March 27, 2023

Volume XIII, Number 86


March 24, 2023

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Mastercard, the Next Installment. The Retailer Strikes Back

The previous four episodes of the Mastercard saga (as detailed in our previous blog posts) focussed on a number of legal battles between Mastercard and both consumers and retailers.

These disputes have centred on Mastercard’s alleged “uncompetitive” interchange fees and restrictive rules on cross-border acquiring. The latest claim by retailers follows a class action brought on behalf of consumers under the Consumer Rights Act 2015 in relation to the same charges.

Retailers including Nando’s, the Cooperative Group and Harvey Nichols have launched a new claim worth approximately £300 million (plus interest and costs), on the basis that Mastercard allegedly breached EU and UK regulations through the setting of “unlawful and anti-competitive” fees. This follows Humphries Kerstetter’s announcement in June 2017 that it would be bringing the claim on behalf of 27 high street retailers.

In addition to arguing that Mastercard’s service charges are anti-competitive, the claimants allege that Mastercard has abused its dominant position in the market. The claimants say that Mastercard credit cards are such a popular payment mechanism that retailers view them as “must-take”. The claimants are also seeking a declaration that the interchange fees are (and always were) void and unenforceable.

In 2007, the EU found that Visa and Mastercard’s high interchange fees breached Article 101 of the Treaty on  the Functioning of the European Union, thus inviting the consumer class action referred to above (led by Walter Merricks and discussed in a previous blog post) followed by several similar claims by retailers.

Until recently, it would have been forgivable to think that the retailer’s current claim (and the consumer class action claim) would be bound not to succeed. This is because in Sainsbury’s’ unsuccessful claim against Visa in respect of their high interchange fees, Mr Justice Phillips ruled that the credit card giant’s fees were not inherently anti-competitive (however, Sainsburys is still expected to appeal this decision).

In light of the legal developments since 2007, the outcome of the retailer’s claim and the consumer class action are far from predictable. We therefore look forward to the next instalment in the long running Mastercard saga.

© Copyright 2023 Squire Patton Boggs (US) LLPNational Law Review, Volume VIII, Number 43

About this Author

Garon Anthony Litigation Attorney Squire Patton Boggs Birmingham, UK

Garon is a partner in the Litigation Practice Group. He advises clients across the full range of commercial dispute issues, including cyber liability/data breach, professional negligence, banking, pensions and insurance.

Garon regularly acts for clients who are subject to investigations or disciplinary proceedings by national and international regulators, including most recently the Financial Conduct Authority, the Financial Reporting Council and the Dubai Financial Services Authority.

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Helen Cain, Squire Patton Boggs Law Firm, Litigation Attorney, Birmingham, United Kindgom

Helen joined the Litigation team in 2014, having completed her training with the firm. Helen has a broad range of experience in general commercial litigation, pensions disputes and financial services litigation.

She has experience in advising on a wide range of matters of both a contractual and tortious nature, including breach of contract, misrepresentation, debt recovery and professional negligence.

Helen regularly acts for a diverse client base including PLCs, SMEs and individuals. Helen also has experience of acting...

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