Supreme Court rules against Visa and Mastercard on interchange fees

The Supreme Court has found in favour of the UK's largest supermarket chains in a case disputing the level of interchange fees levied by Visa and Mastercard.

The UK's highest court unanimously upheld the conclusion of the Court of Appeal that multi-lateral interchange fees (MIFs) infringed European Union antitrust rules by illegally restricting competition in the acquiring market.

Interchange fees are transaction fees that the merchant's bank account must pay whenever a customer uses a credit/debit card to make a purchase from their store. The fees are paid to the card-issuing bank to cover handling costs, fraud and bad debt costs and the risk involved in approving the payment.

Several UK retailers have already lodged claims, with Sainsbury’s et al. previously being awarded over £69 million by the Court of Appeal.

Justice Nicholas Hamblen dismissed all grounds of appeal brought by the credit card companies, except one point over the degree of precision required to calculate loss.

"The effect of the collective agreement to set the MIF is to fix a minimum price floor for the [merchant service charge]," he stated. "A significant portion of the [charge] is thereby immunised from competitive bargaining and is determined by collective agreement rather than by competition."

The judgement did specify exactly how much merchants will be entitled to in repayment, but it is expected to pave the way for other cases to be brought in the commercial court.

Commenting on the landmark ruling on behalf of Asda, Argos and Morrisons, Kate Pollock, head of competition litigation at Stewarts Law - which brought the action - commented: “Our clients were also successful in their cross-appeal, overturning the Court of Appeal’s decision to remit their claims to the Competition Appeal Tribunal on the question as to whether there is an exemptible level of interchange fees.

"Described by the Commercial Court as the largest and most complex cartel damages claim conducted in the English courts to date, this litigation has been hard fought.

“The Supreme Court’s definitive finding on liability means that our clients’ claims can now proceed to trial on the issue of the quantum of damages."

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