UK Court Sends Retailer/Credit Card Fee Fight To Competition Tribunal

The U.K.’s Court of Appeal ruled Wednesday (July 4) that a fight between U.K. retailers and credit card companies over fees has to be reexamined by a competition tribunal.

The Financial Times, citing court proceedings, reported that Asda, J Sainsbury and Wm Morrison’s claims against Visa and Mastercard will be decided by three senior judges. The retailers are appealing three separate cases that the judges would rule on, noted the report. The legal fight has to do with interchange fees, which are the costs businesses pay for processing credit card payments. The fee is charged every time a credit card is used by the consumer. The retailers contend the amount of interchange fees at Mastercard and Visa run afoul of the restriction of competition law. The outcome could impact other lawsuits Mastercard and Visa are facing over interchange fees, noted the Financial Times. The Court of Appeal said it was planning to send the three cases back to the Competition Appeal Tribunal (CAT) for reconsideration.

The CAT can neither retry the cases nor hear new evidence, but it can assess damages and decide if exemptions should be applied to the credit card companies. The High Court judge will chair the review, reported the Financial Times. The three cases were sent to the Court of Appeals after differing rulings by judges in lower courts, noted the report. In 2016 the Competition Appeal Tribunal ordered Mastercard to pay £68.5m in damages to Sainsbury. The tribunal ruled Mastercard broke European Union and U.K. competition laws regarding interchange fees. Sainsbury has also claimed damages because of the level of interchange fees. Visa, on the flip side, won a case against Sainsbury with the High Court finding the U.K. fees did not break the competition laws.

In a statement to the Financial Times, Mastercard said, “We continue to firmly believe that retailers derive real value from our network and we are committed to helping our retail partners grow their businesses and encourage the adoption of ever more convenient, safe and secure payments.” Visa declined to comment in the report. Meanwhile, J Sainsbury said in a statement: “We are pleased with the Court of Appeal’s declaration that both Mastercard and Visa’s domestic interchange fees are restrictive of competition. We will consider the judgment carefully and remain confident in the next hearing at the Competition Appeal Tribunal which will examine whether there is any lawful level of interchange fee for either scheme and establish our damages.”


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.