Legal

Mastercard And Visa Lose Legal Round In The UK Over Swipe Fees

U.K. Court

Two of the world’s largest credit card companies have lost their bid to assess fees on retailers in the United Kingdom.

Britain’s Supreme Court has rejected an appeal by Visa Inc. and Mastercard Inc., affirming a lower court ruling that the mandated payments restricted competition, the court announced on Wednesday (June 17).

In its 83-page ruling, the justices ruled in favor of London-based Sainsbury’s Supermarkets Ltd., one of the nation’s largest grocery store chains with 1,415 stores.

The case dates back to 2016, when Sainsbury and other retailers filed suit against Visa and Mastercard alleging that they charged excessive credit and debit card fees in violation of the country’s  anti-competitive rules.

At issue is the use of so-called interchange fees charged by banks at rates set by the card companies each time a shopper used a credit card.

“This marks the first substantial award in a competition damages claim in the UK, and we believe in Europe,” Sarah Houghton, a lawyer at Mishcon de Reya advising the supermarket chain, told Bloomberg News. “It has an importance well beyond the precedent it sets for claims against the Mastercard and Visa schemes.”

Mastercard’s appeal to the U.K.’s Competition Appeal Tribunal (CAT) was denied later that year. CAT ruled the financial services company must pay judgement. That ruling was appealed to the Supreme Court.

The claims follow a U.S. settlement in 2012 in which Visa and Mastercard agreed to pay U.S. retailers $7.25 billion, the largest antitrust settlement in U.S. history, PYMNTS reported.

Mastercard told Bloomberg the decision was not a final ruling. “There will be further court hearings to determine the key issues,” a Mastercard spokeswoman told the news service. These hearings will most likely take place in 2021.”

Meanwhile, Visa told PYMNTS in a statement: "We are disappointed that the Supreme Court did not agree with the previous high-court ruling that Visa’s U.K. interchange complies with competition law. Interchange is a critical component to maintaining a secure digital payments ecosystem that benefits all parties, including consumers, merchants and banks. Visa supports the decision to send the matter to a specialist tribunal so the evidence can be properly considered.”

The latest chapter in the dispute allows the supermarkets to proceed to a trial on the size of the damages, the judges said in their unanimous ruling Wednesday, Bloomberg reported.

“The fixing of interchange fees by Mastercard and its network members over many years was an unlawful infringement of competition law,” Kate Pollock, a lawyer for the supermarket told Bloomberg said in a statement.

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