In a private action for damages for breach of competition law, the Competition Appeal Tribunal (CAT) today upheld the Claimant’s (Sainsbury’s) claim for damages arising out of the Defendants’ (MasterCard) breach of EU and UK competition law.
Sainsbury’s alleged that the payment scheme operated by MasterCard was an agreement or decision of an association of undertakings which infringed Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and the equivalent provision in domestic law.
The Competition Appeal Tribunal agreed and ordered MasterCard to pay compensatory damages of £68 million plus compound interest on 50% of the amount of the overcharge.
In its claim, issued in the Chancery Division in 2012 and transferred to the Competition Appeal Tribunal in December 2015, Sainsbury’s alleged that the Multilateral Interchange Fee (MIF), which applied to credit and debit card transactions in the UK under the MasterCard Scheme, restricted competition. Having paid the MIF, Sainsbury’s claimed damages for the amount of the alleged overcharge.
MasterCard denied that the setting of the MIF was an agreement or decision that restricted competition and contended that if it did restrict competition, it was exemptible under Article 101(3) TFEU and the equivalent provision in domestic law. It argued that Sainsbury’s had passed on any overcharge to consumers and had therefore not suffered any loss. MasterCard also argued that Sainsbury’s claim was barred under the doctrine of illegality (ex turpi causa) because of the connection between Sainsbury’s and Sainsbury’s Bank, an associate member of the MasterCard Scheme.
The trial took place over eight weeks between January and March 2016. In its judgment, the CAT held that the setting of the MIF was an agreement between MasterCard and its licensees, which was a restriction of competition by effect (but not by object). It said that in the absence of the restriction of competition, interchange fees would have been agreed bilaterally at lower levels than the MIF. It concluded that the restriction of competition was not exemptible under Article 101(3) TFEU. The CAT also found that MasterCard had not established that the overcharge had been passed on, and it rejected MasterCard’s defence of illegality.
The judgment is a landmark decision in the context of private actions for damages for breach of competition law. There are a number of retailer claims pending in relation to interchange fees; the judgment contains a detailed consideration of pass on in this context; and it is the first substantial award in a case of this type in the UK.
Derek Spitz, led by Mark Brealey QC and instructed with Sarah Love by Mishcon De Reya LLP acted for Sainsbury’s, the successful Claimant in the action.
Mark Hoskins QC, Matthew Cook and Hugo Leith appeared for MasterCard, instructed by Jones Day
Full text of the Judgment available here.
CAT Press Summary available here.