower.
The case was transferred to the specialist Competition Appeal Tribunal (CAT), which ruled, on 14 July 2016, that by setting fees on card transactions in the UK, MasterCard had restricted competition. CAT concluded that MasterCard's "UK MIF was a restriction of competition by effect", infringing Article 101(1) of the TFEU, and was not exempt under Article 101(3) of the TFEU.
The CAT did not consider that the agreement setting the UK MIF was a restriction of competition by object. One of the reasons given for this is that the agreement was not secret. The CAT concluded that: "It is also worth bearing in mind that price-fixing...
